COVID-19: Stand downs & JobKeeper directions – What are the courts and tribunals saying?

This year in Australia, the COVID-19 pandemic has prompted mass stand downs under the existing Fair Work Act 2009 (Cth) (FW Act) provisions. Additionally, temporary JobKeeper provisions have been put in place to assist qualifying employers to use JobKeeper enabling directions and agreements to manage employees during these unprecedented times.

In the months that have elapsed since the start of the pandemic, court and tribunal decisions have provided useful guidance for employers on how to apply (traditional) stand down vs. JobKeeper provisions. This article examines four such decisions.

1. What constitutes a ‘stoppage of work’ under the FW Act stand down provisions?

Under section 524 of the FW Act, employers are permitted to stand down employees without pay where they cannot be usefully employed because of (among other reasons, but relevantly) a ‘stoppage of work’ for any cause for which the employer ‘cannot reasonably be held responsible’. The issue of what constitutes a ‘stoppage of work’ was considered recently in Irvine v Perspective Recruitment, in which the Fair Work Commission determined that an employee should not have been stood down and ordered that she be permitted to return to work.

The employer, Perspective Recruitment, provides casual labour hire and recruitment services to industries, including food, retail, travel and manufacturing. It experienced a downturn in work due to COVID-19 from March 2020, but could not access the JobKeeper scheme due to not meeting the turnover test.

Ms Irvine worked as a permanent part-time employee for 20 hours per week as an administration / marketing coordinator. Ms Irvine was stood down from her role under section 524 of the FW Act since 3 April 2020, however, she agreed to work one day per week for the following three weeks. Perspective Recruitment contended that the term ‘stood down’ was used ‘incorrectly’ and that she had agreed to reduce her working hours temporarily.

The Commission relied on the authority, La Plume v Thomas Foods (Thomas Foods), in which DP Anderson indicated that the phrase ‘stoppage of work’:

should not be so broadly construed as to include a mere downturn in business activity nor be so narrowly applied as to require the entire cessation of business activity. The statutory phrase is a stoppage of work, not a stoppage of the business. For there to be a stoppage of work some defined business activity with respect to which work is performed needs to cease, but not the cessation of business activity entirely’.

In making its decision in the Perspective Recruitment case, guided by Thomas Foods, the Commission held that there was not a stoppage of work for the purposes of the FW Act as the work Ms Irvine had been employed to do had not stopped. Although it was accepted there was a downturn in work such that profits were affected, a stand down under section 524 of the FW Act was not available to Perspective Recruitment.

It was ultimately held that the stand down should cease and the employee be permitted to return to work for her usual hours of work. The decision is a salient reminder that business owners should seek advice prior to relying on the non-JobKeeper stand down provisions in the FW Act and a deterioration of business conditions will not (of itself) be sufficient for a valid stand down.

2. Can an employee take sick/carer’s leave and compassionate leave during a stand down?

When Qantas grounded its fleet and stood down thousands of employees in response to the COVID-19 pandemic, several unions instigated proceedings to challenge Qantas’ refusal to allow employees to access paid personal/carer’s leave and compassionate leave during the stand down.

In May 2020 in the decision of CEPU & Ors v Qantas Airways Limited, the Federal Court ruled that employees, including the Qantas employees the subject of the litigation, do not have a right to access paid personal/carer’s leave or compassionate leave during a stand down under section 524 of the FW Act. This is because they are entitlements to take leave from performing work they are required to perform. During a stand down, employees are not required to perform any work, so there is no work from which they can take leave. Further the Court noted that if it were otherwise, this would expose the employer to a liability to pay leave entitlements and defeat one of the two principal purposes of standing down the employee: namely, to protect against such costs.

The Qantas decision provides employers with certainty that declining requests for sick leave, carer’s leave and compassionate leave is lawful during periods of valid stand down under section 524.

3. JobKeeper enabling directions – what makes a direction unreasonable in all of the circumstances?

Qualifying employers may issue eligible employees with JobKeeper enabling directions during a fortnight that the employee is entitled to receive a JobKeeper payment. Such directions may include a full or partial stand down, or directions related to duties or location of work.

There are certain rules that apply to all JobKeeper enabling directions issued by eligible employers. One such rule is that JobKeeper enabling directions do not apply if they are ‘unreasonable in all of the circumstances’ (section 789GK of the FW Act). Some guidance in respect of what is considered ‘unreasonable’ is provided in note form under the relevant section in the FW Act and includes:

      • the impact of the direction on any caring responsibilities the employee may have; and
      • if the direction applies to reduction of hours of a particular category of employees, ensuring the direction does not have an unfair effect on some employees as compared with others.

In Transport Workers’ Union of Australia v Prosegur Australiathe Full Bench of the Fair Work Commission considered the phrase ‘unreasonable in all the circumstances’ and concluded that the phrase means (or at least encompasses) a direction that is ‘inequitable, unfair or unjustifiable’ having regard to the objects of Part 6-4C (i.e. balancing the interests of employers and employees during the pandemic) and the respective circumstances of the employer and the employee.

We recommend that clients give consideration to reasonableness prior to implementing a JobKeeper enabling direction as the particular interests of an employee may (in the words of the Full Bench) ‘render a jobkeeper direction to be non-applicable to the employee because it is unreasonable’.

This is general information only, is current as at 9 November 2020 and may not be applicable to your organisation or situation. If you require specific advice about a JobKeeper related matter, please contact our offices.