22 March 2020

COVID-19 - Issues from an Australian employment law perspective

This article was written by Philip WilloxAndrew Gray, Ruth Rosedale and Angela Weber

The spread of COVID-19 (and attempts to slow the spread) is posing unique challenges to employers and employees across Australia. For businesses, it is vital to stay ahead of the constantly evolving situation.

We are now moving toward an unknown, and until recently, unimaginable situation of Australian internal borders being closed and a possible full shut down of all non-essential activity across the country. The directives being imposed by various State and Territory governments will need to be carefully considered to determine how they impact each workplace.  There will be a fine balance to be struck over the coming period as workplaces are forced to adjust to external forces on an unprecedented scale at an unprecedented speed.

In this article, we update the top employment related legal implications.  The situation in Australia is developing daily and we will continue to keep clients updated with further guidance. 

Employment options to manage through the crisis

The two most common questions at this time are (1) can employees be stood down without pay because of COVID-19? and (2) what options are available to avoid redundancies (which inevitably also leads back to the first question).

There is no general right to stand down employees without pay and the legal position will depend on the precise circumstances affecting the workforce. Relevant awards, industrial agreements and employment contracts may have something to say about the circumstances in which a stand down without pay can be implemented and what steps have to be taken.

The stand down provisions in the Fair Work Act provide a default power to stand down an employee without pay where the employee cannot be usefully employed, including due to stoppage of work for any cause which the employer cannot reasonably be held responsible. It is this category which is the focus for whether COVID-19 directly or indirectly results in a stoppage of work for which an employer cannot reasonably be held responsible.

This is untested in the context of a pandemic. However, given the announcements by certain State governments today of the directed shut down of non-essential services, stand-down becomes a real possibility for employees who cannot be usefully employed at their normal workplace. 

As there will be various ‘essential service’ carve-outs to a government mandated ‘shut-down’, the question will be how such an order impacts each business and whether an employee can still be usefully employed. This requires an examination of whether there is work available that will contribute beneficially to the reasonable and efficient conduct of the business or the business is able to obtain some benefit or value from the employee’s work, even if it is not work within the employee’s ordinary scope of work or duties. This may require exploring different roles, locations, and flexible working arrangements, including working remotely. We have already seen some of these orders (eg. bans on international travel) effectively making it impossible for some employers to operate their businesses.  The exact scope of the bans being imposed by various State and Territory governments remains unknown as at the date of writing – this information will need to be carefully reviewed and employers will need to consider the precise implications for their workforce. Assuming the stand down provisions of the Fair Work Act can be invoked, there is no requirement to pay an employee during a period of stand down.  

In circumstances of a government mandated ‘shut-down, there is scope more generally for agreement to be reached between employers and employees for utilisation of annual leave or long service leave where they are available or other ‘special leave’.

Employers must also be aware that a stand down does not apply when an employee is already authorised to be absent from work. If an employee is unwell or caring for a family member or member of the employee’s household who is unwell then this is personal leave. A period of self-isolation without being unwell is likely to be unpaid (subject to any agreement to access some other form of leave).

Unfortunately, some employers have already been forced to make redundancies to immediately reduce their workforce numbers and costs as a result of COVID-19 impacts.  As was the case following the GFC, employers should also look to consider alternative means of reducing labour costs such as directed leave periods, reduced hours working arrangements or salary reductions.  Such arrangements can only be implemented with employee consent and the terms of any industrial instruments will need to be carefully navigated.

These exceptional circumstances require unique solutions.  Some large corporates are already exploring arrangements to provide continuing employment for their workforces by supplying employees to a third party on a labour hire or secondment basis. Whilst such arrangements pose their own legal issues, they may also enable employers to avoid periods of stand down or having to resort to redundancies.

Employer obligations to ensure health and safety

Where workplaces are to remain open and operational, workplace health and safety considerations for employers, or ‘persons conducting a business or undertaking’ start with the basic duties. Steps by employers should be guided by the obligation to, as far as is reasonably practical, ensure the health and safety of workers and others at the workplace. Depending on the size, complexity, resources and nature of work of the employer, this initially involved implementing reasonably practicable controls, such as:

  • keeping employees informed of government travel and health advice;
  • establishing a ‘task-force’ or group of employees to monitor the latest information, reporting information back to management and assisting in decision-making;
  • implementing the WHO guidance to ensure that surfaces and objects are wiped with disinfectant regularly, promoting frequent hand washing and providing hand sanitiser in prominent places around the workplace, and displaying posters promoting hygienic practices;
  • escalating restrictions in relation to work-related travel, internationally and now domestically;
  • repatriating employees from ‘at risk’ locations;
  • asking employees to notify of travel to ‘at risk’ locations and any contact with persons exhibiting coronavirus symptoms and implementing 14-day self-isolation requirements;
  • reminding employees that they also have a duty to take reasonable care for their own and others’ health and safety; and
  • implementing various forms of social distancing at the workplace.

In implementing some of these controls, there has also been an overlay of a public health perspective – contributing to ‘flattening the curve’, that is, slowing down the spread of the virus to allow the health care system and community at large more time to prepare and respond. As part of this, many businesses have moved or are moving proactively to remote working arrangements. Certainly, many office-based workers are now ‘WFH’ until further notice. This may soon be ‘required’ for many workers, provided they are in jobs that can be done remotely.

This leads to 2 new WHS risks that must be managed in this next phase of the response to COVID-19:

  • the basic duties outlined above remain relevant to each worker’s ‘WFH arrangements. Given the scale of the transition to remote working, it is important that employers work with employees cooperatively to ensure the remote workplace is as safe as possible in all the circumstances; and
  • mental health – the current circumstances will be stressful for most employees - anxiety about the spread of the virus; impacts on family and friends; dislocating normal routine; social distancing and isolation; concern about the impact on the economy and jobs; and trying to maintain work as normal in a situation which is certainly not normal. It is critical that employers do what can reasonably practicably be done to ensure the mental health of employees through this period.

We will continue to keep you informed of the impact on the unique challenges to employers and employees across Australia, as the COVID-19 situation evolves.

For further insights on the business implications of COVID-19 please visit our hub.

Key contacts

COVID-19: Implications for Business

The spread of Coronavirus (COVID-19) has forced us to think and act differently. Beyond the human response, now is the time to think about what the consequences may be on your business, and how best you can prepare for those.

Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    Australian companies are under increasing pressure to recognise, manage and disclose climate risks as major natural disasters are seeing public and shareholder expectations grow fast.

    24 June 2020

    Alignment on penalties hides major differences between laws states and territories are passing. Industrial manslaughter offences are outcome-based offences, triggered by an event – a workplace death.

    24 June 2020

    Amendments to the Work Health and Safety Act 2011 (NSW) introduced into the NSW parliament last year makes it an offence for a person to enter into, provide, or benefit from insurance or indemnity...

    24 June 2020

    Closing for public benefit may not get businesses out of contractual obligations. Negotiating to keep them alive may be to our long-term benefit.

    24 June 2020

    Legal services for your business

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.