COVID-19: Managing the effects on your workplace. Your top five questions answered.

6 minute read  20.03.2020 Kate Plowman, Gareth Jolly

In this time of uncertainty and rapid change, organisations need to take proactive steps to ensure that they are managing the risks to workers and the general public, as well as managing broader operational issues.  Below we summarise the top five questions that MinterEllison has been asked over the past week.

Our business has moved to working from home, but some employees cannot perform their roles from home. Are they eligible for personal leave?

No - an employee in this situation will not be eligible for personal leave as they are not unwell or required to care for an immediate family or household member (although they may subsequently be – in which case their eligibility for leave will need to be re-assessed). Allowing employees to take their personal leave in this situation will not exhaust their legal entitlement, so they could seek to claim it later if they become unwell.

Employers can consider and discuss with an employee possible ways to minimise the impacts of the situation on the employee and the business, such as using accrued annual leave or long service leave, or working reduced hours or alternative duties from another location.

While not everyone is in a position to do so, some employers are also making special paid leave available to employees in these circumstances. Before implementing any such arrangements, employers should fully explore the potential impacts on its business, particularly given the pandemic may affect operations for many months.

Is an employee who is not unwell but 'self isolating', based on government guidelines or medical advice, eligible for personal leave?

This question that all employers are grappling with raises some difficult issues. As in the previous scenario, an employee in this situation will not, strictly speaking, be eligible for personal leave as they are not unwell or required to care for an immediate family or household member. If they become unwell during the period of self-isolation, they will then be entitled to personal leave, subject to satisfying the usual requirements. That said, many businesses who are in a position to do so are allowing employees to use their personal leave to cover these absences - and are being strongly encouraged to do so by unions.

Wherever possible, employers should also explore other ways to minimise the impacts of compliance with government requirements and medical guidance on both its workers and business – subject, of course, to ensuring the safety of employees and the broader public. The most obvious way of doing that is for an employee to work from home, where this is possible.

If, other than in order to comply with a government guideline, an employer directs a permanent employee not to attend work and the employee is otherwise ready, willing and able to work, then – subject to what we say about stand down below - the employee will ordinarily be entitled to be paid as normal. This does not apply to casual employees – assuming they are true casuals.

Our business has dropped significantly and we may not be able to afford to continue to pay our employees. Can we stand them down?

There are two main sources of power to stand down an employee:

  • Section 524 of the Fair Work Act; and
  • Enterprise agreements (if one applies to the employees).

To rely on section 524, an employer must establish that:

  • The employee cannot be usefully employed - this is one of the most important requirements – but unfortunately, the case law is complex and not entirely consistent;
  • There is a stoppage of work (which might not necessarily include a reduction of work, including where there is a drop in demand for services);
  • The stoppage is for any cause for which the employer cannot be held reasonably responsible; and
  • The reason that the employee cannot be usefully employed is because of the stoppage of work.

The Fair Work Commission can arbitrate on any dispute under section 526. This probably does not permit recovery of unpaid wages – this is a matter for the Court. However if the Commission resolves a dispute on the basis that the stand down was not valid, the ordinary consequence will be that wages will be payable for the period of the stand down.

In some cases, section 524 will not apply where there is an applicable enterprise agreement or contract with a stand down clause.

Stand down clauses in enterprise agreements come in many shapes and forms. A number are quite similar to section 524, but some are more restrictive. If there is a stand down clause in an enterprise agreement there may still be room to use section 524 if the clause in the enterprise agreement does not deal with a stoppage of work in these particular circumstances – that is, caused by a pandemic such as the COVID-19 virus.

As a general rule, employers should:

  • Consult employees and unions before standing down or making final decision to do so – in fact, this will be required by most enterprise agreements;
  • Consider whether there are any alternative duties which could be performed – this is required by some enterprise agreements and also inherent in the notion of 'useful employment';
  • Give employees the option of taking paid annual leave or long service leave – where available.

If an employer stands down employees without a right to do so, then the employee, a union and/or the Fair Work Ombudsman can seek to recover the unpaid wages. Penalties can also be imposed.

We have new employees due to commence work shortly but, because of COVID-19, do not have work for them to do. Can we withdraw our offer of employment or delay their start date?

The first question to consider is whether the prospective employee has accepted an offer of employment, or not.

If they have not accepted an offer, you can probably withdraw it (although there still can be some risk).

If they have accepted the offer, then the starting point will be checking the terms of the contract. While most contracts will not permit you to unilaterally delay a commencement date, sometimes they might permit the withdrawal of the offer - although often this is linked to misconduct rather than a decline of work or global pandemic.

In many cases, if an offer which has been accepted is withdrawn, the employer will – in effect – have to pay whatever they would have had to pay to terminate the employment once the employee started. Usually, this will be the notice period, subject to any mitigation of loss.

Of course, in many cases, these situations can be dealt with practically. Many prospective employees may accept a delay to their start date – particularly if the alternative is the offer of employment being withdrawn or their employment being terminated before they start.

In these scenarios, there is some risk of a misleading or deceptive conduct claim, particularly where the employee involved is well remunerated, or has resigned from an existing role – but a claim would be hard for a prospective employee to make out.

An employee has tested positive for COVID-19 and probably contracted it while at work. Can they make a workers' compensation claim? Is this notifiable to the safety regulator?

Yes – COVID-19 is a disease to which the usual workers compensation laws apply. If an employee contracts COVID-19 while working, this will be compensable. 

While there may be an evidentiary question about how or where the employee contracted the virus, so far this has been reasonably straightforward to pinpoint.

This may become more difficult over time, as the virus becomes more widespread.

Most periods of incapacity should be relatively short.

If an employee tests positive, the employer should notify the safety regulator in the relevant jurisdiction. Details of the affected employee's name, period that they were at work while contagious and steps taken by the employer to respond to the incident (including self-isolation of the worker and close contacts, a deep clean of relevant areas) will need to be provided.

What else should we be thinking about?

While it is a time of great uncertainty, there is no doubt that the consequences of COVID-19 will be far-reaching – extending beyond our health – and long term. 

COVID-19 has, and will continue to have, serious personal, societal and economic impacts. In order to best protect your employees, your business and the general public over the coming year, there are many things that you need to consider:

  • If it is not possible for employees to work from home, can you put in place a roster arrangement – such as an A, B and possibly C shift – that facilitates appropriate social distancing while ensuring that your business can continue to operate and your employees can remain in gainful employment. A robust safety assessment will be necessary prior to implementation;
  • It will be a good time for many employees to use accrued annual leave and long service leave entitlements – you can direct employees to do so in some circumstances;
  • Some employees may prefer to work reduced hours, particularly if this will assist an organisation to avoid redundancies;
  • Should you consider imposing a salary freeze and are there any legal impediments to doing so?
  • Should you defer any bonuses and are there any legal impediments to doing so?
  • Is there any way of limiting or mitigating your losses or re-directing spare capacity?
  • Particularly if schools are closed (and even if they are not), many employees will have carer's responsibilities.

How we can assist

We have specialists across Workplace, Insurance, Property and Commercial Contracts who are assisting many clients with the issues discussed above, as well as many others.

If you would like advice or assistance or would like us to discuss any of the issues that are explored above, please contact us.