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JobKeeper Christmas conundrums: your curly questions answered

ABLA Employment lawyer answers your curly questions from shutdowns to JobKeeper.
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JobKeeper Christmas conundrums: your curly questions answered

JobKeeper Christmas conundrums: your curly questions answered

11 November 2020

By Australian Business Lawyers & Advisors

'Tis the season to be jolly, but employers are in for one big headache if they don't remunerate JobKeeper recipients properly.

Employment lawyer Caitlin Vincent answers your curly questions on shutdowns, public holidays, annual leave and what to do if you're no longer eligible for JobKeeper during the silly season.
 
Q If JobKeeper recipients are on reduced hours/days, how should they be remunerated for public holidays? For example, if our employees now only work Monday-Thursday, are they paid for the Christmas and New Year’s Day public holidays which fall on a Friday this year? Or, if their hours are reduced to four hours a day, will the public holiday be paid at four hours?

A How an employee is remunerated on a specific public holiday will depend on whether the employee would ordinarily work on the public holiday, but for the JobKeeper enabling stand down direction reducing their hours of work.

If an employee is entitled to be absent from work on a public holiday, the JobKeeper enabling direction to reduce their hours doesn’t apply. Therefore, where an employee’s ordinary contracted hours would, but for the JobKeeper enabling stand down direction, fall on a public holiday the employee is entitled to be remunerated for the public holiday at their base rate of pay for their ordinary contracted hours. If, however, the employee is required to work on the public holiday they are entitled to be remunerated in accordance with applicable instruments.

Q What if an employer hasn't formalised the reduced days of work – i.e, an employee's hours were reduced to three days a week but the actual days of work weren't specified. Can an employee nominate the public holidays as their days of work?

A No, an employee does not have discretion to nominate a public holiday as their “work day”. As noted above, the JobKeeper enabling direction to reduce their hours doesn’t apply in the event of a public holiday. Therefore, if an employee’s ordinary contracted hours of work fall on a public holiday they are entitled to payment for the public holiday in the same manner that they would have been entitled to but for the JobKeeper enabling direction. However, if the employee's ordinary contracted hours of work do not fall on a public holiday they are not entitled to any payment, provided that the employer would still satisfy the JobKeeper wage condition.

Q Do JobKeeper recipients receive the payment during a shutdown? What if some staff are required to work during the shutdown? Should they receive additional payment?

A Many employers will have an annual shutdown period over the Christmas/New Year period. This is permissible provided that the applicable modern award or enterprise agreement allows it or the direction is otherwise reasonable in respect of modern award/ enterprise agreement free employees pursuant to the NES because the entirety of the employer’s business is shut down over Christmas and New Year.

If the employer is not permitted to direct employees to take annual leave (which is only likely to occur in limited circumstances), an agreement must be reached with each employee as to whether they wish to take annual leave (paid or unpaid). In these circumstances, employees cannot be forced to take annual leave, even during a shut down, and therefore must be permitted to work or be paid for the shut down pursuant to the JobKeeper enabling directions currently in place.

If employees continue to work when a business shuts down they should be paid as normal. If any of the days are public holidays, these days are treated as public holidays. This means the employee should be given the day off without loss of pay or they should be paid public holiday rates as per the applicable modern award or enterprise agreement.

If an employee is taking paid or unpaid leave (such as annual leave) during the shut down, the JobKeeper enabling direction to reduce their hours doesn’t apply. Therefore, during any Christmas shutdown employees will be entitled to paid annual leave at their contracted hours/rate of pay including any annual leave loading, or unpaid annual leave if they do not have sufficient annual leave accrued to cover the shut down.

However, it is important to ensure that all employees still receive the minimum JobKeeper payment irrespective of whether they are on leave or not, in order to satisfy the JobKeeper wage condition. For example, if an employee takes unpaid annual leave the employer must ensure that the employee is still paid the minimum amount of JobKeeper, in order to meet the JobKeeper eligibility requirements. Further, if an employee takes paid annual leave but the annual leave payment is less than the JobKeeper payment, the employee must still be paid the minimum JobKeeper payment for the applicable period.

Failure to satisfy the wage condition/minimum payment guarantee will cause the employer to breach the applicable Fair Work Act 2009 (Cth) provisions and therefore attract associated civil and/or criminal penalties.

Q Can we insist employees use their accrued annual leave during a shutdown? Or can they refuse and opt to receive JobKeeper payments during the shutdown?

A If an employer can lawfully implement a shutdown (which will be the case with most employers) it is then entitled to direct employees to take annual leave during the shutdown.  If the employee has sufficient accrued but untaken annual leave to cover the shutdown they are required to use it. Alternatively, if employees do not have sufficient annual leave to cover the shutdown they will be required to take unpaid leave, noting that the employer will still need to make the minimum JobKeeper payment to employees on unpaid leave in order to satisfy the JobKeeper wage conditions.

Q What if we no longer qualify for JobKeeper after January 3? How can we ensure employees are correctly remunerated? What if we need to make people redundant during a shutdown?

A If an employer no longer meets the turnover test requirements for the December quarter, the employer and its employees will no longer be eligible for JobKeeper in period 2, being from 4 January 2021. This means that employees must be afforded their ordinary contracted hours from 4 January 2021 (i.e. engaged and paid in the same manner they were prior to JobKeeper).

The implementation of any redundancies arising from the employer no longer being eligible for JobKeeper from 4 January 2021 will depend on the duration of the employer’s Christmas shutdown period. We recommend implementing any redundancies at the conclusion of the shutdown period (i.e. when the business reopens, and employees return to work). It is important to wait until the employees return to work to ensure that the employer can comply with its consultation obligations under any applicable modern awards or enterprise agreements.

That said, if the shutdown extends beyond 4 January 2021 it will be necessary for the employer to communicate with the employee that JobKeeper eligibility has now ceased and the associated impact on their remuneration for the balance of the shutdown or their leave. For example, employees on unpaid leave will no longer be entitled to receive the minimum JobKeeper payment.

Further, if employees take extended annual leave throughout January 2021 it may be necessary to contact them during their leave to invite them to participate in a redundancy consultation process if it is not practicable to wait until they return to work. If this occurs, we strongly recommend that you seek legal advice from Australian Business Lawyers & Advisors before commencing any redundancies.

Caitlin Vincent is a senior associate at Australian Business Lawyers & Advisors.

Disclaimer: The information contained in this article is general guidance only and should not be relied upon in place of specific legal advice. Please contact Australian Business Lawyers & Advisors if you require legal advice.

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