COVID-19 – Implications for Employers series – Part Four – Labour

Over the coming days The Sector will be bringing you an informative series, designed to explore the implications of the COVID-19 pandemic for employers. Covering issues such as employee safety, workplace obligations, leave entitlements and managing business continuity, the series is a must-read, tailored to the early childhood education and care (ECEC) sector, based on generalised advice from law firm Corrs Chambers Westgarth.

In part four of the series, we explore the impact of COVID-19 on the labour force, and impacts on running an ECEC business at this time, including managing operating costs, consultation requirements surrounding change, and stand downs.

Various reports from the government, central banks and the OECD suggest that there are likely to be negative effects that will test the resilience of all businesses including ECEC at this time. As such, Corrs Chambers Westgarth said “It would be prudent for companies to take a fresh look at worst-case scenarios and develop contingency strategies against each.”

Operating costs

While it is difficult to plan for outcomes we cannot yet see because the extent and duration of the impacts are not yet known, having staged responses is a solid option to ensure businesses are able to weather this storm. 

When determining these stages, the priorities will be the welfare of employees, the need to retain talent and the need to protect the business in the long term. The most difficult decision for many businesses will be whether or not to implement redundancies. 

Corrs Chambers Westgarth suggest a number of alternatives and supplementary steps which can be considered first, including: 

• Hiring – an ECEC business may choose now to freeze new hires; or to also consider whether it is open to withdrawing or amend offers of employment to candidates; 
• Reducing supplementary labour – arrangements can be implemented to reduce contractors, labour hire and casual employment; 
• Costs – is it possible to amend or defer salary increases, bonus, share plans? 
• Rostering – can changes be made to rosters, hours of work, shift patterns, overtime arrangements? 
• Can employees be redeployed? 
• Implement a stand down of employees. 

Any of the above measures are likely to involve various legal processes either at common law under contracts of employment, or under enterprise agreements or awards or the Fair Work (FW) Act. The increased level of scrutiny of decisions impacting adversely on employees in such circumstances will no doubt need to be considered at length. 

Consultation requirements

The notion of ‘consulting’ about workplace change is embedded in many workplaces through applicable industrial instruments. Employers should carefully consider whether any of the above initiatives require consultation with employees and/or their representatives prior to implementation of new or changed workplace practice and procedures. 

Stand Downs

Employers have no common law right to stand down or send home employees for whom they cannot find work, whether because of a turndown in business or because of factors outside the employer’s control such as the outbreak of COVID-19. The power to stand down is derived from contract, awards, enterprise agreements and statute. 

Many enterprise agreements will have stand down clauses to address circumstances where there is a ‘stoppage of work’ for reasons beyond the control of the employer and workers cannot be usefully employed. 

For National System Employers, Part 3-5 of the FW Act offers a default power to stand down employees without pay. Under s 524(1), this arises whenever they cannot be usefully employed ‘because of industrial action (other than a lockout), a breakdown of machinery or equipment, or any ‘stoppage of work for any cause’ (possible examples include where a key supplier ceases its supply or a government health direction requires quarantining). These provisions do not apply when an enterprise agreement or contract (rare) already grants such a power. 

Again, stand downs will be closely scrutinised and likely to be challenged if not implemented strictly in accordance with the applicable legal obligations. It should not be assumed that a lawful stand down is triggered in all circumstances where employees cannot be usefully employed.

Employers do not have a right to suspend performance of the obligations in the employment contract in the absence of an express right to do so conferred by the contract, industrial instrument or statute.

For further advice about managing operational needs and employees this time, please refer to the Fair Work website with specific COVID-19 information, which may be accessed here.