COVID-19 and Employment contracts in Australia

How to deal with a reduction of business during COVID-19 pandemic? Can I impose a reduction of working time to my employees?

Businesses in Australia may be able to stand employees down during the coronavirus pandemic and government restrictions being in place. It may be necessary to do so where:

  • Government restrictions require the closure of the business;
  • a large proportion of the workforce is in self-quarantine;
  • work cannot be performed due to lack of suppliers; or
  • where permitted under temporary amendments to employment legislation.

Businesses may also consult with their workforce to implement more flexible work arrangements during the crisis, including reducing hours or increasing hours.

The Australian Federal Government has introduced a number of measures to support business and keep people employed. Two key measures introduced by the Government are the JobKeeper Subsidy and the Cash Flow Boost for Employers.

JobKeeper Subsidy

The Australian Federal Government has committed $130 billion in ongoing support to business through the JobKeeper subsidy. The payment is available to businesses that are suffering a reduction in turnover to keep Australians employed during the outbreak. The JobKeeper subsidy is a gross fortnightly payment of $1,500 for each eligible employee for a 6-month period from 30 March 2020. The full $1,500 payment is to be paid to each eligible employee, either as a partial subsidy if their wage is greater than $1,500, or as a full subsidy if their wage was previously less than $1,500. The gross payment will be taxed at normal rates, although employers are not obliged to make additional superannuation contributions.

The scheme includes sole traders as well as businesses and not-for-profits (NFP).

Boosting Cash Flow for Employers

Small and medium businesses, as well as NFP are eligible for cashflow boosts to further assist in retaining employees. Tax-free cash flow boosts of $20,000 to $100,000 will be delivered to eligible businesses and organisations with aggregated annual turnover under $50 million. In a series of two payments, each payment will be equivalent to the business’ withheld salary and wages, with a minimum of $10,000 and maximum of $50,000. The first cashflow boost is set to be available between March and July 2020; the second boost will be made to businesses who received the first and will be of an equal sum, to be paid between June to September 2020. By splitting the support into two equal payments, the intention is to provide continued cash flow support over a longer period – increasing confidence and assisting businesses to maintain their operations.

What if I had just hired someone? Can I take my employment offer back?

If a business has offered employment but that offer has not been accepted by the applicant, then the offer can be rescinded at any time before the offer is accepted.

Once the offer has been accepted then the business will need to follow the terms of the employment contract and/or award (as the case may be) if they wish to terminate the employment relationship.

Can I impose my employees to take their remaining days of paid leave?

A business that has given an employee notice of termination of employment cannot force the employee to take paid leave in lieu of their notice period. Employees will be entitled to redundancy entitlements in accordance with their contract or award, as the case may be, which will include notice, redundancy entitlements, and accrued entitlements.

How to deal with employees that cannot go to work/provide work from home, because they have to take care of their children?

Employers and employees are being encouraged to work together to agree flexible work arrangements. If an employee asks for flexible working arrangements the employer can only refuse if they have reasonable grounds for doing so.

Full-time and part-time Employees are entitled to paid (e.g. full-time employees are entitled to 10 days paid sick and carers leave per annum and as accrued) and unpaid carers leave. Employees can access their paid sick and carers leave to care for an immediate family member, which includes a child. Once an employee has exhausted their accrued paid carer’s leave entitlements the employee and employer could agree for the employee to use other accrued entitlements (e.g. annual leave or long service leave). Temporary measures have been introduced in a number of awards to enable employees to access up to two (2) weeks unpaid carers leave.

Australian employment law would protect an employee whose employment is terminated because they are unable to attend work due to the need to care for children during the covid-19 pandemic.

What should I do if there is still some business to do? How can I anticipate the end of the lock-down?

Businesses are required to have employees work from home where possible. If working from home is not possible, then businesses must ensure that their workplaces and employees comply with social distancing and hygiene measures required by the government.

The Australian Government will give notice when certain restrictions have been lifted or eased. For example non-essential retail stores were permitted to resume trade from 2 May 2020.

Do I have the right to terminate contracts in this period?

A business can terminate an employee’s employment during the pandemic so long as they follow the proper contractual and legislative process for doing so, including but not limited to giving proper notice, payment of redundancy entitlements (if applicable), and payment of other accrued entitlements.

Protections against unfair dismissal and discrimination continue to apply during the covid-19 pandemic.