JobKeeper 2.0: preparing for the unknownJuly 24, 2020
By Ceri Hohner, Associate at FCB Workplace Law
As we hurtle towards the end of the first stage of JobKeeper, it’s time for businesses to look to the future – as uncertain as it may be – to ensure they not only survive, but thrive, in the new world that 2021 will bring.
The second stage of JobKeeper
When the Morrison Government announced the introduction of the JobKeeper scheme in late March 2020 to combat the detrimental economic effects of the COVID-19 pandemic, it had already assigned a termination date: 27 September 2020. The six-month scheme was intended to see Australian employers through to the other side of the crisis, lessening unemployment and enabling employers to prepare for the inevitable resurgence in business. But while we may have had glimmers of hope from time to time, the recent surges of second waves across Victoria and NSW have proven that September won’t be nearly enough time for many businesses to recover from the devastating impacts that the pandemic has wrought.
On 21 July 2020, the Government announced a much-needed extension to the JobKeeper scheme to March 2021, but this ‘JobKeeper 2.0’ comes with several new conditions: not only is there now a reduced ‘part-time’ rate for those employees working less than an average of 20 hours a week, and the subsidy amount will be reduced from 28 September 2020 and again on 4 January 2021, but there will also be a quarterly turnover eligibility test that businesses must meet.
The new criteria was introduced in an attempt to minimise the number of employees who, under the first stage of JobKeeper, have been receiving more money than they previously earned before the pandemic. A quarterly eligibility test provides a good balance between minimising the administrative burden on businesses to report their turnover while ensuring that only businesses in genuine need are able to access the scheme. The Government is hopeful that by the time we reach the end of March 2021, few businesses will still require the support of the JobKeeper scheme.
Yet for some employers, particularly in those industries hit hard by COVID-19, such as tourism and hospitality, it may still not be enough, particularly with the reduced payments. Other businesses may lose or be unable to gain access to JobKeeper because they don’t meet the requisite decline in turnover, yet still be in a significantly compromised position that is not financially viable to continue.
But this isn’t the last change we expect to see made to the JobKeeper scheme, especially if you consider the way that the scheme was built. JobKeeper was implemented through legislation – the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 – but as anyone who has read the Act will know, the legislation may be heavy on the details when it comes to JobKeeper directions and requests, but is conspicuously missing much of the substance of the JobKeeper subsidy payments themselves. This was reserved for a separate instrument, the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020, which have the same legal force but are significantly easier to change to suit the Government’s intentions…and indeed, have already gone through four iterations to date. The Rules themselves even directly contemplate sudden change, with an express statement that “an entitlement to JobKeeper payment under this Part may be cancelled, revoked, terminated, varied or made subject to conditions by or under later legislation.”
So, with this backdrop of uncertainty, what does the world of JobKeeper 2.0 look like?
Restructures and redundancies
As a workplace relations law and HR firm, we handle restructures every week, but there are seasonal and economic trends in every workplace issue. We have seen two waves of restructures and redundancies already this year: firstly, the usual annual post-Christmas hit in February/March which was exacerbated by the beginnings of the COVID-19 pandemic. With no support from the Government at that time, many employers acted quickly to reduce their workforce head counts as the severity of the virus started shutting businesses across the country.
The announcement of the JobKeeper scheme in late March prevented these redundancies from continuing en masse: although the payments weren’t due until May, the hope of financial support staved off many business decisions that would have ended in unemployment. In June and July, however, coinciding with the second wave but not necessarily caused by it, we have seen a second round of restructures implemented by businesses who are looking forward to what they will need (and can afford) once JobKeeper ceases and they are required to stand on their own feet once more.
Prior to the extension of the JobKeeper scheme, we had expected a third round of redundancies to be made by employers in October and November as a result of the scheme ending. It is likely that there will still be some restructures at this time as businesses adjust to the reduced payments or loss of access to the scheme (depending on their own financial circumstances), but by thinking ahead and planning out workforce requirements over the next two months, employers may be able to build a sustainable structure that can survive the drop off in financial support when it comes.
Don’t sit idle, waiting for it to arrive. While the duration and eligibility of the JobKeeper subsidy could change at any time in the future, there are some certainties: that it will be harder (if not impossible) to obtain after 27 September 2020 due to the quarterly turnover tests, and that at some time in the near future, it will end. That may provide enough clarity for an employer to at least start considering its options: what did your business look like before the pandemic? What does it look like now? Where do you think you’re going? Will you have the same priorities, needs and goals? Many retailers that have been forced to embrace online sales while prevented from operating their brick and mortar stores, for example, have developed renewed recognition of the power of a strong digital presence and may choose to continue to prioritise marketing projects over their traditionally-favoured focuses even when normal business resumes.
Employers have a number of resources at their disposal, from relying where required on the directions and requests able to be made under the JobKeeper legislation, to voluntary agreements with employees to change their duties or hours of work, to conducting internal restructures which will put the business in the strongest position to finish the 2020 calendar year.
Where a restructure is the most appropriate avenue, don’t shy away from it: restructure doesn’t always mean the termination of employment. It can simply be an internal shift of priorities and team structures, promotions or transfers of high-performing individuals or teams into roles which will best utilise their skills or a new focus on a different area of the business.
Yet even where terminations are inevitable to ensure the business survives, it is vital that they are considered well in advance to ensure the timing is correct. It’s not always in an employee’s best interests for an employer to leave it as late as possible before effecting a redundancy, if that delay threatens the business as a whole and poses a risk to that employee receiving any benefits at all as a result of insolvency. And redundancies, depending on the applicable industrial instrument and the employee’s length of service, can be very expensive.
With a number of time-consuming and potentially onerous obligations on employers when undertaking restructures, particularly for award and agreement-covered employees, these processes aren’t to be taken lightly and bear substantial risk of post-termination claims. They aren’t decisions which should be rushed into…or ignored until it’s too late. Keep a weather eye on your business and continually assess it, in the context of the daily health and economic reports from the Governments, to determine what actions need to be taken to ensure your business survives JobKeeper 2.0 and beyond.
Many employers were suddenly thrust into the realities of flexible working arrangements, particularly working from home and/or flexible hours, earlier in 2020, despite potentially having little experience with such situations. Some, depending on location, may even be starting to transition their workforce back into the workplace as I write this. Others may have decided or been forced to hold off a little longer until the recent infections subside. But whatever the circumstances, flexible work has become an abrupt yet pivotal part of Australian workplace relations.
We expect that many employees, at least those that thrived in a home office environment, will be considering the possibility of working from home on a permanent or regular basis, or requesting to continue the flexibility of their working hours. And that employers will find it difficult to refuse. After all, if it’s worked for the last six months, why shouldn’t it be permitted to continue?
Your obligations in this regard are the same as they’ve ever been, with certain groups of employees having express entitlements under the Fair Work Act 2009 (Cth) to request (and not be unreasonably refused) flexible working arrangements, while the remainder of your workforce has no direct entitlement (but refusals may factor into other types of claims such as discrimination or unfair dismissal). But the landscape has substantially changed during COVID-19, an increasingly digital world of online connectivity, use of apps and software to track work and performance, and employees working hours that suit them rather than the usual 9-5 weekday.
So rather than making any decisions based on what everyone else is doing (either in the business or outside), or what has worked or not worked in the past, try to approach all flexible working requests with fresh eyes. What could it achieve? What does it risk? How can we monitor its success? Is there a middle ground that can be reached between flexibility and certainty? Consider offering trial periods for new arrangements and keep open communication between both parties as to what is working and what isn’t.
Perhaps the most exciting trend to come out of our forced flexibility during the pandemic is the number of employers that are not just reluctantly agreeing to flexible working arrangements, but proactively offering them, putting forward suggestions to employees rather than the other way around. Of course, not all industries or businesses are suited to working from home arrangements, but that’s hardly the extent of workplace flexibility. There are also flexible hours, including time off in lieu (TOIL) arrangements, compressed work weeks, job sharing, purchased annual leave, and partial telecommuting (such as attending meetings digitally rather than in person, if appropriate).
In the period of the unknown that sits in the latter half of 2020 and the beginning of 2021, flexibility could be a key opportunity and resource that helps to shape your business by increasing productivity, improving employee morale, and setting your organisation up as a key contender in your industry.
Changes to the workplace relations system
No system is ever perfect, and workplace relations in Australia doesn’t deserve that title, either. The introduction of the Fair Work Act in 2009 and the Modern Awards in 2010 were generally well-received, but there are still several major failings and inconsistencies in the instruments that lead to disputes, uncertainty and underpayments. The increased focus on employment terms and conditions through the pandemic has shone unexpected public spotlights onto some of these issues, as well as highlighting the need for a strong workplace relations system to pull Australia out of the COVID-induced recession and unemployment spike. We have already seen huge changes to the Fair Work Act through the JobKeeper scheme, which were implemented at an unprecedented speed, along with variations to hundreds of Modern Awards in respect of unpaid pandemic leave and, in some cases, increased employer flexibility. While these amendments are intended to be temporary, the matters raised in the course of recent Government announcements and discussions are not, with several discussion groups scheduled to be held with representatives from employer associations and unions alike. We expect to see significant change proposed over the coming 12 months as Australia refines its commitment to restoring employment.
In addition, the decision of the Fair Work Commission in June to defer minimum wage increases for dozens of Modern Awards will undoubtedly have a knock-on effect to the following financial year, and perhaps the one after that, in turn influencing the “better off overall test” for newly made enterprise agreements. The effects of that wage decision will be felt for years, and it has set a precedent for staged implementation of increases. Case law on new and previously obscure matters such as stand downs is being established on a weekly basis, forging a new path into employer entitlements and obligations, while the Courts and Tribunals themselves are revolutionising the procedural elements of the system by embracing technology in a way never seen before, holding conferences and even hearings through purely digital communication.
On a more local level, the individual jurisdictions are starting to take matters into their own hands in respect of “wage theft”, a term encapsulating underpayments and worker exploitation that has gained popularity in the last couple of years. While the Federal Government has discussed criminalising such conduct, Victoria has already implemented legislation to do just that (although the Act has not yet taken effect), while Queensland has recently announced the same intention. With a heavier focus on employer compliance as a result of the Fair Work Ombudsman’s efforts and the high-profile exposure of large businesses such as Woolworths, Coles and Westpac, we expect that the pressure on businesses to get it right will only increase over the next 12 months, rendering the workplace relations system highly fraught with risk.
Preparing for the unknown
In light of our expectations for the world of JobKeeper 2.0, our recommendations for employers, no matter their size or industry, are as follows:
- Think ahead. In a world that changes as quickly as ours is seeming to, by the time something happens, it might be too late. Thinking ahead gives you a competitive advantage, allowing you to be prepared for whatever challenges and opportunities you may face in the coming months. Having a plan already formulated means you are ready to implement it as soon as it becomes necessary to do so.
- Change with the change. A business must constantly adapt to its environment, and while there’s plenty of unknown, we’re also receiving the benefits of daily updates from Federal and State governments about the health and economic impacts of COVID-19. Monitor your revenue and expenditure, identify trends, keep up to date with industry movement, and don’t forget to check in with your employees along the way. All of these factors can help you be flexible enough to survive whatever COVID-19 throws at you next.
- Know your obligations. If you’re wondering how to compliantly effect a redundancy when you’re delivering the termination letter, it’s too late: a claim might already be on its way. It’s vital that before any decisions are made, you seek advice so you are aware of your obligations to your employees and can act compliantly, fairly, and with the lowest risk to your business.
- Have a comprehensive HRIS in place. A good Human Resources Information System (HRIS) like HRA Cloud or enableHR is worth its weight in gold. Not only does it assist with the recruitment, management and termination of your employees, including template letters, checklists and policies available to you whenever you need them, but it records everything along the way, giving you peace of mind when it counts the most.
- Don’t do it alone. If there’s one remarkable thing that COVID-19 has given us, it’s a renewed sense of solidarity, of Australian mateship. We’ve seen fantastic things: employers and unions working in complete harmony for a common goal of keeping the business sustainable, politicians and their opposition passing legislation unopposed, professionals offering free services to businesses in need. We’re all in this together, and there’s always a shoulder or a word of advice available to you if you need one. Thousands of businesses are going through the same problems as you: you’re not alone.
With such challenges and opportunities coming our way in the era of JobKeeper 2.0, it’s going to be a difficult, but worthy road ahead for each employer to stay on track to not only survive but thrive in a (hopefully) post-COVID-19 world.
For more information about JobKeeper 2.0, contact the team at FCB Group.
Ceri Hohner is an associate and solicitor at FCB Workplace Law who has assisted clients across Australia from a range of industries and businesses.