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Some JobKeeper Guidance from the Fair Work Commission

Libby Pallot, Anthony Massaro, Abbey Burns

Information current at date of publication: 14 July 2020
The average reading time for this Alert is 8 minutes.

With the Melbourne Metropolitan area and Mitchell Shire back in another lockdown, while the rest of Australia continues to open back up, it is timely for employers to consider how they can use JobKeeper agreements and directions to work for their needs, whether that means increasing or decreasing their existing workforce.

Since the JobKeeper scheme was introduced in April 2020 this year, many employers have been relying on the flexibility measures in the Fair Work Act 2009 (Cth) to manage their workforce. However, as with any new laws, there was uncertainty as to how the Fair Work Commission would interpret some of the provisions, with the result that there were some grey areas. The Commission has now handed down a number of decisions that provide answers to questions like “what is reasonable?” and “can I direct casual employees to work more hours?”.

JobKeeper directions and agreements

Our comprehensive article about JobKeeper can be accessed here, but by way of a reminder employers who are eligible for JobKeeper payments can issue three types of JobKeeper directions. Employers can direct employees:

  1. to not work on a day or days that the employee usually works, to work for a lesser period than the employee normally works, or to work a reduced number of hours compared with the employee’s ordinary hours of work (which can be down to nil);
  2. to work from a different location than their usual location, including their home; or
  3. to perform any duties within their competency, provided that the employee has any necessary licence or qualification.

There are two types of JobKeeper agreements. Employers can ask employees to agree to:

  1. alter their days or usual hours of work; or
  2. take some paid annual leave.

Provided these requests are valid, an employee cannot unreasonably refuse to enter into such an agreement.

Fair Work Commission decisions

The Fair Work Commission has handed down three decisions that provide employers with guidance on what is reasonable and provide insight into how extensively the Commission will examine an employer’s situation when it relying on JobKeeper flexibility measures.

Agreement to take annual leave

In McCreedy v Village Roadshow Theme Parks Pty Ltd [2020] FWC 2480 the employer, which operates a theme park that had to close due to the pandemic, stood staff members down and directed them to take some annual leave each week until their remaining balance was 2 weeks. Ms McCreedy was a part-time employee with a substantial annual leave and long service leave balance (approximately 18 weeks), who was directed to take one day of annual leave per week over 16 weeks. Ms McCreedy did not consider the direction to be reasonable based on the size of her employer, because she had future holidays booked and because it would result in her employer offsetting her annual leave balance against the JobKeeper payment. The Fair Work Commission considered a range of relevant factors, including:

  1. the amount of leave Ms McCreedy needed for her planned holidays and the amount of leave she had accrued;
  2. Ms McCreedy’s medical condition (finding that it was not serious enough to warrant accrued annual leave, compared to an employee with breast cancer);
  3. the fact that leave balances continue to accrue while employees are stood down;
  4. the fact that the direction had been given to all employees; and
  5. the employer’s inability to operate its business for some time during the pandemic.

Ultimately, the Commission found that Ms McCreedy’s refusal to agree to take annual leave was unreasonable and required her to agree to take the leave.

Direction to work more hours as a casual

Another decision, Transport Workers’ Union of Australia Queensland Branch v Prosegur Australia Pty Limited [2020] FWC 3139, and the subsequent appeal Transport Workers' Union of Australia v Prosegur Australia Pty Limited [2020] FWCFB 3655, dealt with one of the more contentious aspects of the JobKeeper scheme, directing casual employees to work more hours. The employer implemented a number of measures to reduce the impact of the pandemic, including implementing a leave system, asking senior managers to take pay cuts, imposing a hiring freeze, making some positions redundant, and spreading work amongst the remaining employees. The measures also included giving all employees, including casuals, a direction to work a minimum of 25 hours per week (which is approximately the number of hours casual employees could work without exceeding the $1,500 per fortnight JobKeeper payment). This was more hours than some of the casual employees had been working prior to the pandemic.

The TWU contested the employer’s direction to its casual employees, arguing that it would unfairly impact permanent employees who regularly worked up to 50 hours (full-time) and 35 hours (part-time), including overtime.

In the first instance the Commission found that the direction was not unreasonable, however on appeal the Full Bench found that the Commission had not taken all of the relevant circumstances of the employees into consideration, including by assessing hours worked by employees before the direction came into effect, not those worked after.

The Full Bench quashed the original decision and referred it back to the parties to attempt to reach an agreement. In doing so, the Full Bench stated that to determine what is reasonable, it is necessary to consider all the entitlements of the effected employees. The Full Bench stated it was clear that a JobKeeper enabling direction to reduce full-time hours was necessary, due to a reduction in working hours.  However, what would be reasonable for part-time employees was unclear because the minimum contracted hours were not in evidence, but any direction would be unreasonable if it resulted in them working more hours, if full-time hours were being reduced. The Full Bench also stated that casual employees do not have a guarantee of ordinary hours, but long-term casual employees have an expectation of ongoing work, and the reasonableness of any direction should not disproportionally impact one category of employees (in this case, full-time employees). If the parties to this matter cannot reach an agreement, the matter will be heard by the Commission and a further decision will be handed down.

Direction to work less hours

Finally, the most recent JobKeeper case is Allan Jones v Live Events Australia Pty Ltd [2020] FWC 3469. In this case the employer was in the business of contacting with organisations to broadcast live events and the employee was a broadcasting engineer who predominantly worked on live horseracing broadcasts. In March 2020 the employer suffered a downturn in work and requested all employees to accept a reduction of up to 40% to their hours and pay, so that only 60% of wages were guaranteed unless the employee worked more than 60% of their hours. All employees agreed, other than Mr Jones, who continued to work his normal hours due to horse racing events continuing. In mid-May, the employer lifted this to a 20% reduction so that 80% of wages were guaranteed.

Mr Jones worked approximately 80-85 hours per fortnight, but sometimes up to 100 hours with overtime. In early June 2020, the employer notified Mr Jones that it intended to issue him with a JobKeeper enabling direction to reduce his hours to 48 a fortnight, based on the uncertainty around events, including horse racing, being cancelled. The employer only issued Mr Jones with such a direction. Mr Jones contested the validity of this, arguing that he could be usefully employed for his normal hours and days of work, and had in fact, continued to be so engaged. He also asserted that it was not a reasonable direction for a range of reasons, including that the direction should not be issued as a contingency in case hours reduced and that he was being unfairly targeted because he had not accepted the contractual reduction in hours and pay.

In determining whether the direction was valid, the Commission examined Mr Jones’ current and possible future hours. It found that Mr Jones was working an average of 80 hours a fortnight, with less overtime than pre-pandemic work, and acknowledged that while no horse racing events had been cancelled, the nature of COVID-19 meant that there was still a possibility that they could be. This meant the Commission was satisfied that Mr Jones could not usefully be employed for his normal hours due to COVID-19, or government initiatives, and it found that the direction was valid. 

In determining whether the direction was reasonable, the Commission reviewed Mr Jones’ circumstances and the business as a whole. The Commission found that the employer had been substantially impacted by COVID-19, Mr Jones was not exclusively contracted to work on horse-racing, and the employer was entitled to be concerned about the interests of all employees, which included spreading available work around to them. However, the Commission found that the employer had not been entirely reasonable, given the level of reduction was not proportionate to the rosters that were being issued, or the number of hours being offered to employees. In addition, the other employees were only facing a 20% reduction in their hours and pay, and the employer issued a 40% reduction direction to Mr Jones as a precautionary measure.

The Commission found that the employer’s direction was not reasonable, and replaced it with a direction to reduce Mr Jones’ hours by 20%. However it also said that this direction should only be relied on if necessary, and if the other employees’ hours were brought up to 100%, Mr Jones’ should be too.

Lessons for employers

The cases discussed above show that the Commission is willing to uphold employer decisions around JobKeeper flexibility measures, as long as they are reasonable, and it is less willing to tolerate disputes brought by employees or their representatives who are not ‘doing their bit’ for the overall needs of an organisation. 

However, despite a general acceptance that businesses are suffering during the pandemic, the Commission will still require evidence about the impact on a business overall and the circumstances of specific employees. The Commission is clearly willing to dig into proposed arrangements in some detail. When relying on the JobKeeper enabling directions and agreements, employers should consider factors such as whether the request is proportionate to the impact the pandemic has had on the business, and how it compares with the way other employees have been treated, and if any group of employees are disproportionally impacted. Employers also need to ensure they comply with the administrative requirements for issuing directions or requesting agreements.

If you have any questions about JobKeeper enabling directions, or need advice about managing your workforce as you scale your business up or down during the pandemic, please contact Libby Pallot, Anthony Massaro or Abbey Burns.

If you would like to stay up-to-date with Alerts and Insights from our expert Workplace Relations, Employment and Safety or Disability team, you can subscribe to our mailing list here.

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