This month (March 2021) marks a full year since the Federal Government announced the JobKeeper scheme, providing unprecedented financial support to many employers and employees across Australia. Unfortunately, this month also signals the end of the scheme, along with the Fair Work Act flexibilities extended to eligible ‘Qualifying’ employers and ‘Legacy’ employers as part of the program.
Whilst many employers who were originally eligible for JobKeeper have already exited the scheme, employers relying on the JobKeeper subsidy or the Fair Work Act flexibilities (primarily, the ‘JobKeeper–enabled stand down provisions’) are now forced to consider how their business will continue to operate in a post-JobKeeper world. We break down here important changes businesses need to consider over the next couple of weeks and what this means for employers, including referencing our earlier articles on the subject where appropriate.
JobKeeper officially comes to an end on March 28th 2021. For more information about the key dates relating to the scheme, and when final payments will be made, you can visit the ATO resources here.
Qualifying employers and Legacy employers
In this article, we touched on the impacts of the JobKeeper scheme ending for ‘Qualifying’ and ‘Legacy’ employers. For more information about what this means, please see our article from September 2020 here.
The End of JobKeeper Fair Work Act Flexibilities
Whilst the discontinuation of the JobKeeper subsidy will be a huge detriment to some employers, for others the end of the Fair Work Act flexibilities which accompanied the scheme will be the greatest challenge. The JobKeeper provisions which continued to be available to eligible employers as part of ‘JobKeeper 2.0’ included:
- giving their employees JobKeeper enabling stand–down directions (for example, a direction to work less or no hours);
- giving their employees JobKeeper enabling directions (for example, a direction to change duties or work location);
- making agreements with their employees to change their days or times of work (for example, an agreement that an employee will work on different days).
These flexibilities allowed employers to unilaterally reduce employee hours of work, duties or location of work, or to seek agreement for work to be performed at different times or on different days than normal.
The cessation of these flexibilities means that employees will have the right to automatically resume their pre-JobKeeper terms and conditions. For permanent employees, this includes returning to their full, contracted hours.
From March 29th, 2021, employers will need to seek consent from permanent employees to modify any of the above conditions, especially around reduced hours of work, or this modification may become unlawful.
Employers should review their employment contracts to see if ongoing changes to duties and/or locations of work can continue, or whether consultation and employee agreement is required.
What happens if an employer cannot afford to provide pre-JobKeeper hours to employees, or if the level of work required has reduced?
Employers will no longer be able to provide stand down directions to employees, unless the stand down directions are in line with the pre-existing requirements of sections 524 and 525 of the Fair Work Act 2009.
If the stand down provisions do not apply to your business, employers will have to consider the following options: –
1. Consulting with employees about mutually agreeing to reduce hours of work on a temporary or permanent basis;
2. Whether the business can continue to employ its staff when JobKeeper ends (e.g. redundancy).
Consultation about changes to contracted hours of work:
For some workplaces, especially in the case of ‘Legacy’ employers, employees may have only had their hours reduced slightly by way of JobKeeper–enabled stand down over the past couple of months as business levels returned to almost pre-COVID-19 levels. For these employers, it may be as simple as consulting with your part-time and full-time staff, being transparent about the needs of the business and seeking their mutual agreement (in writing) to temporarily continue these reduced hours in order to preserve the business and their overall employment, until the business recovers fully.
If employees are kept informed, and the impact to their employment is minimal, then seeking mutual agreement will hopefully not be a difficult task. Casual employees do not have the same right to ongoing work and will not require the same level of consultation, although for casuals who have been receiving the JobKeeper subsidy, it will at least be courteous to remind them that the Scheme is coming to an end and how this may impact their hours of work.
Having leave accrue at employees’ original contracted hours (in the same way they did under JobKeeper), setting up interim reviews of reduced hour arrangements and having open dialogue about how the business is performing and when employees can expect to return to their originally contracted hours, are some strategies businesses should consider when consulting with their staff. Employers could also encourage employees to utilise available leave balances (e.g. annual leave and long service leave) when consulting about reducing hours, to mitigate job losses and to supplement employee income where possible.
However, for qualifying employers or employers who have had employees on severely reduced hours (or nil hours) under a JobKeeper–enabled stand down direction, gaining agreement from employees to reduce contracted hours could be more difficult or not tenable. Without the JobKeeper subsidy, employees will have little incentive to agree to significant reductions in hours, especially if there is no clear end date in sight for when business conditions and their positions will return to normal.
Employees have no obligation to reduce their contracted hours, and without the power to unilaterally reduce these hours, employers may have to start making difficult decisions about overall staffing levels if employees do not agree to the changes and the business can no longer maintain all positions.
If, once the JobKeeper subsidy ends, employers can no longer afford to maintain their current staffing levels and they cannot reach a suitable agreement with staff to reduce their hours, the business may need to consider if this is a genuine redundancy situation and begin the process of consultation accordingly.
ER Strategies recently published an article about managing post-JobKeeper redundancies, which can be found here. Employers should always seek expert advice before proceeding with redundancies. Clients of ER Strategies should call us on 1300 55 66 37 to discuss their specific situation.
At the time of publishing this article, the Federal Government has not announced any additional support for employers in industries which are still impacted by COVID-19. Impacted employers should start considering whether redundancies will be unavoidable, because legislated notice of termination provisions will continue to apply. JobKeeper subsidies cannot be used to make payments in lieu of notice but can be used to offset payment to employees who are serving out their notice period, if the notice period starts prior to 28 March 2021. For more information about how JobKeeper payments can be used at termination, please visit the ATO website, or clients can call ER Strategies for advice.
Award flexibilities also ending
In addition to the JobKeeper Scheme ending this month, the majority of Modern Awards that were varied with additional COVID-19 provisions will also see these flexibilities conclude at the end of the month.
For context, 99 modern awards were modified over the previous 12 months to include ‘Schedule X’ or additional industry-based flexibilities, to assist businesses during this time. On the 29th of March (one day after the end of JobKeeper), the ‘Schedule X’ provisions will cease to apply in all applicable awards, with the exception of certain industry– and occupation-based awards in health care or high-risk settings (e.g. Nurses Award and Aged Care Award). A full list of impacted awards can be found here.
Employers impacted by the end of JobKeeper are encouraged to seek expert advice to ensure the business is prepared for the March 28th end date. Clients of ER Strategies can contact us on 1300 55 66 37 to discuss their specific situation.
For those who do not currently have access to ER Strategies services, you are encouraged to contact us on 1300 55 66 37 to see how we can help you through this transitional period.