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Employment relationship during COVID-19 – Darkness before dawn

As everyone is aware, the Coronavirus has put many Australian companies in a very difficult position. Some of the companies’ fixed costs, such as wages, rents, utilities, bank interest, etc., may not be reduced as a result of the decline in sales. Even worse, the sharp decline in income has brought huge cash flow pressure to the working capital of some companies. In despair, many Australian restaurants and retail stores have laid off their employees and even closed their businesses. 

Our firm believes that the difficult times will eventually pass, and we cannot lose hope for the future just because of the momentary difficulties. We must recognise that the more difficult the moment is, the more we need to work together and not abandon or give up each other. 

The Australian government has put in place a series of measures to help businesses through the outbreak, but it is not enough to rely on national efforts alone, it also requires the contribution of every and each individual in order to support the economy and achieve an effective response to the outbreak. Australian Prime Minister Morrison also called on businesses and employees to support each other, finding a solution that is suitable for each other, and work together to get through the difficult times.  
1.Barry-Wehmiller
When the economic crisis hit in 2007, 40 per cent of orders disappeared overnight, and large numbers of employees were the target of redundant layoffs. However, the company’s chief executive, Bob Chapman, did not opt for short-term stop loss measures, instead called for a “four weeks unpaid leave” scheme across the company. In this scheme, they can choose more than or less than four weeks of leave according to their own circumstances, and employees with better economic conditions can choose to take more time off so that their colleagues who do not have as good economic conditions can take less time off to increase their income. 
As a result, in the darkest moment, the entire company came together and worked together, employee loyalty reached an unprecedented level. Not only did the company quickly got out of the difficult situation, the company’s corporate culture has also been promoted and developed to the greatest extent. Now, Barry-Wehmiller has become one of the world’s largest paper groups.

Image from Forbes 2015

 
2.Southwest Airlines
After the September 11 incident, the global aviation industry was in trouble, and many airlines chose to lay off workers in large numbers to reduce economic pressure. However, the founder of Southwest Airlines, Kelleher, has rejected layoffs and flight cuts, instead initiated the company’s senior leaders to work unpaid. Seeing the sacrifice of senior leaders, other employees have also proposed voluntary pay cuts to reduce the burden on the company, the total amount of voluntary pay cuts exceeded US $1 million. After the crisis, Southwest Airlines became the only profitable airline in the United States at the time, and all employees’ sacrifice was compensated. 
Image from Jeb Brooks Youtube Channel
The leaders of both companies chose to support each other and work together in the darkest of times, not only won the respect of employees but also developed the good reputation of the enterprise.In Australia, both businesses and employees are monitored and protected by the Fair Work Ombudsman to ensure the safety and fairness of employment relationship in all circumstances.Facing the critical moment of the Coronavirus, the Fair Work Ombudsman also issued a series of guidance information on the epidemic which is updated on 13 March 2020, listing some common questions and answers. 
Q1: What if an employee or their family member is sick with Coronavirus?

Each full-time, part-time, or casual employee is entitled to a certain number of days of paid sick leave or paid carer’s leave, depending on the length of work. The method of calculation can be found on the Fair Work Ombudsman website at .
If an employee is unable to work because he or she is sick or need to take care of a sick family member, he or she may first use the previously accumulated paid leave entitlements, and the company can require the employee to provide the relevant medical certificate. 
If paid sick leave has been used up and the employee is still unable to return to work, the company should reserve a position for him or her but without paying wages. The Fair Work Ombudsman will protect employees from being dismissed due to temporary absence for reasons of injuries and illnesses.
Q2: What if an employee is asked to be quarantined?

Fair Work Ombudsman recommends that companies and employees negotiate to find solutions that are suitable for both parties, such as: 

- Employee can work from home;
- Employee may take sick leave;
- Employee may take annual leave;
- Employee may take other leave (e.g. long service leave or any other leave available under an award, enterprise agreement or employment contract);
- Companies and employees may also negotiate paid or unpaid agreed leave on their own, depending on the circumstances.
Q3: What if an employee wants to stay home as a precaution?

If an employee is reluctant to go to work only because of personal concerns, the employee needs to first negotiate with the employer to find a solution that is suitable for both parties (refer to previous question). 

If an employee is unable to reach a suitable solution with the employer, the employee will not be able to receive a salary in such case according to the Fair Work Ombudsman's guidance information on the epidemic.
For more information on quarantine requirements, please visit the Australian Government Department of Health’s website at .
Q4: What if an employer wants their employee to stay home as a precaution?

Under workplace health and safety laws, it is the responsibility of employers to provide a safe working environment for their employees.  If an employee is at risk of infection from coronavirus (e.g. they have been to high-risk areas, in contact with a confirmed case, etc), the employee needs to be isolated and, after isolation, provide a doctor's health certificate. 

Under Fair Work Ombudsman’s guidance information, employees are usually entitled to be paid wages if they do not need to work for reasons of the employer, and not for employees’ own health reasons. Under the Fair Work Act, there are generally only three cases where an employer does not need to pay wages for standing down employee: the employee cannot be usefully employed because of equipment break down, industrial action or work stoppage which the employer cannot be held responsible such as due to inclement weather or natural disasters. 

Employers and employees should understand and considerate of each other. Employers can negotiate with employees during this special period to reach an agreement specifically targeted at the special circumstances to ensure the rights and interests of both sides.
Q5: What if the employer needs to reduce the number of employees?

If an employer needs to make employees redundant due to operational difficulties, it must abide by the redundancy rules under the Fair Work Act and relevant regulations, which involve two aspects: notice period and redundancy pay.

The notice period should be calculated based on the length of employment and the age of the employee. Generally speaking, the shortest notice is at least 1 week in advance. Redundancy pay should be calculated based on the size of the company, the length of the employee’s employment, and the age of the employee. If the company is smaller than a certain size, then redundancy pay may not be required.
In addition, employee's unused annual leave, long service leave, or any other leave available under an award, enterprise agreement or employment contract also need to be converted and pay to the employee.

If the company needs to reduce the working hours of the employee due to operational difficulties, it is necessary to negotiate with the employee first so that both parties can reach an agreement.

Note: If the company does not comply with the rules for reducing employee's working hours or redundancy, then the employee has the right to complain to the Fair Work Ombudsman within 21 days, and the company may also be fined for any incompliance.
In order to ensure the interests of both companies and employees, you may wish to consult us before making decisions to ensure that all decisions are reasonable and legal. If employees feel that they have been treated unfairly, they can also consult a law firm and take up the arms of the law to protect their interests. Of course, in this special difficult period, the most important thing is that the company and employees work together to establish a positive communication mechanism to increase mutual understanding and trust. If you have any questions, please scan the code to consult.
Disclaimer
Due to frequent changes in Australian laws, it is emphasized that you should not rely on this article alone to make decisions. Specific legal policies should refer to the local validity at the time. This article is for general information only and does not apply to readers ’cases. Readers should not rely on the information in this article to make any legal decisions without consulting any Australian Legal Practitioner. Fumens Lawyers hereby declares that the readers who refer to this article do not constitute a client relationship, so Fumens Lawyers is also not responsible for any loss caused by reliance on this article.

 

23.03.2020

 

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