The JobKeeper scheme has been in place since 30 March 2020 and on 28 March 2021, this scheme is scheduled to end (JobKeeper Period).
In this article, we summarise what the end of JobKeeper means for JobKeeper qualifying employers and some key considerations for employers moving into the post-JobKeeper Period.
How does the end of JobKeeper impact my business?
On and from 29 March 2021:
- JobKeeper qualifying employers will no longer receive a wage subsidy for their JobKeeper eligible employees
- any JobKeeper enabling directions issued by an employer
(including stand down directions, variations to days and hours of
work, location and directions to perform certain duties) currently
in force will cease to have effect and the majority of the
JobKeeper amendments to the Fair Work Act 2009 (Cth) (FW
Act) will be repealed, including:
- the provisions allowing employers to pay the JobKeeper wage subsidy to employees, rather than their ordinary remuneration, in cases where employees have not been performing work that would otherwise entitle them to an amount exceeding the JobKeeper payment
- the provisions allowing qualifying employers and employers who previously qualified for the JobKeeper to issue JobKeeper enabling directions.
In other words, on and from 29 March 2021, employers must revert to pay and working arrangements in accordance with employees' applicable terms and conditions of employment and employers can no longer validly issue any JobKeeper enabling directions (including stand down directions, variations to days and hours of work, location and directions to perform certain duties). By way of example, an employee whose working hours were reduced as a result of a valid JobKeeper enabling direction will, on 29 March 2021, be entitled to return to their ordinary hours of work and pay.
Key considerations for employers
Accordingly, employers will need to consider their workforce requirements and whether their business can accommodate all returning employees.
Employers who are navigating the end of the JobKeeper scheme should consider taking the following steps:
- review business workforce requirements and financial capacity to retain employees
- assess whether a restructure will be needed and if so, what it may look like. Restructuring a business could involve mutual agreements to vary terms of employment, including in relation to remuneration, duties and responsibilities, location, basis of employment (full-time, part-time or casual) and ordinary hours of work and/or redundancies
- consider the legal basis for the current work arrangements. Employees who have been working altered arrangements based on a JobKeeper enabling direction will return to their pre-JobKeeper ordinary hours of work, while employees who have altered their working arrangements based on a variation to their contract of employment may continue to work according to their varied hours of work, subject to the terms agreed
- consider the hours or availability of current employees and issue a notice regarding the end of the JobKeeper scheme. In this notice, employers should request confirmation of an employee's availability to return to their ordinary hours of work
- meet and consult with employees regarding any restructuring proposals and also consider employees' availability to return to their pre-JobKeeper employment. Employees' availability may impact the businesses' restructuring requirements
- closer to 28 March, implement any required restructure.
The legal risks arising from the end of JobKeeper
Restructuring and redundancy risks
Redundancies are not without significant legal risk. Employers need to have regard to the legal requirements of a 'genuine redundancy'. If an employee's termination is found not to be a 'genuine redundancy', employers could be liable for an unfair dismissal claim. To find out more about the legal requirements of a 'genuine redundancy', please see our previous article here.
Consulting with, and considering the availability of employees, is one way to mitigate the risks arising from a business restructure. Employers may find that employees who have engaged in alternative employment during the JobKeeper Period may not have the capacity to return to their pre-JobKeeper employment arrangements. If this is the case, the employer and the employee may be able to reach a mutual agreement to vary the employee's employment and/or a mutual separation.
Claims arising from the JobKeeper scheme
Employees who were issued with JobKeeper enabling stand down directions during the JobKeeper Period are entitled to continue accruing leave entitlements, as if the JobKeeper direction had not been given. Employers should ensure that they have correctly accrued leave entitlements during the JobKeeper Period.
If an employer has failed to accrue leave entitlements for employees who have been subject to a JobKeeper enabling stand down direction (including a reduction in hours), employers may be exposed to the risk of underpayment claims and claims for breaches of the FW Act and/or any applicable modern award or enterprise agreement.
Employers who issued JobKeeper enabling directions are also at risk of underpayment claims. If an employer did not issue a valid JobKeeper enabling direction and paid an employee a reduced wage during the JobKeeper Period, that employer could be liable for the unpaid wage. An employee has six years to lodge an underpayment claim. For further information regarding valid JobKeeper enabling directions, please see our previous article here.
Other key considerations
Employers should ensure that they keep valid and accurate records of all relevant employee data relating to the JobKeeper Period. Records relating to the JobKeeper Period should be treated like any other employee record and maintained for at least six years.
Employers should also keep in mind that the Fair Work Commission varied 99 awards and inserted "Schedule X - Additional measures during the COVID-19 Pandemic" (Schedule X). Schedule X generally provides employees with an entitlement to two weeks of unpaid pandemic leave and the option to take annual leave at half pay. For some modern awards (including, but not limited to, Banking, Finance and Insurance Award, Legal Services Award and General Retail Industry Award), Schedule X will cease to have effect on 29 March 2020. Employers should confirm the applicable end date for Schedule X in any modern award that applies to their business. The Fair Work Ombudsman has published a list with Schedule X end dates here.
We also note that the 'stand down' provisions under section 524 of the FW Act will remain in force following the repeal of the JobKeeper enabling stand down directions on 29 March 2021. However, employers should be cautious when issuing any stand down directions under section 524 of the FW Act. The legal basis for a stand-down under section 524 of the FW Act differs from the legal basis for a JobKeeper enabling stand down direction. Importantly, a mere downturn in business as a result of the coronavirus pandemic will not be a sufficient legal basis for a valid stand down under section 524 of the FW Act.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.