Is your JobKeeper direction lawful – lessons learned so far


21 July 2020


While there is little doubt that the JobKeeper wage subsidy scheme has provided welcome relief to many Australian businesses since the COVID-19 pandemic began, related amendments to the Fair Work Act 2009 (Cth) to support the practical operation of the scheme have proved similar relief for businesses.

A more detailed summary of those amendments is available here.

The temporary flexibility powers available to employers have now been in place for around 3 months.  In this article we discuss some recent decisions of the Fair Work Commission (FWC) about the lawfulness or otherwise of some of the JobKeeper directions that have been given by businesses in an effort to manage their reduced workforce needs.

The outcomes in these cases illustrate that in assessing the reasonableness of a direction the FWC will consider:

  • whether the direction operates fairly across different categories of employees (full time, part time and casual);
  • in relation to a direction to reduce hours - whether the COVID-19 impact on the employer’s business objectively justifies the reduction in hours, by reference to the actual or likely reduction in the need for the particular work that affected employees perform.  A direction to employees to reduce their ordinary hours of work will not be considered reasonable, and therefore valid, unless the employer can satisfy the FWC that an objective or fair basis for issuing the direction exists in all the circumstances; and
  • the individual circumstances of the employer and each employee affected.

 

71% reduction in employee’s remuneration not unreasonable

In W.C. [2020] FWC 2928, the FWC considered whether a JobKeeper stand down direction which had the effect of reducing an employee’s hours (and remuneration) by 71.5% compared to the employee’s pre-COVID situation was unreasonable.

The FWC balanced, on the one hand, the financial impact of the direction on the employee, including the fact that he was the sole income earner in his household, against the financial impact of COVID-19 on the employer’s income stream and cashflow.

Relying particularly on the employer’s commitment to review the situation on a monthly basis, the FWC concluded that the direction was not unreasonable in the circumstances.

 

Stand down direction unsupported by forecast conditions

In Allan Jones v Live Events Australia Pty Ltd [2020] FWC 3469 Mr Jones, a broadcast engineer, was issued with a JobKeeper direction to reduce his minimum hours of work by 40%, from 80 to 48 hours per fortnight.

At the time the direction was issued, and thereafter, Mr Jones continued to be rostered to work his usual 80 hours each fortnight.  Whilst the employer’s business had been disrupted by the pandemic, the particular work that Mr Jones performed was not materially interrupted by COVID-19.

Mr Jones challenged the lawfulness of the direction on the basis that the direction was unreasonable in all the circumstances due to him.

The FWC agreed with Mr Jones, concluding that the employer had ‘overplayed its hand’ by issuing a direction that was overwhelmingly precautionary and not proportionate to the actual circumstances or those which could be reasonably forecasted.

The employer argued that the direction was reasonable and necessary because of the possibility that circumstances might change such that it would have less need for Mr Jones to work.  The FWC rejected the employer’s attempt to obtain flexibility to reduce Mr Jones’ working hours in the event that circumstances changed and it needed to do so.

 

Global direction issued to entire workforce not reasonable

In Transport Workers’ Union of Australia Queensland Branch v Prosegur Australia Pty Limited [2020] FWCFC 3655 the employer, Prosegur, issued a JobKeeper direction to its entire workforce.  The effect of the direction was that the ordinary hours of work of all of its full-time, part-time and long term regular casuals would change to 25 hours per week, irrespective of their pre-pandemic number of hours.

The TWU challenged the direction on the basis that it was unreasonable, and therefore not a valid direction under the Fair Work Act, because it unfairly and disproportionately impacted on full-time employees (whose hours reduced from more than 38 per week to 25) compared to part-time employees (whose pre-pandemic hours were less than 25 per week).

On appeal, the Full Bench of the FWC accepted that Prosegur’s business had been significantly impacted by the pandemic and therefore some form of JobKeeper direction reducing hours of work for full-time staff was necessary.

However, a direction which increased the ordinary hours of part-time employees in circumstances where full-time employees were simultaneously having their ordinary hours reduced was unreasonable.

The FWC held that the direction issued by Prosegur to its workforce was not a valid direction, and invited the parties to re-consider an appropriate alternative form of direction.

 

Employee’s refusal to take annual leave not reasonable

In McCreedy v Village Roadshow Theme Parks Pty Ltd [2020] FWC 2480 the employer requested all of its employees to draw down their accrued annual leave entitlements to 2 weeks. 

One long term employee, Ms McCreedy, refused the request, arguing that she was disproportionately effected by the direction since her leave balance was significant.  She complained that she would be required to take approximately 16 weeks of annual leave, whereas other staff might only need to take a week or two of leave.  She also relied upon the fact that she had planned five future holidays and needed her annual leave for that purpose.

The issue before the FWC was whether Ms McCreedy had unreasonably refused the request to take annual leave.

Commissioner Hunt noted that Ms McCreedy had sufficient long service leave available to accommodate her future planned holidays, or could alternatively request to access annual leave in advance.  The FWC also dismissed Ms McCreedy’s complaint about the alleged disproportionate impact of the direction on long term staff, concluding that her refusal to adhere to her employer’s request was unreasonable.

 

 

This article provides general comments only.  It does not purport to be legal advice.  Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.

 

Authors:

 

Paul Dugan, Principal in our Disputes Team

Contact
Email:  pdugan@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2266

 

Kylie Dunn, Senior Associate in our Disputes Team

Contact
Email:  kdunn@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2286

 

The authors would like to thank Lachlan Chuong for his assistance in preparing this article.