COVID-19: Stand downs & JobKeeper directions – What are the courts and tribunals saying?
In Australia during 2020, we have seen the COVID-19 pandemic prompt mass stand downs under existing Fair Work Act 2009 (Cth) (FW Act) provisions, as well as temporary JobKeeper provisions being put in place to assist qualifying employers to use JobKeeper enabling directions and agreements to manage employees during these unprecedented times.
In the months that have elapsed since the start of the pandemic, court and tribunal decisions have provided useful guidance for employers on how to apply (traditional) stand down vs. JobKeeper provisions – and our latest blog examines six such decisions.
1. What constitutes a ‘stoppage of work’ under the FW Act stand down provisions?
Under section 524 of the FW Act, employers are permitted to stand down employees without pay where they cannot be usefully employed because of (among other reasons, but relevantly) a ‘stoppage of work’ for any cause for which the employer ‘cannot reasonably be held responsible’. The issue of what constitutes a ‘stoppage of work’ was considered recently in Irvine v Perspective Recruitment, in which the Fair Work Commission determined that an employee should not have been stood down and ordered that she be permitted to return to work.
The employer, Perspective Recruitment, provides casual labour hire and recruitment services to industries, including food, retail, travel and manufacturing. It experienced a downturn in work due to COVID-19 from March 2020, but could not access the JobKeeper scheme due to not meeting the turnover test. Ms Irvine worked as a permanent part-time employee for 20 hours per week as an administration / marketing coordinator. Ms Irvine was stood down from her role under section 524 of the FW Act since 3 April 2020, however, she agreed to work one day per week for the following three weeks. Perspective Recruitment contended that the term ‘stood down’ was used ‘incorrectly’ and that she had agreed to reduce her working hours temporarily.
The Commission relied on the authority, La Plume v Thomas Foods, in which DP Anderson indicated that the phrase ‘stoppage of work’: ‘should not be so broadly construed as to include a mere downturn in business activity nor be so narrowly applied as to require the entire cessation of business activity. The statutory phrase is a stoppage of work, not a stoppage of the business. For there to be a stoppage of work some defined business activity with respect to which work is performed needs to cease, but not the cessation of business activity entirely’.
In making its decision in the Perspective Recruitment case, guided by Thomas Foods, the Commission held that there was not a stoppage of work for the purposes of the FW Act as the work Ms Irvine had been employed to do had not stopped. Although it was accepted there was a downturn in work such that profits were affected, a stand down under section 524 of the FW Act was not available to Perspective Recruitment.
It was ultimately held that the stand down should cease and the employee be permitted to return to work for her usual hours of work. The decision is a salient reminder that business owners should seek advice prior to relying on the non-JobKeeper stand down provisions in the FW Act and a deterioration of business conditions will not (of itself) be sufficient for a valid stand down.
2. Can an employee take sick/carer’s leave and compassionate leave during a stand down?
When Qantas grounded its fleet and stood down thousands of employees in response to the COVID-19 pandemic, several unions instigated proceedings to challenge Qantas’ refusal to allow employees to access paid personal/carer’s leave and compassionate leave during the stand down.
In May 2020 in the decision of CEPU & Ors v Qantas Airways Limited, the Federal Court ruled that employees, including the Qantas employees the subject of the litigation, do not have a right to access paid personal/carer’s leave or compassionate leave during a stand down under section 524 of the FW Act. This is because they are entitlements to take leave from performing work they are required to perform – during a stand down, employees are not required to perform any work, so there is no work from which they can take leave. Further the Court noted that if it were otherwise, this would expose the employer to a liability to pay leave entitlements and defeat one of the two principal purposes of standing down the employee: namely, to protect against such costs.
The Qantas decision provides employers with certainty that declining requests for sick leave, carer’s leave and compassionate leave is lawful during periods of valid stand down under s.524.
We note that in coming to its decision in the Qantas case, the Court relied on the Full Federal Court authority of Mondelez v AMWU, an authority regarding personal/carer’s leave that has since been appealed and overturned by the High Court. But, as the Mondelez v AMWU decision did not involve a stand down situation, the Qantas decision reflects the current state of the law.
3. JobKeeper request to take annual leave – in what circumstances may an employee refuse?
Pursuant to temporary COVID-19 provisions in the FW Act, and provided certain conditions are met, JobKeeper employers were able to request that eligible employees take paid annual leave provided their balance does not drop below two weeks. An employee “must not unreasonably refuse the request” – but when will such a refusal be unreasonable?
The Fair Work Commission has considered whether an employee’s refusal to take annual leave was unreasonable in a number of decisions, including:
In this case, the Fair Work Commission concluded that the employee had unreasonably refused her employer’s request to take annual leave during the pandemic.
The case concerned a part time employee, Ms McCreedy, who had worked at Village Roadshow Theme Parks Pty Ltd (Village) for 22 years and was eligible to receive JobKeeper payments. Ms McCreedy was directed to take one day of annual leave per week for the duration of the JobKeeper scheme. The dispute arose as Ms McCreedy refused Village’s request to take annual leave, and argued that:
- Village’s request would significantly reduce her annual leave balance, preventing her from taking planned holiday trips in 2020 and 2021; and
- that Village, as a large employer, should not be able to draw down on employees’ annual leave balances and use JobKeeper payments to assist with leave costs (but she noted that if her employer was a small business, she would support the request).
At the time of the hearing, Ms McCreedy had 140 hours of annual leave accrued, and 130 hours of long service leave. This amounted to 9.3 weeks and 8.6 weeks respectively. Ms McCreedy submitted evidence of her planned trips, including flight bookings. She also submitted a medical certificate regarding a medical condition from which she suffered to support the claim that her annual leave balance should not be reduced to the legislated minimum (i.e. to allow her to take annual leave if her sick leave were exhausted).
The Commission had regard to a number of factors, including:
- the high leave balance held by Ms McCreedy;
- the annual leave policy of Village which stated that all leave must be approved by the manager before it is guaranteed, and cautions employees against booking flights etc prior to receiving approval – something Ms McCreedy had ignored;
- Ms McCreedy’s medical condition not being sufficiently ‘serious’ so as to warrant the requirement of a balance of paid annual leave above the two week minimum.
The Commission concluded that Ms McCreedy had no regard to Village’s reasonable request that was made in order to assist it to reduce its annual leave liability during a period when it was unable to operate its business due to COVID-19 restrictions. Commissioner Hunt considered that Ms McCreedy’s refusal of the request was ‘excessive and disappointingly vitriolic’ and that during the hearing she had made ‘belligerent and unwarranted attacks’ on Village.
Importantly, the Commission noted that the test is not whether Village ‘acted reasonably or unreasonably; it is whether Ms McCreedy has unreasonably refused the request’. Therefore the onus falls onto the employee to demonstrate their refusal is not unreasonable.
This case involved a request to take annual leave of a retail worker in the context of all of H&M’s stores being closed in April for a period of four weeks due to COVID-19. The employee, Ms Powell, worked at a Brisbane store part-time and was asked to take annual leave to ‘reduce contingent liabilities and support [H&M’s] overall financial position in response to the pandemic’. Ms Powell was entitled to JobKeeper payments. Ms Powell asserted that the request was unfair on the basis that her entitlements were treated as having less value than the financial position of H&M and that she sought to save her leave for when she can take a proper holiday.
Commissioner McKinnon ultimately held that the need to support business continuity and the preservation of jobs for H&M employees outweighed the inconvenience to Ms Powell of not being able to take annual leave when she wishes to.
4. JobKeeper enabling directions – what makes a direction unreasonable in all of the circumstances?
Qualifying employers may issue eligible employees with JobKeeper enabling directions, including legacy JobKeeper enabling directions, during a fortnight that the employee is entitled to receive a JobKeeper payment. Such directions may include a full or partial stand down, or directions related to duties or location of work.
There are certain rules that apply to all JobKeeper enabling directions issued by eligible employers. One such rule is that JobKeeper enabling directions do not apply if they are ‘unreasonable in all of the circumstances‘ (section 789GK of the FW Act). Some guidance in respect of what is considered ‘unreasonable’ is provided in note form under the relevant section in the FW Act and includes:
- the impact of the direction on any caring responsibilities the employee may have; and
- if the direction applies to reduction of hours of a particular category of employees, ensuring the direction does not have an unfair effect on some employees as compared with others.
In Transport Workers’ Union of Australia v Prosegur Australia, the Full Bench of the Fair Work Commission considered the phrase ‘unreasonable in all the circumstances’ and concluded that the phrase means (or at least encompasses) a direction that is ‘inequitable, unfair or unjustifiable’ having regard to the objects of Part 6-4C (i.e. balancing the interests of employers and employees during the pandemic) and the respective circumstances of the employer and the employee.
We recommend that employers give consideration to reasonableness prior to implementing a JobKeeper enabling direction as the particular interests of an employee may (in the words of the Full Bench) ‘render a jobkeeper direction to be non-applicable to the employee because it is unreasonable’.
This is general information only, is current as at 1 October 2020 and may not be applicable to your organisation or situation. It is not a substitute for legal advice and it is important that you obtain specific advice.
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