Ending Employment in Coronavirus Times
For businesses of all sizes, the Covid-19 Pandemic has had a direct impact on the number of staff they can continue to employ. Yes, JobKeeper & JobKeeper 2.0 have helped keep some jobs, but the longer the impact on our economy the greater the risk of cutbacks continuing. Navigating ‘stand downs’, redundancies and entitlements can be incredibly confusing without the complication of Coronavirus. As payroll experts, we’ve done the hard work identifying the key points of the legislation. Please, please, please don’t hesitate to ask for help – that’s what we’re here for. This is an important piece to get right. Here’s what our Payroll expert, Teresa Bu had to say on the issue of redundancy in Covid times.
Before ending any employment, remember that under the Fair Work Act, an employee is protected from being dismissed because of a temporary absence due to illness or injury. The Fair Work Act also includes protections against dismissal for discrimination, a reason that is harsh, unjust or unreasonable and other protected rights. These protections continue to apply to employees whose employment is impacted by coronavirus.
Should I talk to my employee about redundancy before offering it?
Yes, absolutely. Communication is vital and the clearer you are about the circumstances, the rationale and the outcomes the better. You should notify the employee (s) who may be affected and provide them with clear, succinct information about the changes and their expected impact. We’re all people at the end of the day and as hard as it is talking through the changes, it’s a healthy part of the process. Allowing the employee to hear the rationale for your decision and see that it’s been well thought out is helpful.
There is a step by step guide to handling the redundancy process on the Fair Work website. If you are considering redundancy of 15 or more staff, please note that employers must give written notice to Services Australia of the proposed dismissals.
If I offer my employee another position within the company, is eliminating the original role still considered a genuine redundancy?
As an employer you can offer alternative positions to employees, however, if the employees take the position, then it is no longer considered a genuine redundancy. Some enterprise agreements may have exceptions, so please check the fine print of the agreement.
Do employees continue to accrue leave during a ‘stand-down’ period due to COVID-19?
The answer is yes under Fair Work. Employees keep accumulating leave as usual on Pre-Covid hours where a direction of reduced hours is temporarily issued.
Do employees also accumulate long service leave?
This varies from state to state so you’ll need to check state legislation on this one. In NSW for example, the NSW Government has the Long Service Leave Act 1955. The Act has been temporarily amended to ensure that an employee’s long service leave continues to accrue if they’ve been stood down (without pay) between 11 March 2020 and 12 March 2021 as a direct or indirect result of the COVID-19 pandemic.
Do employees always get paid a redundancy pay?
That’s complicated! There’s a number of criteria to meet with genuine redundancy and the determination may differ between Fair Work Australia (FWA) and the ATO – It may be a genuine redundancy from FWA perspective, but the payment may or may not be deemed a genuine redundancy payment from a tax perspective by the ATO. Your HR or Payroll Manager will usually be able to do the analysis but determining a genuine redundancy is complex. If you don’t have an in house expert, we can look into it for you.
What are the obligations for COVID-related notice and final pay?
All entitlements under the NES/Awards/Enterprise Agreement should be paid out at the Pre-Covid rate on termination under the Fair Work Act. For example, if an employee is given notice of termination, they stay employed through their notice period. Their employment ends at the end of the notice period (or earlier by agreement or if payment in lieu of notice is paid). They continue accrue leave for the notice period and are also paid their appropriate redundancy pay.
If payment, instead of notice, and the appropriate redundancy pay is paid to the employee, their employment ends at the time that payment is made. Any payment in lieu of notice is calculated based on the employee’s full pay rate, usual hours and days of work (as if the stand down didn’t apply).
Is there a change to redundancy pay relating to COVID-19?
Employees working reduced hours under these awards continue to accumulate entitlements based on their original hours before the change. Redundancy and final pay entitlements are based on their original hours. The Fair Work Commission has recently varied some awards as a result of coronavirus. Some of these changes affect employee entitlements. There’s a list of these changes here.
What support can I offer my employees effected by Covid-19?
Offering support to the employees effected by Coronavirus is an important part of the process. There are different forms of support available for employees who lose their job because of the impacts of coronavirus.
I still need some help!
Please contact us, through the website, on the phone or email. All discussions are confidential and we’re here to support and help you navigate the complex issues.