Thinking | 27 August 2020

Keeping up with JobKeeper: Fair Work Act flexibilities set to be extended, but with limitations

By Aaron Dearden, Jessica Luker and Alexandra Armstrong-Millar

Yesterday the Federal Government introduced a bill that further amends the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 and extends the JobKeeper related provisions in the Fair Work Act (Cth) (FW Act) until 28 March 2021 to align with the end of JobKeeper 2.0.

The changes allow legacy employers who previously received JobKeeper subsidies under the first iteration of the scheme to continue to issue JobKeeper-enabling directions to eligible employees. The amending provisions are designed to assist those employers who will not re-qualify for JobKeeper 2.0 from 28 September 2020 because they do not meet the requisite decline in turnover test.

Under the new amendments, legacy employers can stand employees down, direct employees to perform alternate duties, perform work at an alternate location and change days and times of work.

However, the extended amendments in the FW Act are not mirror images of the original amending provisions. From 28 September 2020, legacy employers will need to meet a new decline in turnover test before they are permitted to issue JobKeeper-enabling directions, and will be subject to other restrictions under the legislation.

The changes that will impact legacy employers under the extended FW Act amendments from 28 September 2020 are summarised below:

  • Employers must be able to demonstrate a 10% decline or more in turnover in relevant quarters in 2020 compared to last year in order to access the flexibility provisions.
  • A 10% decline in turnover certificate issued by a financial services provider or self-certified where the employer is a small business with less than 15 employees must be held that confirms the employer satisfies the 10% decline in turnover test.
  • Employers cannot issue JobKeeper-enabling stand down directions to:
    • reduce an employee’s hours of work below 60% of the employee’s ordinary hours of work as at 1 March 2020; or
    • require an employee to work less than two hours in a day.
  • Employees must be given 7 days written notice of any reduction in hours, or a lesser notice period where genuinely agreed, compared to the three day period previously required. Employees are also able to appoint a representative, such as their union, during consultation about the direction and employers must keep a written record of the consultation.
  • Where an employer fails to meet the 10% decline in turnover test and contravenes the proposed legislation by proceeding to issue a JobKeeper-enabling direction, penalties of up to $13,200 for individuals and $66,600 for body corporates may be imposed. These penalties may also apply where employees are not notified that a JobKeeper-enabling direction or agreement is continuing or will end during a quarter.

The amending legislation also appears to broaden the scope of when a JobKeeper-enabling direction will be considered unreasonable and will therefore not apply. The existing note against this provision provided that a direction may be unreasonable in light of its impact on an employee’s caring responsibilities. The bill proposes to add an additional note that directions which reduce hours may be unreasonable if they have a disparate effect on a category of employees over others who are subject to the same direction.

Legacy employers can still issue JobKeeper-enabling directions to alter duties of work, location of work and days of work in substantially the same manner as those under the original amending provisions. However, the ability to issue a JobKeeper-enabling request for employees to take annual leave up to a minimum accrual of two weeks will not be carried through; the rationale being that employers and employees who wanted to access this provision have already done so.

Businesses who meet the requirements to receive payments under JobKeeper 2.0 are still able to access the original flexibility provisions under the FW Act. However, as a matter of practicality, businesses seeking to extend any JobKeeper-enabling directions already issued will need to make sure they comply with the notice requirements.

The proposed amendments attempt to assist employers who do not qualify for JobKeeper 2.0 but are still suffering a downturn in business due to the adverse economic effects of COVID-19. Employers will need to carefully examine whether they will, in fact, be eligible to issue JobKeeper-enabling directions under the extended provisions, particularly in light of the toughened penalty regime, and consider alternate measures to reduce labour costs where the 10% decline in turnover test cannot be met.

The legislation is set to be passed and receive royal assent before the end of Parliament’s sitting fortnight on 7 September 2020.

Hall & Wilcox will continue to report on any further developments and provide confirmation once the legislation has been enacted.

In the meantime, Hall & Wilcox is well placed to assist your organisation in navigating the proposed changes and considering other cost-saving measures if your business will not meet the 10% decline in turnover test.

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