COVID-19

Snap Lockdowns and What it Means for Employers and Employees

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At 11 am on 7 July 2021, NSW Premier Gladys Berejiklian announced that the lockdown for Greater Sydney and surrounding factions will extend at least until Friday, 16 July 2021. This represents a three-week lockdown whereby affected residents must stay at home causing many businesses into a temporary cessation of operation. Not only do such conditions create hardships for employers but also for employees, many of whom are not required for work and, in some cases, are going without pay. In this client alert, we examine what options are available to employers to protect themselves and their employees during these snap lockdowns.

What are the Current Restrictions in Greater Sydney and How does it affect Businesses?

Generally speaking, when State governments issue a public health direction for residents to ‘remain at home’, the effect has been that members of a household cannot leave their homes except for specific reasons. For example, under the Public Health (COVID-19 Temporary Movement and Gathering Restrictions) Order 2021, dated 26 June 2021, made under the Public Health Act 2010 (NSW) (“Order”), residents of Greater Sydney cannot leave home unless:

  1. obtaining food or other goods and services in Greater Sydney; or
  2. for the purposes of work or education if it is not possible to do it at home; or
  3. exercising in Greater Sydney; or
  4. medical or caring reasons, including obtaining a COVID-19 vaccination.

There has been some confusion as to direction ‘a.’ above as it has been widely reported in the media that residents of Greater Sydney can leave home to obtain ‘essential items’ or for food and groceries only. However, the Order does not define what is an ‘essential item’ so, in effect, any business that provides goods or services, whether public facing or not, has not been mandated under the Order to cease trading or to perform its normal function.

Nevertheless, for certain industries, such as hospitality and retail, the Order has had the effect of reducing traffic to such an extent that, for many employers, to remain open while continuing to pay its permanent employees, is commercially imprudent. This has potential implications for employers as we discuss below.

What Protections are in Place for Employers who Temporarily Cease Operations during Lockdown?

When the country was first faced with COVID-19 and the reality of nationwide lockdowns, the Federal Government introduced the JobKeeper programme, providing employers with the flexibility to direct their permanent employees to either work reduced hours and/or in different roles, or not to work at all, and still receive defined minimum fortnightly remuneration. The premise behind the JobKeeper programme was to protect both employers and employees from financial hardship during temporary business closures or a reduction in operations. The JobKeeper programme concluded on 28 March 2021 and has not been reactivated even in light of current lockdowns in Greater Sydney and elsewhere across the country.

Furthermore, when JobKeeper was first introduced, the Fair Work Commission also made temporary amendments to several modern awards which allowed for a combination of flexibilities where, depending on the award, employees were entitled to:

  1. take annual leave where available at short notice;
  2. take annual leave for a full day, at the rate of half pay, and at the expense of a half day’s annual leave;
  3. work reduced hours where the employee could not usefully be employed for the employee’s normal days or hours due to the COVID-19 pandemic or where government initiatives were in place to slow the transmission of COVID-19; or
  4. take two weeks’ unpaid pandemic leave.

With some exceptions (for example, the entitlement to take two weeks’ unpaid pandemic leave under the Restaurant Industry Award 2020 is operational until 31 December 2021), these award flexibilities are no longer in place.

So, where an employer cannot usefully deploy its employees due to temporary closures as a result of the lockdown, what legal apparatus is in place to stand employees down?

Section 524 of the Fair Work Act 2009 (Cth) (“the Act”) allows for an employer to stand down its employees where, amongst other reasons, there has been “a stoppage of work for any cause for which the employer cannot reasonably be held responsible”. This is where the lines are somewhat blurred. In the event a government direction forbids an employer from conducting a business or undertaking for public health reasons, it is uncontroversial that the employer can rely on section 524 of the Act to stand down its employees, and without pay if it so chooses. However, if an employer simply faces the reality of a reduction in trade volumes or where it is merely uneconomical to continue to pay its staff during the lockdown, it might not be considered a “stoppage” within the meaning of section 524 of the Act.

Whilst some mandates are in place (such as the wearing of masks within an indoor workplace) the NSW Government, by not defining ‘essential items’ or ‘essential services’ under the Order has, in effect, not expressly forbidden any businesses from operating. Hence, in the event of a claim by an employee, employers who opt to rely on section 524 of the Act in standing down employees without pay would likely need to demonstrate that the Order has obliged them to temporarily cease operations rather than simply made it uneconomic or otherwise difficult to continue operations during the temporary lockdown.

What can Employers do to Mitigate this Risk?

The Federal and State governments agreed that the Federal Government would consider options to support employees during COVID-19 lockdowns. However, State Governments agreed to consider and implement assistance to businesses throughout their own states.

Accordingly, on 29 June 2021, the Berejiklian Government announced new grant packages and changes to the Dine and Discover programs to assist small business and people across NSW impacted by the current COVID-19 restrictions.

In this regard, the package includes grants of between $5,000 and $10,000 for small businesses, a tourism COVID-19 support package, payroll tax deferrals for all employers, an extension of the Dine and Discover program to 31 August 2021 and the ability for people to use the Dine & Discover vouchers for takeaway delivered directly to their home by the venue itself.

In particular, the business grant amounts will be available for businesses depending on the decline in turnover experienced during the restrictions, being $10,000 for a 70% decline in business, $7,000 for a 50% decline in business and $5,000 for a 30% decline in business. The Premier stated the small business support grants were aimed to help businesses by alleviating cashflow constraints while trading is restricted. The grants can be used for business expenses such as rent, utilities and wages.

Notably, businesses will be able to apply for the grants through Service NSW from late July and will need to show a decline in turnover over across a minimum two-week period after the commencement of the major restrictions which came into place on 26 June 2021. Full eligibility criteria will be available on the Service NSW website.

In addition, Service NSW currently has a number of other support assistance available on their website including export assistance grants, travel support program, taxi industry support package, electricity and gas network relief package, small business fees and charges rebate, jobs plus program and the like.

Is There Assistance for Employees during the COVID-19 Lockdown?

A Federal Government assistance programme for employees affected by the lockdown in Greater Sydney has been put in place. In the event employees have been adversely affected by a public health order and cannot attend work or have lost income after day 8 of a ‘COVID-19 restriction of movement event’, those affected employees can apply for the COVID-19 Disaster Payment through Services Australia. In this scenario, and based on other criteria such as age, residency status and assessable liquid assets, the affected employee must also not have access to paid leave entitlements through the employer, cannot be in receipt of another income support payment and can only be applied for after the seventh day of lockdown where attendance at work has not been possible. This is of particular relevance to casual employees.

Additional support has been made available through the Pandemic Leave Disaster Payment. This benefit is available to employees who:

  1. have COVID-19;
  2. have been in close contact with a person who has COVID-19;
  3. cares for a child, 16 years or under, who has COVID-19; or
  4. cares for a child, 16 years or under, who has been in close contact with a person with COVID-19.

Again, eligibility criteria applies but this benefit is of particular relevance to an employee who has been directed to self-isolate by NSW Health in instances where, through contact tracing, is determined to be a ‘close contact’ with a COVID-19 case or is diagnosed with COVID-19.

It is a matter of good policy and serves as a mitigating factor against any potential legal claims, for employers to be aware of, and direct their employees to, these support regimes, particularly where employees find themselves either stood down by their employer or directed to self-isolate by health authorities, and their income earning capacity suffers as a result.

Industries that are Particularly Affected

An employer’s ability to direct employees to receive a COVID vaccination when available may be a matter for our higher courts to determine; however, on 28 June 2021, the National Cabinet agreed that COVID-19 vaccinations are to be mandated for residential aged care workers as a condition of working in shared state, territory, and Commonwealth facilities. Furthermore, NSW workers specified in the NSW Airport and Quarantine Workers Vaccination Program can only enter the workplace or provide services if they have received at least the first dose of a COVID-19 vaccine. This provision commenced at 12pm on 28 June 2021.

Vaccination obligations applicable to certain industries will likely continue to evolve. The aged care sector, unsurprisingly, was the first industry whereby the National Cabinet declared it a mandatory requirement for employees to be vaccinated against COVID-19 and other industries such as health care, hospitality, food preparation and sanitation are likely to be scrutinised for mandatory vaccination moving forward.

As such, we remind our employer clients that it is prudent to, at least, have in place a COVID-19 vaccination policy as part of a suite of human resources policies as this pandemic situation evolves. We are ready and able to provide a bespoke COVID-19 vaccination policy to our clients as needed.

If any further information in relation to any aspect of this alert is required, please do not hesitate to contact us. Otherwise, we are available and ready to assist should you require any specialist employment law advice or legal support at this time.

This alert is not intended to constitute, and should not be treated as, legal advice.

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