Imagine… It’s January 2020…
On a night not clouded by bushfire smoke, you and I are enjoying a post-work beverage at the local. I tell you the following.
“Come late March, this pub will be closed for who-knows-how-long. Even if it was open, we wouldn’t be allowed to sit here, because we wouldn’t be 1.5 metres apart. In fact, because we don’t live together, we won’t be seeing each other at all… Along with 600,000 other Australians, you’re about to lose your job. I’m lucky enough to be able to work from home, but I’ll be looking after the kids at the same time, because the schools are closed. By June, we’ll be in a recession for the first time since 1991, and unemployment will still be on the up … Why has all this happened, you ask? Because the world is in the grip of a pandemic, caused by a virus you’ve never heard of.”
While you might have been convinced by the specificity of my facts, it’s more likely you would have called me mad.
There is no denying we were all caught off-guard by the speed and force with which COVID-19 struck every aspect of Australian life. As some parts of the country slowly begin to emerge from COVID-19 restrictions (albeit uncertainly), our attention inevitably turns to the question: “what can we learn for next time?”
Many sentimental answers are sure to be proffered by feel-good television specials over the coming months. While we won’t claim to be experts in “feel-good”, here in the employment team at Baker McKenzie, what we have become well-versed in is the range of practical challenges that COVID-19 has posed to our clients as they have attempted to manage their workforce through this time of change.
With that in mind, we have set out below our tips to help ensure your organisation is best prepared for whatever the next COVID-19 may be.
Expect the unexpected
“Expect the unexpected”. A phrase as trite as it is true. Most employers were caught flatfooted by COVID-19, and have ended up playing catch up. The pandemic has emphasised the need for employers to position themselves to be flexible and adaptable in response to major world events.
Standing down employees
The Fair Work Act 2009 (Cth) (Act) contains provisions that allow employees to be stood down in certain circumstances. Unfortunately, in the early days of the pandemic, many employers struggled with the restrictive nature of those provisions. In particular, many found that they could not satisfy the requirement that there be a “stoppage of work for which the employer cannot reasonably be held responsible” (noting that it is difficult to say this requirement is met where an employer decides to shut to shop in circumstances of economic downturn). Prior to the imposition of government-ordered shut downs, employers in many sectors (including retail and hospitality) were unable to rely on these provisions, notwithstanding an extreme downturn in demand. Even following the closure of certain business to the general public, businesses that were able to continue operating in some capacity faced difficulty with the provisions.
However, the Act also provides that, where an enterprise agreement or contract of employment provides alternative stand down provisions, an employer can rely on those provisions to the exclusion of the provisions in the Act. In light of this, employers should strongly consider including in contracts of employment clauses permitting stand down in response to unforeseen circumstances, including pandemics and financial crises. Careful consideration will need to be given to the circumstances specified to minimise uncertainty, and help obtain employee agreement. For example, triggers may include pandemic declarations, or state of emergency declarations by relevant authorities.
Employment contracts can also provide employers with rights to redeploy employees into more productive positions in circumstances where they cannot be employed usefully in their usual position. Employers should consider including clauses in contracts of employment that allow an employee’s position or duties to be changed, provided the change is safe, and within the employee’s skills, capabilities, and experience.
Requirements to take leave
When employees can be required to take leave (such as annual leave or long service leave) will always be subject to legislative requirements. In addition, further restrictions may be imposed by an applicable industrial instrument. Where this is the case, employers may need to rely on “change from above” before getting too creative. Fortunately, during COVID-19, a number of measures have been introduced to increase leave flexibility (with amendments to long service leave legislation and modern awards, and the inclusion of leave-related provisions as part of the JobKeeper scheme).
However, it has also become clear to us that employers are often not making the most of existing flexibility in relation to some employees. For example, the Act provides that an employer may require an award-free employee to take annual leave where the requirement is “reasonable”. The Act indicates that a requirement to take annual leave may be reasonable if the employee has an excessive annual leave accrual, or the employer’s enterprise is being shut down for a period (for example, between Christmas and New Year). These examples are not exhaustive, and employers may wish to set out in contracts of employment other circumstances in which it is agreed that a requirement to take annual leave will be considered “reasonable” (for example, having regard to external market influences or events). While it will ultimately be up to a court to decide whether a particular requirement is reasonable, the contract will provide good evidence of what was contemplated by the parties.
If your organisation didn’t have an emergency plan before COVID-19, it is evident that it should have one to prepare for the future. An organisation’s emergency plan should deal with all aspects of its emergency response, from managing a speedy transition to work from home arrangements, to managing its contingent workforce needs in times of rapid change.
You don’t gotta go to work, work, work, work
When the pandemic escalated rapidly in mid-March, many organisations were forced to implement “Work from Home” arrangements for some or all of their staff. In both New South Wales and Victoria, public health orders remain in place that require (or require employers to allow) employees to work from home where this is feasible. The quick transition to work from home arrangements on a massive scale posed a number of challenges that Fifth Harmony’s namesake smash hit hadn’t prepared us for.
Work health and safety
Apart from ensuring that employees had the technology and resources necessary to work from home (see “Emergency plans” above!), the biggest concern for many of our clients was work health and safety. Work health and safety obligations continue to operate while employees are working from home, and employers must be careful to implement strategies to help discharge these obligations in the absence of physical control over the employee’s workspace.
As a first step, employers should have detailed working from home policies and checklists that can be used by employees to assess the safety of their (often makeshift) workspaces (think: ergonomics, trip and fire hazards, noise levels). These should emphasise that work health and safety is not just the responsibility of the employer – employees also have a duty to take reasonable care for their own health and safety.
Where it becomes apparent that home workspaces are not satisfactory, employers must consider what steps it is reasonably practicable to take to reduce risk. Sometimes, these steps may include purchasing (or subsidising the cost of) ergonomic equipment, such as chairs, keyboards or monitors. While employment contracts may include provisions requiring employees to foot the bill, it should be remembered that an employer’s primary duty of care cannot be contracted out of.
It is also interesting to note that there has been some talk of post-COVID amendments to modern awards that would require employers to provide employees with working from home allowances in some circumstances. Watch this space.
While most employees accepted the need to work from home in the circumstances, we did observe that many of our clients’ employment contracts did not include express provisions to allow employees to work from different locations, including their home. Including such provisions in employment contracts going forward may help protect your organisation from disputes.
While not necessarily a legal problem, COVID-19 has made clear the importance of staying connected with employees working remotely. Without staying connected, maintaining workplace culture, managing performance, and ensuring employee wellbeing become close to impossible.
Staying connected doesn’t have to be complicated (particularly now that we all, surely, know how to use Zoom). Frequent check-ins with employees (where the focus is not always on work product, but on learning and development and team building as well) are key. We have also found that our clients who have adopted open, honest and consultative approaches to workplace change have had the most success managing their workforce during this time.
You can’t ask that!
Where our clients are beginning to welcome employees back to the workplace (or where working from home has never been an option), a key concern has been ensuring that they have sufficient information about the health of their employees to appropriately manage risk (for example, information about COVID-19-related symptoms and travel history).
Where possible, this type of information should always be collected by agreement, and in the current circumstances, we have found that most employees have been willing to provide it freely. Where consent is not provided, care needs to be taken. The type of directions to provide information that can be given, and the range of possible disciplinary action that may be taken where a direction is refused, will depend on a number of factors, including the specific information sought.
In one recent case, an employer’s decision to terminate the employment of an employee who repeatedly refused to complete a survey about his recent travel history was upheld by the Fair Work Commission. The Commission held that the request was not for “sensitive” information, and that the purpose of the request was to protect the workplace from COVID-19-related risks, rather than collect health information about the employee per se.1 However, this needs to be considered in light of a previous Commission decision which held that an employer has no right to direct an employee to provide “sensitive” information (such as health information) without consent.2 While this previous decision has been the subject of some criticism, it demonstrates the need for employers to ensure that privacy-related issues are taken into account in determining any disciplinary action that might be appropriate in light of a refusal to provide certain information.
Feeling the pinch
The sheer financial impact of the pandemic on many of our client’s businesses caused many to consider pay cuts to alleviate pressure on the bottom line.
Generally speaking, an employee’s consent is required to reduce their pay, with unilateral reductions likely to give rise to a breach of contract. Going forward, employers may wish to consider building a right to reduce pay in emergency circumstances into employment contracts from the get go. Of course, this type of provision will be unpalatable to employees, and employers who are seen to overstep the mark, or adopt atypical market practices, may find themselves in weakened bargaining positions. These types of provisions may also be constrained by legislation or award requirements.
A less drastic measure to increase flexibility around remuneration may be to ensure that bonus provisions are discretionary, so that businesses do not find themselves committed to the payment of bonuses despite an ongoing crisis.
Where our clients did determine it necessary to implement pay reductions, we found those who adopted a consultative approach and thoroughly explained their reasons had the most success. While a pay reduction will never be looked upon favourably by an employee, the only thing perhaps less desirable is no job at all.
Act global, think local
Our international clients have battled to coordinate COVID-19 responses across jurisdictions with different laws and processes, particularly in relation to stand downs and redundancies. In some instances, we have seen this lead to clashes of expectations regarding how and when these measures can be achieved. For example, consultation requirements for redundancies in Australian law often come as a shock to our US based clients, where employment can be terminated at will.
While we may not be able to visit each other just yet, in the spirit of connectivity, we would encourage our international clients to touch base with counterparts in other jurisdictions often. By doing so, we can all increase our knowledge, and be better positioned to understand each other in any difficult times that may lie ahead.
1 Kieran Knight v One Key Resources (Mining) Pty Ltd t/a One Key Resources  FWC 3324.
2 Jeremy Lee v Superior Wood Pty Ltd  FWCFB 2946.