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The JobKeeper scheme and award flexibility in the social and community services industry

Libby Pallot, Walter MacCallum, Anthony Massaro, Ben Tallboys, Abbey Burns, Caitlin Walsh, Caitlin Meers, Natasha Sim, Jaqueline Wilson, Morgan Smithe & Sophie Cusworth

Information current at date of publication: 29 April 2020. The average reading time for this Alert is 7 minutes.

This Alert is relevant to CEOs, CFOs, GMs, Human Resource / People & Culture from social and community organisations. 

The COVID-19 pandemic has caused disruption within workplaces in the social and community service industry and employers are continuing to navigate the options available to them as they evolve. From individual agreements with employees to JobKeeper directions, employers have a range of options available to them. However, deciding which course to take is complicated, especially when arrangements need to change or more relevant options become available.

The JobKeeper legislation passed both houses of Parliament and received Royal Assent on 9 April 2020, coming into immediate effect. The Fair Work Act now contains provisions to enable employers to give eligible employees directions around their working arrangements, or to agree with eligible employees to arrangements which might otherwise attract penalties. The new provisions also ensure that employers who receive JobKeeper payments actually pass these onto their employees. 

The issues facing the social and community services industry depend on what service is provided and the impact the pandemic has had on the particular workforce. For example, the issues are different for organisations who undertake social, recreation, welfare, youth work or community development work, and for those who provide disability services including the provision of personal care and domestic and lifestyle support.

Many services are essential and some services have been able to continue through the pandemic with necessary workplace health and safety measures implemented to protect the health and wellbeing of their employees and clients. However, other services have had to partially or fully cease operation for now. In some cases, this is because clients are not using their usual services and businesses have suffered a loss of revenue. In other cases, it is due to the nature of the clients and/or services where social distancing requirements may not be met and have the ability to compromise the health and safety of workers. In addition to this, given many disability services jobs cannot be performed from home, many workers have raised concerns about continuing to work during the pandemic.

Where downturn has occurred, many employers in the industry have already had to rely on section 524 of the Fair Work Act 2009 (Cth) to stand down some employees, while others have come to individual agreements with employees to take paid or unpaid leave, or reduce their overall hours. 

On 9 April 2020 JobKeeper legislation was enacted and on the same day, the Fair Work Commission amended 99 modern awards, including the Social, Community, Home Care and Disability Services Industry Award 2010 (SCHDSI Award), to include special provisions relating to the COVID-19 pandemic. There is also currently an application before the Fair Work Commission to amend the SCHDSI Award further to include paid pandemic leave and paid COVID-19 leave. 

The result of all of the above is that employers now have to consider:

  • whether directions to take annual leave or unpaid pandemic leave under the SCHDSI Award are viable options;
  • whether they and their employees are eligible for the JobKeeper scheme; and
  • if they qualify for the JobKeeper scheme, whether the JobKeeper directions or agreements are necessary or useful options for them.
SCHDSI Award

Schedule X, which has been inserted into the SCHDSI Award, is only relevant to disability employers who do not have an enterprise agreement (unless that agreement incorporates the award). Schedule X provides the following:

  • Unpaid pandemic leave
    If an employee is prevented from working as a result of a government or medical direction to self-isolate, or a measure taken by a government or medical authority in response to the COVID-19 pandemic, the employee is entitled to take up to 2 weeks’ unpaid leave. The employee must provide their employer with notice, as well as identify the reason for taking leave. The employer can also require the employee to provide appropriate evidence of the reason for taking leave. It is also possible for the employee to take a period of unpaid leave which is longer than two weeks, if their employer agrees.
    If an employee does take unpaid pandemic leave, the period of leave must start before 30 June 2020 but can end after that date.
    While pandemic leave does provide some protection for employees who are required to take leave to self-isolate, the changes do not otherwise go beyond what many employers and employees have been arranging by agreement since the pandemic started to affect business.
  • Annual leave at half pay
    An employee can elect to take double their annual leave entitlement at half of their rate of pay, by agreement with their employer. For example, under an agreement, an employee may take two weeks’ annual leave, and will be entitled to the same pay that they would have received for one week’s leave on full pay. This agreement must be made in writing and kept on record.
    If an agreement is made for an employee to take twice as much annual leave at half pay, the period of leave must start before 30 June 2020.

If the application currently before the FWC is successful, the SCHDSI Award may also include an entitlement to paid pandemic leave, as well as paid leave if an employee contracts COVID-19.

The JobKeeper Scheme

The JobKeeper scheme will provide welcome relief to many social and community services industry employers who have experienced a downturn in business. However, given the nature of the industry, there are likely to be many employees who are not eligible for the scheme.

If a provider is an ACNC registered charity, then it only needs to experience a decline in turnover of 15% to be eligible for the scheme. Otherwise, assuming the business has a turnover of less than $1 billion, it will need to experience a decline in turnover of 30%. Receipt of some government funding does not preclude a business from eligibility but the business cannot be wholly government owned.

To determine a decline in turnover, the comparison point is to the same month or quarter in 2019, depending on whether the organisation has monthly or quarterly tax periods. An alternative test is available for business which did not have a turnover in 2019, or for which the comparable month in 2019 is not an appropriate reference point to measure the decline. 

Employers are only eligible for payments in respect of eligible employees. Eligible employees are people who are currently employed by the employer, and who were as at 1 March 2020:

  • employed by the employer;
  • full-time, part-time, or casuals who have been employed on a regular and systematic basis for at least 12 months;
  • 16 years or older; and
  • Australian citizens, permanent visa-holders, or Subclass 444 visa-holders.

In addition to the above, to be eligible the employees also cannot be on government paid parental or dad and partner leave, they cannot be fully incapacitated and receiving worker’s compensation, and they can only receive the JobKeeper payment from one employer.

It is likely that providers will have many staff members who do not qualify for the JobKeeper scheme. This is because the disability sector employs a large number of workers on visas, many workers have more than one job and they can only receive JobKeeper through their primary employer, and there are many causal employees who will not meet the definition of a ‘long-term casual’.

Eligible employees must give their employer a completed nomination notice, confirming that they agree to be nominated by that employer for the JobKeeper scheme, and also confirming their eligibility.

JobKeeper flexibility

Employers who are eligible for JobKeeper payments can issue three types of JobKeeper directions to eligible employees. Employers can direct employees:

  • not to 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);
  • to work from a different location than their usual location, including their home; or
  • 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:

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

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

A valid direction or agreement under the JobKeeper provisions will override the terms in any award, enterprise agreement or contract of employment, as well as some parts of the Fair Work Act itself. However, in order for these directions or agreements to be valid:

  • they must be given or made after 9 April 2020;
  • the employer must qualify for the JobKeeper scheme; and
  • the relevant employee must also be entitled to a payment under the scheme for the relevant period.

For a JobKeeper direction to be valid, the employer must also ensure that:

  • the direction is safe having regard to the nature of the COVID-19 pandemic;
  • the direction is reasonable in all the circumstances, including in relation to carer’s responsibilities;
  • the employer provides 3 days’ notice in writing of their intention to provide the direction (unless the employee agrees on a lesser period) and the employee, or their representative is consulted about the direction;
  • for a stand down direction, the relevant employee cannot be usefully employed for their normal days or hours due to the COVID-19 pandemic; and
  • for a direction in relation to duties or location, the direction is necessary for the continuing employment of one or more employees (not necessarily the relevant employee themselves).

Additional requirements apply to each specific direction that employers can give. Directions can be withdrawn by employers at any time, or replaced by new directions, and they will automatically cease to have effect on 28 September 2020.

In addition to the above, if an employer qualifies for a JobKeeper payment for one of their employees, the employer must ensure that they pay that employee whichever is greater out of the $1,500 JobKeeper payment, or the employee’s entitlement to wages for work performed in the fortnight. Employees are entitled to receive their usual hourly rate in respect of hours worked, unless the duties which they are directed to perform attract a higher rate of pay. For some employees in the disability services sector, this may result in their employer having to pay them more than they would usually earn. If an employer does not comply with these safety net provisions, penalties can apply.

Navigating the options

When deciding whether to take steps under a modern award, the JobKeeper scheme or by agreement outside those measures, employers will need to understand their options. 

For example, like an agreement under Schedule X, the JobKeeper scheme allows employers and employees to agree to take double leave at half pay. Employers have more leverage under the JobKeeper scheme because the employee cannot unreasonably refuse this request. However, the agreement will only be valid where the employee has two weeks of annual leave remaining after the leave is taken and the employee and employer are both eligible for the JobKeeper scheme. By comparison, an agreement could be made under Schedule X where the employee takes all of their annual leave at half pay, regardless of whether the parties are eligible for JobKeeper.

By way of another example, an employer that experienced a decline in demand for the services may have asked for volunteers to be stood down while the business experienced a decline in work. However, the JobKeeper scheme may result in the same payment being made to employees who continue to work, as well as those who have agreed to be stood down. Given the inequity in this, employers may have to consider issuing a JobKeeper enabling direction to the employees who are stood down.

How we can help

The Russell Kennedy Workplace Relations, Employment and Safety team frequently advises clients in the social and community services sector and can assist with your questions about the new JobKeeper rules, award changes, and other employment matters.

If you would like to keep in touch with Alerts and Insights from our expert Workplace Relations, Employment and Safety team, you can subscribe to our mailing list here.

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