Parliament extends operation of flexibility measures in the Fair Work Act


9 September 2020


It is not a great surprise that parliament last week passed legislation to extend the operation of a number of flexibility measures that are currently available to businesses which qualify for the JobKeeper wage subsidy scheme.

 

In April 2020, the Fair Work Act 2009 (Cth) (FWA) was amended to give eligible employers additional powers to vary employee working arrangements in an effort to both help sustain the business and keep people employed.

 

In brief, those amendments allow employers to:

  • direct employees to reduce their working hours (including down to zero);
  • direct employees to perform different duties or work from a different location;
  • request employees change their days of work;
  • request employees take additional annual leave.

 

A more detailed summary of the flexibility measures that are currently available to employers that qualify for the JobKeeper scheme is available here.

 

On 1 September 2020 it was announced that the current flexibility measures will continue to be available, albeit in a modified form, until 28 March 2021. 

 

Employers who qualify for JobKeeper 2.0 on 28 September 2020

Employers who qualify for JobKeeper 2.0 on 28 September 2020 will continue to be able to implement the full range of flexibility measures that are currently available, save that employers will no longer have any right to request that an employee take additional annual leave. 

 

Therefore an employer’s right to direct or request employees to take annual leave will be subject to the terms of an employee’s contract of employment, award or enterprise agreement.

 

Any direction or request that was issued by an employer prior to 28 September 2020 will remain on foot until 28 March 2021, provided the employer continues to qualifies for JobKeeper 2.0 during that period.  An employer may withdraw a direction previously given at any time.

 

An employer who qualifies for JobKeeper 2.0 on 28 September 2020 can also issue new directions or requests at any time.

 

Employers who do not qualify for JobKeeper 2.0 on 28 September 2020

An employer who receives at least one JobKeeper payment prior to 28 September 2020 but does not qualify for JobKeeper 2.0 after 28 September 2020 (known as a “legacy employer”) can still access the flexibility measures, subject to a number of conditions which are detailed below, for so long as the business satisfies a new 10% decline in turnover test (see below).

 

Direction to reduce employee’ hours of work

A legacy employer will be able to give a direction to reduce an employee’s hours of work, subject to the following new restrictions:

  • an employee’s working hours cannot be reduced by more than 40% of the employee’s ordinary hours of work as of 1 March 2020;
  • an employee cannot be directed to work less than 2 hours on any day.

 

Request to change days of work

Legacy employers will also have a right to request that an employee agree to work on different days or at different times to those usually worked, provided that the request does not result in the employee working less than 2 hours on any day.

 

Notice and consultation requirements

Instead of the current 3 days’ notice, a legacy employer will need to provide 7 days’ notice to employees prior to issuing a direction.

 

There are also stricter consultation requirements for legacy employers.

 

Protections for employees

All directions issued will still need to satisfy the requirements that the direction not be unreasonable in all the circumstances and is necessary to continue the employment of one or more employees of the business.

 

Significant penalties ($66,600 for companies and $13,320 for individuals) will continue to apply where a direction is given and is not authorised under the legislation and the employer knew this was the case.

 

New 10% decline in turnover test

In order to qualify as a legacy employer, businesses will need to obtain a certificate from an eligible financial service provider (being a registered tax agent, BAS agent or qualified accountant) which certifies that the business has experienced at least a 10% decline in its actual GST turnover for the relevant quarter (compared to a corresponding quarter in 2019).

 

Small business employers with fewer than 15 employees (including casuals employed on a regular and systematic basis) do not require a certificate from a financial service provider.  Instead, someone with knowledge of the business’ financial affairs can sign a statutory declaration certifying the 10% decline in actual GST turnover test has been met.

 

Businesses wishing to qualify as a legacy employer (and thus be entitled to issue one or more directions or requests to employees) from 28 September 2020 will need to obtain a certificate/statutory declaration on or prior to 28 September 2020 certifying that the 10% decline in turnover test has been satisfied in respect of the June 2020 quarter.  The business will remain a legacy employer until 28 October 2020. 

 

Businesses wishing to qualify as a legacy employer after 28 October 2020 will need to obtain an updated certificate/statutory declaration on or before 28 October 2020 certifying that the 10% decline in turnover test has been satisfied in respect of the September 2020 quarter.  The business will remain a legacy employer until 27 February 2021. 

 

Businesses wishing to qualify as a legacy employer after 28 February 2021 will need to again obtain an updated certificate/statutory declaration on or before 28 February 2021 certifying that the 10% decline in turnover test has been met in respect of the December 2020 quarter.  The business will remain a legacy employer until 28 March 2021.

 

Any direction or request that was issued by a legacy employer prior to 28 September 2020 will cease to be authorised under the FWA on that date.  Legacy employers will need to issue new directions or requests after 28 September 2020 which comply with the conditions referred to above. 

 

Key takeaways for employers

Employers who currently qualify for the JobKeeper scheme should take the opportunity now to assess whether they are likely to qualify for JobKeeper 2.0 from 28 September 2020 (for information about the new eligibility requirements for JobKeeper 2.0, see our article here) and if not, whether they are likely to satisfy the 10% decline in turnover test and hence will be a “legacy employer”.

 

If the business is likely to qualify as a legacy employer, careful consideration needs to be given to the stricter requirements that apply to directions that may be issued to employees.

 

Businesses that do not qualify for JobKeeper 2.0 or as a legacy employer need to carefully consider their future workforce needs because employee working arrangements may automatically revert to what they were before any JobKeeper directions were issued.

 

 

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.