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What COVID-19 Lockdowns Means for Businesses and their Employees

It’s hard enough amidst the COVID-19 crisis, working out the when to shut up shop to protect your business and staff members, but wondering whether you’re meeting your legal responsibilities can add to the stress. To help, the Australian Government have created some easy tip sheets and guidelines for businesses owners and employees.

During the COVID-19 crisis, should I stand down my staff, offer a redundancy or let them go?

While many businesses are choosing to create an online workforce, for some industries, like hospitality or health, this isn’t possible and for others the work has slowed down so much that going virtual isn’t necessarily helpful. For many employers, there will come a point where changes will need to be made to to the workforce to match the workload and the bottom line.

In order to determine what actions you can lawfully make as an employer, should your business be suffering or have to close as a result of COVID-19, the Fair Work Act is your best source of information and advice.

They explain your options include:

  • Standing employees down for the duration of COVID-19 related closures – this means they remain employed for the period of the stand down without pay.
  • Seeking employees’ agreement to take paid (or unpaid) leave for a period. This will usually require agreement from both parties without undue pressure.
  • In limited circumstances, directing employees to take paid annual leave or asking employees to change regular rosters or hours of work.
  • Terminating the employment of the employees, in which case you may have to provide redundancy pay.

Standing down employees due to COVID-19

Under the Fair Work Act, an employee can only be stood down without pay if they cannot be usefully employed due to a stoppage of work for any cause for which the employer ‘cannot reasonably be held responsible.’ If you choose to stand down staff, here’s what you will need to show:

  • There is a stoppage of work. If you have ‘pivoted’ your business to offer COVID-19 adapted goods or services and there is a different role the employee can reasonably undertake, generally speaking you would not be able to stand them down and hire someone else to do the new work.
  • The employees to be stood down cannot be usefully employed (which is not limited to the work an employee usually performs.)
  • The cause of the stoppage must also be one that the employer cannot reasonably be held responsible for.

An employee being stood down without pay because they have COVID-19 is generally unlawful, and they would possibly be able to recover any unpaid wages. Also, make sure you check out any enterprise agreements and employment contracts you have in place as they may impact what you can lawfully do.

While you don’t have to pay employees who have been stood down (though you can), the Fair Work Act notes they will accrue leave for the period of a stand down – if you later decide to terminate their employment, be aware this period of accrued leave will need to be added to their final pay. [1]

What about casual employees and independent contractors?

Generally speaking, casual employees or contractors don’t have paid sick or carer’s leave entitlements under the National Employment Standards  – in short, if they don’t work, they do not get paid (including, for example, if they are home for Coronavirus related illness or mandatory isolating.) However you will need to abide by any applicable enterprise agreement, award, employees’ employment contracts or workplace policies that supersede this – for example the fashion and textiles industries have applicable agreements that render them an employee in the eyes of workplace law. [2]

What if I need to dismiss an employee due to COVID-19?

If you need to dismiss employees due to a downturn in income, be aware you will need to provide adequate notice. While this period may be set out in an award, employment contract, enterprise agreement or other registered agreement – which all supersede any other law, the basic minimum notice periods when dismissing an employee if they don’t have any of the above are:

Period of continuous service  Minimum notice period 
 1 year or less  1 week
 More than 1 year – 3 years  2 weeks
 More than 3 years – 5 years  3 weeks
 More than 5 years  4 weeks

 

An employee is entitled to an extra week’s notice if they’re over 45 years old and have worked for the employer for at least 2 years.

If you are terminating staff because your business closes permanently due to Coronavirus, they may be entitled to redundancy pay alongside any other entitlements owed including annual leave. You should also check your employee’s applicable award, enterprise agreement, employment contract or workplace policy to ensure you meet all your obligations.[3]

Still unsure? Here’s how to find specific advice and support

Talk to your employment lawyer, HR manager or contact FairWork Australia on 13 13 94 and select the prompt for the Coronavirus hotline. You can also submit an enquiry online.

[1] https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/business-closures-during-coronavirus

[2] https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/pay-and-leave-during-coronavirus#what-about-casual-employees-and-independent-contractors

[3] https://coronavirus.fairwork.gov.au/coronavirus-and-australian-workplace-laws/ending-employment-during-coronavirus