FWC finds the limits to JobKeeper stand downs
By Alex Millman and Lindsay Carroll, NRA Legal
The Fair Work Commission has, for the first time in the short life of the JobKeeper jurisdiction, tested exactly how far a JobKeeper stand down direction can go in reducing an employee’s hours.
In a decision handed down earlier this week, Deputy President Peter Anderson determined that the employer had gone too far in reducing the employee’s hours, and instead altered the direction to provide for a lesser reduction.
Live Events Australia Pty Ltd (LEA), part of the Mediatec Asia Pacific group, contracts with various networks to broadcast live events including sport and, particularly in this case, horse racing in Victoria and Western Australia.
The employee, Mr Allan Jones, was employed full-time as a broadcast engineer based in Western Australia. Although he was not bound to any particular kind of event, it transpired that 97% of his work was directly related to the broadcasting of horse races in Western Australia.
The impact of COVID
Deputy President Anderson noted, importantly, that while some aspects of LEA’s business had been significantly affected (such as the broadcasting of sporting events in Victoria), this impact was not uniform across the business, and that some parts of the business (such as horse racing in Western Australia) had carried on largely unaffected.
Nevertheless, the overall impact of COVID required LEA to take steps to protect its ongoing viability, starting in March 2020 when it asked staff to agree to a voluntary 40% reduction in salaries. Mr Jones was the only employee to not agree to this reduction.
In May 2020 LEA advised that with the implementation of JobKeeper and restrictions easing, they would be progressing more towards a “normal” working week, with it being hoped to return to normal hours by July 2020.
Whilst the return to normal hours by July has not eventuated, staff moved from a 40% reduction in salary to a 20% reduction in salary in June 2020. During this time, staff involved in the broadcasting of horse races were typically working not just their usual rostered hours, but additional overtime.
The JobKeeper stand down
On 11 June 2020, after giving notice on 5 June 2020 and discussing the matter with Mr Jones between 6 and 10 June 2020, LEA issued a direction under section 789GDC of the Fair Work Act 2009 (Cth) reducing Mr Jones’ hours from 80 per fortnight to 48 per fortnight, or by 40%.
Mr Jones challenged the JobKeeper stand down on two fronts:
- first, that it was not valid because he could be usefully employed for his normal days and hours, whereas section 789GDC requires that “the employee cannot be usefully employed for the employee’s normal days or hours”; and
- second, that it was unreasonable in all of the circumstances in contravention of section 789GK of the Fair Work Act 2009 (Cth).
Deputy President Anderson disagreed with Mr Jones on the first point, noting that although he was still working his minimum contracted hours, the concept of “the employee’s normal days or hours” was not limited to his contracted hours, but included regular overtime.
As Mr Jones’ regular overtime had been reduced from its usual levels, his “normal hours” had been reduced, even though he was still working his “contracted hours”. Therefore, the conditions for the issuing of a JobKeeper stand down had been met.
However, the Deputy President agreed with the second contention put by Mr Jones, finding that the direction was unreasonable in all of the circumstances, in particular noting that:
- LEA expected to continue to be able to roster Mr Jones for his contracted 80 hours a fortnight;
- other broadcast engineers working in the broadcast of horse racing in Western Australia were continuing to work 80 hours a fortnight; and
- the business as a whole had moved from a 40% reduction to a 20% reduction in hours.
Ultimately, the Deputy President found that a reduction of 40%, when the rest of the business had moved to 20%, was not reasonable, especially given the circumstances of the area of the business in which Mr Jones worked.
However, the Deputy President did not overturn the JobKeeper stand down entirely, instead ordering that the direction be amended to provide for a reduction of 20% in line with the rest of the business, meaning that Mr Jones’ minimum hours under the direction were 64 per fortnight rather than 48 as originally provided.
What happens if a JobKeeper stand down is found to be invalid?
A JobKeeper stand down, if valid, means that an employer does not have to provide or pay for any hours of work specified in the employee’s contract above the hours specified in the stand down direction.
If the JobKeeper stand down is found to be invalid, then the employer will be required to satisfy their obligations under the employee’s contract, including back paying the employee for any contracted hours that they didn’t work.
It is worth noting that this did not arise in Mr Jones’ case, as he had always worked more than the minimum number of hours prescribed in the stand down direction.
A lesson for employers
This is the first time that a JobKeeper stand down direction has been overturned, even in part, on the basis of unreasonableness.
It is a timely lesson for employers that there are limits to what JobKeeper stand down directions under section 789GDC of the Fair Work Act 2009 (Cth) can actually achieve, namely that they must be reasonable in all of the circumstances.
This includes being proportionate to the issues facing the business; although there may be valid reasons for differentiating between different parts of the business, these need to be objectively determinable and the nature of the direction appropriate in all of the circumstances. Getting it wrong has the potential to expose the business to back payment claims, which is the last thing anyone wants at the best of times.
If you have any questions about how to manage JobKeeper stand downs, please contact NRA Legal on 1800 572 679.