COVID-19 – The industrial relations system’s response to the pandemic. Will it prove to be enough?


The advent of COVID-19 and its impact across all aspects of our society has put enormous pressure on the award system and its capacity to provide a framework for employers and employees (Parties) to operate with greater speed and agility, as they battle the enormous challenges presented by the pandemic.

In response, a Full Bench of the Fair Work Commission (FWC) recently introduced changes to awards designed to give the Parties greater flexibility and capacity to keep business open and to maintain the connection between employee and employer. The changes to awards outlined below are designed to battle the COVID outbreak specifically, ending on 30 June 2020.  For example:

The Clerks Private Sector Award 2010

  • Casual and part-timers working from home are now to be paid a minimum of 2 hours rather than 3;
  • For employees working from home, hours of work have been broadened out to 7am – 11pm. Meaning that if employees work during this span of hours, penalty rates are not required to be paid;
  • Despite working these longer hours, employees working from home will remain classified as day workers, thereby again avoiding the requirement for employers to pay a penalty rate for the additional hours;
  • Employers and permanent employees (both full-time and part-time) may agree to temporally reduce the ordinary hours of work for a specified period. This may be for the entire workforce or a department or section. For such an agreement to be valid, the following requirements must be met:
    • the reduction in ordinary hours must not be less than 75% of the employees contracted hours that applied immediately prior to the change;
    • the agreement must be approved by not less than 75% of the employees affected by the change.
  • Employers and individual employees may agree to take up to twice as much annual leave at a proportionately reduced rate for part or all of any agreed or directed period away from work, including during any closedown period.
  • In a further acknowledgement of difficulty times, the FWC has temporarily given employers the right to mandate the taking of accrued annual leave on the proviso at least one weeks’ notice is given and that the employee is left with a minimum of two weeks leave in the ‘bank’ thereafter.
  • These conditions would apply particularly if the business is forced to close.
  • The FWC has also introduced two weeks of unpaid pandemic leave ‘if the employee is required by government or medical authorities or on the advice of a medical practitioner to self-isolate and is consequently prevented from working, or is otherwise prevented from working by measures taken by government or medical authorities in response to the COVID-19 pandemic’.

Remember these conditions remain in place only until 30 June 2020.

So, we can see from the above that the IR system has ‘spat out’ a range of changes to awards designed to ameliorate difficulties for the parties covered by awards. A first read would indicate that the ability of all industrial parties (employers and unions) and the FWC, has at least set up a much needed more flexible set of conditions to battle the pandemic. The problem of course is all of this will stop on 30 June 2020. Yet, who is to know if society will be through this pandemic by the end of the financial year.

The impact on award free employees

For those employees that are award free, outside of the conditions set in the National Employment Standards (notice, leave, hours of work, redundancy etc), outcomes generated by the FWC, are largely irrelevant. Award free employees are reliant upon the terms and conditions laid in their individual common law contract. Anecdotal evidence is now showing that many large professional service firms in the legal and accounting/consulting field in particular, are making decisions to shore up their long-term viability that involve, requesting staff to substantially reduce hours and salary, for periods of three to six months.

Further examples include:

  1. requesting employees to adopt an 80% work pattern for 3 months, with an equivalent reduction in remuneration;
  2. partners taking a 50% reduction in drawings and requesting that staff but 6 weeks of COVID-19 leave in preparation for a drop-in revenue;
  3. standing down some staff and requesting the remainder to work reduced hours;
  4. a reduction in partner drawings of 25% and an ‘across the board reduction’ in remuneration for all staff earning more than $65K.

This approach will only work if the process is one of agreement between the parties.  And let’s be candid, many will, because it may reflect the state of the business and go some way to saving the jobs of their fellows. Done unilaterally along the lines of ‘it’s happening whether you like it or not’, is a clear breach of contract, which may find the parties in court once the pandemic has passed.

Conclusion

Since the advent of COVID many have asked me if their employer can ask them to take leave, when I’d prefer to work; or ask them to reduce their hours and therefore our take home pay.  The short answer is yes.  Recent changes to awards have given the Parties far more flexibility around hours of work, reduction in remuneration and the taking of leave, providing it is done in a manner that is collaborative.  What is not open to employers is to make these types of decisions unilaterally.

For any further information, please contact our Employment Law and Workplace Relations team.

Michael Baldwin – Special Counsel – mbaldwin@kottgunn.com.au

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.