IR flexibility: Should the COVID-19 changes become permanent?

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Should I ask my employees to return to the workplace
Credit: Austin Distel

Industrial relations changes have been critical in helping small business employers keep their doors open and staff on their payroll throughout the pandemic.

The flexibilities that apply to employers on the JobKeeper wage subsidy, particularly small to medium-sized enterprises, give them the ability to change their duties, their total number of ordinary hours, days and times of work, the location of their work and the ability to agree to take annual leave.

Now that JobKeeper is being extended for another six months, Employsure, Australia’s largest workplace relations advisor, are welcoming an extension to the IR changes, so that business owners can keep people in work and aid the recovery of the Australian economy.

“It has taken a crisis like this to highlight just how inflexible and complicated Australia’s workplace relations system has become,” says Employsure Managing Director Ed Mallett.  “The JobKeeper changes have benefited employers and workers across the country by both saving and creating jobs.”

Mr Mallett also argues that the changes to the IR sector have been beneficial to SMEs and should be made permanent.

“The changes we have seen in the industrial relations sector over the past few months have given small business owners the flexibility they need to continue to operate in this challenging time,” he says. “We need to maximise investment across the economy, not reduce it. The need for IR flexibility and reform is now greater than ever.”

Related: “Fair Work Commission releases draft flexible working clauses”

What and who is eligible?

As a result of COVID-19 and the JobKeeper scheme, the Fair Work Act 2009 has been temporarily amended. Since 9 April 2020, employers have been given the power to give employees JobKeeper, which has resulted in:

  • Reducing the number of hours an employee works, including to zero
  • Changing the employee’s days of work and times (but not changing the number of hours of work)
  • Changing the employee’s duties
  • Changing the employee’s location of work
  • Agreeing to take annual leave (including at half pay)

However, on and after 28 September 2020, employers will not be able to give a JobKeeper enabling direction to request that an employee agree to take annual leave.

Employers who are not entitled to JobKeeper payments for an employee in JobKeeper 2.0, but were previously entitled to a JobKeeper payment for that employee before 28 September 2020, may continue to access the JobKeeper provisions after 28 September 2020, but they must satisfy a 10% decline in turnover test and have a certificate confirming this.

These “legacy employers” will continue to have the power to give employees JobKeeper enabling directions subject to certain conditions being met which result in:

  • Reducing the number of hours an employee works to a minimum of 60% of the hours that they worked as at 1 March 2020
  • Changing the employee’s days of work and times (but not changing the number of hours of work)
  • Changing the employee’s duties
  • Changing the employee’s location of work

Options for employers:

Certain JobKeeper enabling directions may be better suited than others depending on the circumstances of the eligible employer. Employers should determine which direction is best suited for their business before following through. They may choose to either:

  • Reduce an employee’s hours of work as long as the direction is safe, the hourly rate of pay is not reduced, and the employee cannot be usefully employed for their normal hours due to changes in the business as a result of COVID-19. Employers who continue to qualify for JobKeeper can reduce their employees’ hours to zero, where reasonable. Legacy employers can reduce their employees’ hours to a minimum of 60% of the hours that they worked as at 1 March 2020, so long as the employee works at least two hours on a day they are rostered to work
  • Change the employee’s usual days and hours of work by mutual agreement confirmed in writing. Performance of those duties on those days and times must be safe. This direction does not change the total number of ordinary hours under the employees’ contract. For instance, the employee works Monday and Tuesday 9AM-5PM. Using this direction, the days and times are changed to Thursday and Friday 7AM-3PM. The employee must consider the request and cannot unreasonably refuse. Legacy employers must ensure that the employee works at least two hours on a day they are rostered to work
  • Change an employee’s duties that are within their skill and competency, as long as the employee holds a relevant licence or qualification for that duty, the duty is safe and reasonable, the employee is paid their usual base rate or rate that applies to the duty they’re performing (whichever is higher), and if the direction is necessary to continue the employment of one or more employees
  • Change the location an employee works, as long as it is suitable and safe for their duties, the employee doesn’t have to travel an unreasonable distance, and if the direction is necessary to continue the employment of one or more employees

Employers who qualify for JobKeeper must provide three days’ written notice of intention to give a JobKeeper enabling direction. They must consult with the employee about the direction and keep a written record of it, as well as confirm the direction in writing.

Legacy employers must provide seven days’ written notice of intention to give a JobKeeper enabling direction, which must include more information about the proposed direction.

What next?

While the Federal Government is pressing for the IR changes to be extended, Mr Mallett argues that making them permanent will help lead Australia out of the recession.

“The Government is expected to use its October budget to implement its five-year blue print and has identified industrial relations reform aimed at injecting greater flexibility into the labour market being ‘first cab off the rank’,” he says. “This is our opportunity to hit the reset button on industrial relations reform that Australia so desperately needs.”


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