‘Pandemic leave’, reduced hours and leave at half-pay: What the recent changes to modern awards mean for employers

hospitality workers

In response to the impacts of the COVID-19 pandemic on businesses and employment across Australia, the Fair Work Commission (FWC) has already introduced (and proposes to further introduce) a range of temporary variations to modern awards to provide increased flexibility for employers and employees during this challenging time.

Here are the key changes small and medium businesses need to know about.

The Hospitality Industry (General) Award 2010

On March 24, 2020, the FWC decided to vary the Hospitality Industry (General) Award 2010 (the Hospitality Award) by inserting a new schedule. The new schedule (Schedule L) allows for flexibility in the work given to employees, the potential for reduced hours of work and increased flexibility around the taking of annual leave.

In summary, Schedule L includes the following measures:

  • Schedule L will operate from March 24, 2020, until June 30, 2020;
  • Employees can be directed by their employer to perform any duties within their skill and competency, regardless of their classification, provided the duties are safe and the employee is licensed and qualified to perform them;
  • Following consultation with affected employees (and the United Workers Union if employees are members), an employer may:
    • Direct a full-time employee to work an average of between 22.8 and 38 hours per week. The employee will be paid on a pro-rata basis
    • Direct a part-time employee to work an average of between 60% and 100% of their guaranteed hours;
  • Employees given a direction to work fewer hours will continue to accrue annual leave, personal leave and any other Hospitality Award accruals based on their ordinary hours of work prior to the commencement of Schedule L;
  • If an employee given a direction to work fewer hours takes a period of paid personal or annual leave, payment for that leave will be based on their ordinary hours of work prior to the commencement of Schedule L;
  • An employer may direct an employee to take annual leave on 24 hours’ notice (subject to considering the employee’s personal circumstances); and
  • An employer and an employee can agree to the employee taking twice as much annual leave at half the rate of pay.

The Clerks – Private Sector Award 2010

On March 28, 2020, the FWC decided to vary the Clerks – Private Sector Award 2010 (the Clerks Award) by inserting a new schedule (Schedule I).

In summary, Schedule I provides for the following:

  • Schedule I will operate from March 28, 2020, until June 30, 2020;
  • Employees can be directed by their employers (without loss of pay) to perform any duties within their skill and competency, regardless of their classification, provided the duties are safe and the employee is licensed and qualified to perform them;
  • Part-time employees working from home are required to be rostered for a minimum of two hours;
  • Casual employees working from home must be paid for a minimum of two hours work;
  • The spread of hours for employees working from home is 6.00am to 11.00pm Monday to Friday, and between 7.00am and 12.30pm on Saturday;
  • An employer and their full-time and part-time employees may agree (via a vote) to a temporary reduction in ordinary hours while Schedule I is in operation. At least 75% of employees in the workplace or section must approve any such agreement to temporarily reduce hours;
  • The reduction in hours cannot be less than 75% of the employees’ ordinary/agreed hours;
  • Weekly wages will be reduced to reflect an employee’s reduced hours;
  • Where hours have been reduced, an employer cannot unreasonably refuse an employee’s request to engage in reasonable secondary employment and the employer must consider all reasonable requests for training, professional development and study;
  • Where there is a reduction in hours, all relevant leave accruals and all entitlements on termination of employment continue to be based on an employee’s ordinary hours of work prior to the commencement of Schedule I;
  • An employer and individual employee may agree that an employee will take twice as much annual leave at a proportionally reduced rate for any agreed or directed period away from work (i.e. on half-pay);
  • An employer may direct an employee to take annual leave by giving one week’s notice (subject to considering the employee’s personal circumstances). A direction to take annual leave must not result in the employee having less than two weeks of accrued annual leave remaining; and
  • An employer may require employees to take annual leave as part of a close down on one week’s notice. If employees do not have sufficient annual leave for the period of the close down, the employee will be given unpaid leave for the remainder of the closedown. Any unpaid leave will count as continuous service.

The Restaurant Industry Award 2010

On March 31, 2020, the FWC decided to vary the Restaurant Industry Award 2010 (the Restaurant Award) in essentially identical terms to the variation to the Hospitality Award (as summarised above), with the addition of a number of provisions relating to close down.

These additions are:

  • As part of a close down, an employer may require an employee to take annual leave on one week’s notice;
  • Where an employee does not have sufficient leave to cover the period of the close down, leave without pay will be given for the remainder of the close down period; and
  • Any unpaid leave will count as continuous service.

Proposed variation to 103 modern awards – unpaid pandemic leave and annual leave at half-pay

On April 1, 2020, the FWC released a statement setting out its provisional views regarding the variation of 103 modern awards to provide for unpaid “pandemic leave” and flexibility to take annual leave at half-pay.

The FWC said the COVID-19 pandemic, and the measures introduced by the government in response, were having a significant impact on businesses, employment relationships and individuals.

In particular, the FWC highlighted employers were having to stand down or lay off employees as a result of government restrictions and greater flexibility was required to maintain the employment of employees during this time. The FWC also highlighted that one of the primary measures being used to contain the spread of COVID-19, the 14-day self-isolation period, was significantly affecting employment relationships.

Unpaid pandemic leave

The FWC acknowledged that employees who have contracted COVID-19 may have an entitlement to paid personal/carer’s leave for a period of self-isolation, but a number of other employees who are required to self-isolate may not have access that entitlement because:

  • Casuals are not entitled to paid personal/carers leave;
  • The 10-day entitlement is likely to be insufficient if employees have already used some their entitlement;
  • The rate of accrual (progressively throughout a year of service) poses a limitation on access to the full 10 days all at once; and
  • The entitlement is accessible if an employee is suffering from a personal illness. However, self-isolation is not always required because an employee has contracted COVID-19. In many cases, self-isolation is a precautionary measure imposed on healthy individuals.

To deal with this “gap” between the impact of the government-imposed orders to self-isolate and the limitations on paid personal/carers leave, the FWC has proposed inserting a new schedule into 103 modern awards providing, in summary, the following:

  • Any employee may elect to take up to two weeks unpaid pandemic leave if the employee is required by the government to self-isolate or is otherwise prevented from working by measures taken by the government or medical authorities where the employee is required to work at the premises operated by the employer;
  • The employee must give notice of taking unpaid pandemic leave and the reasons for the unpaid pandemic leave as soon as practicable (which may be after the leave has started). The employer may request reasonable evidence to support the taking of unpaid pandemic leave that would satisfy a reasonable person;
  • The unpaid pandemic leave will not affect any other leave entitlements and will count as service; and
  • Unpaid pandemic leave will constitute a workplace right for the purposes of the Fair Work Act 2009 (Cth).

The entitlement to unpaid pandemic leave will be available in full (as opposed to accruing progressively). It will only be available until June 30, 2020, unless extended by a further award variation, and will be available in full to all employees covered by the relevant modern awards, notwithstanding that an employee may have other leave entitlements available to them.

The overarching purpose of the unpaid pandemic leave is to allow as many people as possible to remain in employment.

Leave at half-pay

The FWC has also proposed inserting a further new schedule into 103 modern awards dealing with annual leave at half-pay. In summary, the proposed new schedule will provide as follows:

  • An employer and an employee may agree to the employee taking twice as much leave on half-pay;
  • Any agreement must be record in writing and retained; and
  • The entitlement to take annual leave at half pay is a workplace right under the FW Act.

The FWC’s proposed award variations dealing with unpaid pandemic leave and annual leave at half-pay were open to public  submissions until April 6, 2020. Unless submissions against the variations were received, the proposed changes will be confirmed and variations to the relevant 103 modern awards will commence.

Information about modern award variations and other matters related to FWC’s response to the COVID-19 pandemic can be accessed here.

This article was first published by Workplace Law.

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