“Non-Essential Services” – Termination, stand-downs and next steps for employers

Following the announcements of Scott Morrison and the various State and Territory leaders on 22 March 2020, a host of closures and restrictions on “non-essential services” including in cafes, restaurants, gyms, pubs, clubs and places of worship has been announced.  These businesses, in addition to the tourism industry, have and are likely to see a significant deterioration in business, affecting their ability to employ staff.

All too often, the above mentioned businesses are small businesses which are at risk of becoming financially strained due to COVID-19’s impact.  As there is no one size fits all response, each business must seek independent legal advice before implementing any changes which may affect employees’ rights.

1. Do I terminate my staff employees’ immediately as a result of these announcements?

The Fair Work Commission suggests employers and employees work together to reach a resolution which is suitable to each individual workplace and staff.

Termination of an employee is serious, should not be done without seeking independent advice and should not be an employer’s default position because you should immediately ascertain if any of the below alternatives apply.

2. Alternatives to termination

Requirements regarding consultation on major workplace change is required by most modern Awards and any applicable enterprise agreement.

LSW recommends employers review whether the following may be implemented in respect of their workplace following the announcements:

• consult with staff to see if alternative arrangements can be made (e.g. a reduction in hours or days of work);
• identify any other useful tasks which may be undertaken by the employee or redeploy the worker in another part of the business; or
• allow staff to take paid or unpaid leave if requested or allowing employees alternative leave arrangements such as extended annual leave at half pay or early long service leave (if permitted under any applicable modern Award, enterprise agreement or employment contract).

The options listed at sub-paragraphs (a) and (c) above are subject to an employer consulting and coming to an agreement with each relevant staff member on a case-by-case basis.

3. My employee cannot “usefully be employed” as part of my business due to the Government’s announcement

In a recent update on 20 March 2020, the Fair Work Commission provide clarification on when an employer may exercise the stand down provisions under the Fair Work Act.

A stand down may be implemented if:

• there is a stoppage of work;
• the employees to be stood down cannot be usefully employed (which is not limited to the work an employee usually performs); and
• the cause of the stoppage must also be one that the employer cannot be reasonably held responsible for.

Generally, a stand down cannot be implemented because of a deterioration of business conditions or because an employee has coronavirus.

In its update, the Fair Work Commission set out that the following may include circumstances where a stand down period may be exercised:

• if there is an enforceable Government order or direction requiring the business to close (which means there is no work at all for the employees to do, even from another location);
• if a proportion of the workforce was required to self-quarantine with the result that no useful work was able to be performed in the business by the remaining employees/workforce; or
• if there was a stoppage of work due to lack of supply for which the employer could not be held responsible.

The above is a non-exhaustive list and whether the option of standing down employees is available is fact dependent. Each employer should seek independent legal advice before implementing a stand down period.

4. What if an employer still needs to let employees go

In response to a business turn down, a result of ongoing financial hardship or changes in the operational requirements of the business as a result of COVID-19, some employers may need to make the unfortunate decision to make an employee’s position redundant.

In addition to the provisions of the National Employment Standards regarding redundancy, if an employee’s job is made redundant, their employer must still comply with provisions of the employee’s employment contract, enterprise agreement or modern Award.  Should an employer be required to terminate an employee due to redundancy, they must ensure they meet their legal obligations including consultation, notice provisions and pay any applicable redundancy pay.

5. Conclusion

The impacts of Covid-19 will be felt in every workplace across Australia.  Each employer, including all non-essential services who have an impact on their business as a result of the recent announcements, should seek independent legal advice regarding the rights and entitlements of its employees as well as meeting the operational requirements of the business.

Long Saad Woodbridge, as experienced employment lawyers with over 25 years’ experience in the industry, provide succinct, commercial advice to assist businesses in responding to the unfolding developments of COVID-19.

Please contact Clayton Long clong@lswlawyers.com.au or Genevieve Hehir ghehir@lswlawyers.com.au should you require any assistance in this regard.