One of the most significant fall outs for SME’s from this unexpected scenario will be balancing employees’ work and entitlements against a likely reduced turnover and cashflow. Below are some of the most pressing Q & A’s coming from employers trying to clarify their business risk and projections.
This employment law advice is general in nature as every individual employment relationship is covered by different Awards, agreements, contracts and legislation. You must seek personal legal advice for your specific business to ensure that you are meeting your legal obligations as an employer. Make sure you consider the Governments assistance packages in conjunction with the below information as more support is being announced everyday.
Do I have to pay my casuals if they choose to self-isolate?
Casual employees are typically engaged on irregular work patterns, have the ability to reject any offer of work and have no guarantee of future work.
When choosing to self-isolate, casuals should notify the employer of their absence where rosters may have already been agreed. Where a casual employee cancels a work engagement the employer will not be required to pay the casual for that engagement.
Special provisions may apply for casuals employed within the public sector.
Do I have to pay casuals if I close shop by choice?
If you have already engaged a casual to cover a particular work period, and you then decide to close the doors of your business, this will raise a question as to whether the casual is entitled to payment for that period.
Under the Fair Work Act (applicable to employers in the Federal system) any employee can be stood down without pay if they cannot undertake work due to stoppages of work for which the employer cannot reasonably be held responsible.
So, while the business is affected, the employer can direct casuals to be stood down, that is to not attend at work, and not be required to pay whilst the employee is so stood down.
Do I have to pay them if I close the doors by government instruction?
With Federal, State and Territory governments activating their emergency response plans to contain the spread of COVID-19, it is foreseeable that governments will institute measures to restrict travel and direct that work at home.
This scenario takes away any discretion the employer may have to stand down employees, however, if the employee cannot be usefully employed whilst directed to stay home, then the stand down regime mentioned above can be invoked.
In these situations, the employer would not be required to pay a casual employee.
PART TIME AND FULL TIME EMPLOYEES
What about Part time and full time staff ?
The employment relationship for full-time and part-time employees is quite different to casuals, as they do have a commitment to a set number of working hours and leave entitlements.
Do I have to pay my part time & full time staff if they choose to self-isolate?
Where the employee chooses to self-isolate, the employee is therefore not ready, willing and able to work. In such circumstances the employer would not be required to pay the employee.
However, we suggest that employers and their employees should attempt to manage these processes and potential absences, perhaps by allowing the use of accrued annual and long service leave.
Do I have to pay my part time & full time staff if I close the doors by choice?
The same rule apply in this situation as for casuals.
Under the Fair Work Act (applicable to employers in the Federal system) any employee can be stood down without pay if they cannot undertake work due to stoppages of work for which the employer cannot reasonably be held responsible. Similar rules will apply for employers in the State system.
Careful consideration of the ramifications will need to be done by employers if a reduction in overall employee numbers is being contemplated. Such a decision may led to unintended cost consequences, including redundancy payments.
Overall, it may be more practicable to consider standing down employees rather than exercising a right to terminate their employment.
Do I have to pay my part time & full time staff if I close the doors by government instruction?
The same rule applies here as is discussed above.
Can I require my part time & full time staff to go on Sick Leave or Annual leave?
Employees in both the Federal and State systems may discuss and reach agreement for use of accrued annual or long service leave entitlements.
There are particular circumstances where an employer can direct an employee to take accrued annual leave. It may however be too late to exercise these rights, so employers should seek advice if this is an option being considered.
In regard to accessing personal (sick) leave in the context of COVID-19, payment from an accrued personal leave entitlement may be applicable:
In the above circumstances, the employer is entitled to ask the employee for evidence of the illness or the illness of the family or household member.
If the employer considers that an employee is not fit for work, the employer may direct the employee to obtain a medical certificate to confirm the employee’s fitness. Generally, the employer will not have to pay the employee for any time not at work in these circumstances, although advice should be sought in such circumstances.
All employers should seek advice relative to the circumstances that are prevailing in the workplace, in relation to all of their employees or particular employees that may have been exposed to the COVID-19 virus.
If they don’t have enough accrued leave can I require them to stay home on unpaid leave?
Casual and permanent employees have access to unpaid carer’s and compassionate leave, with permanent employees only entitled to unpaid carer’s and compassionate leave once they have exhausted their paid personal leave.
Employers will also have an option to stand employees down, which is itself a form of unpaid leave.
If I have no cashflow and have to sack staff is that termination? or redundancy?
In the circumstances of a pandemic, events may unfold in the future where the business may no longer have the cashflow to sustain its costs. As a result, this will create difficult decisions for some businesses.
Where a business is in a position where it can no longer operate because of the COVID-19 outbreak and the interposing of government restrictions, the relationship between the employee and employer may be “frustrated”, as that term is known in law.
If this is so, then the contract comes to an end as a matter of law and not through the actions of either the employer or employee. Where this is the legal outcome, then there will be no obligation to make termination payments.
On the other hand, if the contract is not frustrated, and decisions are made to dismiss employees because of the economic situation, the concept of redundancy more likely arises.
On the above issues we do urge employers to seek appropriate advice before making any final decisions.
Redundancy gives rise to various rights and obligations, such as a redundancy pay. For employers with less than 15 employees, redundancy provisions will not apply.
In saying this, we consider that redundancy should be a measure of last resort and the employer should look to several other solutions and strategies before going down this route. Some alternatives are:
Overall, businesses around the country will be affected by COVID-19. Powers of the State and Federal governments provides for the imposition of measures which can substantively affect the employment relationship.
Information today may be irrelevant tomorrow during this pandemic and there will be several implications for employers during this time. We suggest all employers need to be appraised of and vigilant about their rights and obligations to their employees and importantly, to seek advice before making structural changes to the business.
Protecting people is a priority and we consider that work should not be put above a person’s right to safety. Stay safe and practice good hygiene to contain the spread of COVID-19.
For further questions and/or advice regarding workplace law and COVID-19, please contact Bailiwick Legal at 08 9321 5451 or email us at: email@example.com.