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CORONAVIRUS (COVID-19) - WHAT IF OUR BUSINESS NEEDS TO REDUCE OR CEASE OPERATIONS?


There may be a number of options and measures businesses may need to take in the coming weeks and months to mitigate the impact of Coronavirus (COVID-19), each with its own requirements and restrictions. Businesses should therefore ensure they fully understand the various measures and options, including the relevant provisions of the Fair Work Act 2009 (Cth) (FW Act), relevant industrial instruments (Modern Awards/Enterprise Agreements), employment contracts and company policies, before implementing the same.

IR Legal Solutions has answered some of the common questions around the measures and options that may available to employers.

Can we reduce the working hours or pay of employees?

If you need to reduce operations, rosters, try to reduce costs, mitigate job losses etc, you will need to check any relevant industrial instrument (Modern Award/Enterprise Agreement) and/or employment contracts in place first as well as any relevant provisions of the FW Act that apply, to ensure compliance.

In some cases, if you need to look at reducing working hours/days or the pay of your employees, you will need to obtain their consent, as an employer cannot unilaterally change the terms of an employee’s employment without their consent, or there may be a required process under the relevant industrial instrument that must be followed.

If such measures need to be imposed as part of a change or redundancy mitigation strategy/restructure, you may need to provide notice and consult before such changes are implemented. Such measures could also trigger redundancies, so we recommend you obtain legal advice if needing to effect such measures in your business.

When can we stand down employees without pay?

If your business is affected by the COVID-19 crisis, any Government initiated directives or closures, you may be able to utilise the stand down provisions under the FW Act, an applicable Enterprise Agreement or employment contract. It is a real possibility that such arrangements may need to be utilised if the Government implements mandatory closures and restrictions that impact on the ability of a business to operate/remain open in the weeks and months ahead.

Circumstances for stand downs can include where a worker cannot be usefully employed in certain circumstances where there is a stoppage of work for which the employer cannot be held responsible. However, be aware there are strict limitations on when stand down provisions (with pay and without pay) can be used, so legal advice should be taken first to determine whether you can actually use the stand down provisions and to ensure compliance with the FW Act or other obligations.

Generally, if a stand down occurs, employers are not required to make payments to the impacted employees during the stand down period, but can of course, choose to pay their employees. Employers could also authorise/approve access to accrue paid leave entitlements during such times to avoid a stand down.

What happens if there are forced closures of schools, public transport, other businesses?

If your business is subject to closure or other directions issued by Government due to COVID-19, you may be able to utilise the stand down provisions under the FW Act, an applicable Enterprise Agreement or employment contract, but as set out above there are restrictions as to when these can be used, so you will need to check this first. Where you can come to agreed arrangements with your employees, try to do so, for example; to take accrued leave entitlements, TOIL, RDOs, leave without pay or as a last resort, you may need to utilise the stand down provisions or look at strategies such as forced redundancies.

What happens if we decide to reduce or close down our operations for a period of time?

COVID-19 may have unprecedented impacts on businesses, particularly with cancellation of events, travel bans, forced closures and more limitations and bans expected to occur over the coming days and weeks.

If this results in a downturn in your business requiring a close down for a period of time, or you just decide to do so to save costs, manage the risks to employees and your operations etc, you may need to consider mitigation strategies, including:

  • reaching agreements with employees to take periods of leave (paid and/or unpaid), TOIL, RDOs etc;

  • reaching agreements with employees to reduce their days or hours of work for an agreed period of time, as a way of mitigating redundancies or agreeing taking unpaid leave for certain periods (e.g. to reduce the working week if there is a reduced workload);

  • utilising the stand down provisions where allowable;

  • considering the appropriateness of restructuring;

  • consider redundancies, if determined necessary.

In making such changes, remember that you must ensure you comply with the requirements of any relevant legislation (FW Act), industrial instrument (Modern Award/Enterprise Agreement), relevant employment contracts and company policies. You should ensure you are compliant with these requirements at all times.

If you are needing to affect any forced changes or redundancies, remember that there may be requirements to notify and consult with employees, relevant unions, Centrelink and document such changes in writing.

What happens if we have to make our employees redundant?

If you are in a position where you have to employees redundant and there are no other ways to mitigate this, remember there are likely to be requirements to:

  • notify and consult with employees, relevant unions, Centrelink, consider redeployment;

  • provide notice of termination (which can usually be paid in lieu); and

  • provide redundancy (severance) pay.

Who doesn’t need to be paid redundancy (severance) entitlements?

There are some exemptions under the FW Act where redundancy (severance) entitlements are not payable. However these are limited and apply only to:

  • small businesses with less than 15 employees;

  • employees with less than 12 months service;

  • specified term or task employees;

  • casual employees; and

  • some trainees and apprentices.

Remember also, that there is an avenue to apply to the Fair Work Commission to have the amount of redundancy (severance) pay reduced, if you cannot afford the full redundancy payment. This involves an application to the Fair Work Commission and satisfaction of strict criteria, so we recommend you obtain legal advice on this if needed.

Support your employees

Remember that the COVID-19 crisis will subside at some stage in the months ahead, and so whilst you will need to react appropriately over the coming weeks and months to proactively manage your operations, cashflow and of course the wellbeing and safety of your employees, it will be critical for your continued future operations that you have retention of key employees, contractors, business associates and partners. Remember how you react now could impact your business, reputation and brand in future.

Look at what other support you can provide, such as employer funded annual flu shots, access to Employee Assistance Services (counselling) to support employees during this time.

Keep communicating with your team

In this uncertain time, where the impact and directives are changing daily and there is a lot of misinformation circulating, make sure you provide regular updates to your employees and others involved in your business about the steps your business has in place to manage the risks, as well as how it will impact your operations as it happens.

Available advice and assistance

Employers must ensure that before they act in response to COVID-19 in their workplace, that they check the relevant industrial instrument (Modern Award /Enterprise Agreement), employment contracts and policies that are in place and ensure compliance.

If you need urgent advice or assistance in managing the impact of COVID-19 in your workplace, please contact IR Legal Solutions to discuss.

These steps should not be a substitute for legal advice and are for information only. Employers should obtain advice that is specific to their circumstances and business operations, and not rely on this publication as legal advice.