Australia: COVID-19: Legal update on employment issues

Introduction

Employers and employees are struggling to understand their rights and responsibilities at this time. To make things more confusing, there have been some comments from government suggesting that it may pass new legislation to assist people in the crisis, for example, to introduce 2 weeks “special leave” for those who have to self-isolate but who are not actually sick.

Can I direct my employees not to attend work?

You are entitled to direct your employees to not attend the workplace and, if your employees are capable of performing their duties from home, or reasonable alternative duties, they should be directed to perform their work from home. Your employees will need to be paid as usual.

The direction may be as a precaution i.e. your employee shows no signs of illness but has been in contact with a confirmed case of COVID-19 or they are at higher risk of infection due to overseas travel. Generally, employers are also increasingly directing whole workforces to work from home, regardless of any higher risk of infection.

Any employees you direct to leave the workplace because they are actually sick (whether as a result of COVID-19 or otherwise) are entitled to paid personal leave. If they do not have a sufficient accrual, then authorised unpaid leave should be granted.

A direction to work from home, or not attend the worksite, will likely be a reasonable direction given your workplace health and safety duties (as an employer) to minimise risk in the workplace and provide a safe place of work.

What if I have employees who can't work from home?

It may not be possible for your employees to work from home. In such cases, if your employee is not sick but is told not to attend work, then alternate arrangements may need to be made. These arrangements must usually be by agreement, apart from stand down without pay, discussed further below. Alternative arrangements may include:

1. the employee taking paid leave for the duration of the absence;
2. authorising the absence as a type of special paid leave or ex-gratia personal leave;
3. if the workplace is shutdown, it may be possible for you to direct employees to take annual leave if the direction is ‘reasonable’. What is reasonable will depend on a variety of factors including the notice given and the amount of leave the employee has and is directed to take.¹

Do I have to pay my employee as normal?

Generally, yes.

If your employee is working from home, they should be paid as normal.

If your employee is unable to work from home, and no alternative arrangement has been agreed to (as described above), then they will still be entitled to be paid as long as they are “ready, willing and able” to work.

If your employee is sick or caring for someone who is, then they should be placed on paid personal leave. However you cannot force an employee who is not actually sick (but who is isolating as a precaution) to use their accrued personal leave.

An exception to paying employees is if the requirements of a stand down without pay are met.

Can I direct my employee to take leave?

Generally, annual leave and long service leave must be taken by agreement between the employer and the employee – an employer cannot force the employee to take leave.

However, some Modern Awards and enterprise agreements do set out limited circumstances where an employee can be directed to take their annual leave. There will usually be conditions attached, such as how much notice must be given to the employee and how much leave the employee can be directed to take.

Employees who are not covered by a Modern Award or enterprise agreement may be directed to take annual leave only if the direction is ‘reasonable’. What is reasonable will depend on similar considerations as described above for other employees, for example, how much annual leave they have and how much notice they are given of the direction.

You may require your employees to take annual leave if you shut down the whole or a part of your operations due to COVID-19 but, again, the requirement must be ‘reasonable’.

When can I stand down an employee without pay?

There is a very high bar for standing down employees without pay. If you propose to stand down an employee, and this action is found to be unlawful, you will have breached your employee’s contract of employment and the Fair Work Act 2009. You might face penalties for a breach.

The first step is to check if any applicable enterprise agreement has provisions for standing down employees without pay. If so, these need to be strictly complied with.

If not, section 524 of the Fair Work Act 2009 may be available to allow you to stand down employees without pay during a period in which they cannot be ‘usefully employed’ because of:

1. industrial action;
2. a breakdown of machinery or equipment if the employer cannot reasonably be held responsible for the breakdown; or
3. a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

In the circumstances of COVID-19, para 3. is the most likely scenario to arise.

Section 524 applies to all employees, including permanent staff, casuals and those on fixed-term contracts. However, for casual employees, an employer may choose not to offer shifts, instead of formally placing them on stand down.

A stand down will only become an option when the employee cannot be ‘usefully employed’, which means they cannot be assigned other meaningful tasks within their capabilities that they would normally not be required to perform, and they cannot work from home.

REMEMBER: A stand down will not apply to circumstances where there is simply a downturn in business as a result of the virus and the employer wishes to reduce employee numbers or hours to reduce labour costs. This is because the decision is firmly within your control as an employer.

Similarly, a decision to close the business because it is the safest and best action to take, to limit the risk of contagion, may not be enough to trigger section 524 because this is still a decision within your control. Circumstances where you may be able to say the stoppage of work is for a cause for which you cannot reasonably be held responsible include:

• where the health department or WorkSafe authority shuts down your business or workplace;
• where no work can be performed because products are no longer available.

The current government direction to ban gatherings of over 100 people may not yet meet the criteria for a stand down in the workplace, but this will depend on your business. Given the unprecedented nature of COVID-19, there is very little case law or precedent on whether a stand down without pay would be lawful.

We therefore recommend you seek specific legal advice before implementing any stand down of employees without pay.

Important note: These updates are applicable to Australian law only and are generic in nature. If you have any specific legal concerns relating to the impact of COVID-19 on your people or your business, please reach out to our pro bono team (ausprobono@nortonrosefulbright.com) and we will consider your pro bono legal request. If we aren’t able to help you, we will try to find someone else who can. This update is current as at 24 March 2020.