Flexibility within reason – Recent cases demonstrate limitations on the exercise of JobKeeper enabling directions

Flexibility within reason – Recent cases demonstrate limitations on the exercise of JobKeeper enabling directions

Since 9 April 2020, the temporary JobKeeper legislation has allowed employers to vary the working hours of employees in response to the COVID-19 pandemic. This JobKeeper enabling direction, among others, aims to assist businesses to retain its workforce despite reductions in revenue and available work and the Government health measures which have been put in place to control it. Employers should note however, that this flexibility is not absolute and recent decisions by the Fair Work Commission (FWC) illustrate that the exercise of these directions must still be reasonable.

Directions must be proportionate to available work

The case of Allan Jones v Live Events Australia Pty Ltd [2020] FWC 3469 (3 July 2020) is a timely reminder for employers not to overplay their hand when issuing stand down directions. Mr Jones was employed as a broadcast engineer at Live Events and most of his rostered work was at horse racing events in Western Australia. Although the pandemic had disrupted the sports industry generally, horse racing continued relatively uninterrupted in Western Australia.

By March 2020, Live Events had formed the view that the impact of the pandemic on its business more broadly would be significant enough to require operations to be cut back. Live Events asked its staff to voluntarily agree to a 40% reduction in salary and working hours. Mr Jones refused the pay reduction and from March to June 2020 he continued to work at least 80 hours per fortnight with occasional overtime.

In June 2020, Live Events notified Mr Jones of its intention to issue a JobKeeper enabling direction to reduce his minimum working hours from 80 hours to 48 hours per fortnight (a 40% reduction). Mr Jones disputed the reasonableness of this direction as productive work was still available and was being performed.

The FWC held that the direction issued by Live Events was authorised, but that the direction was so overwhelmingly precautionary, it was unreasonable. The level of reduction was not proportionate to his rostered hours, prospective work hours or to the arrangements of other technical crews in Western Australia. Furthermore, at the time that Live Events imposed the reduction of Mr Jones’ hours by 40%, it had lifted the 40% reduction imposed on other staff to 20%.

The FWC varied the direction to a minimum of 64 working hours per fortnight (i.e. it imposed a 20% reduction for Mr Jones), concluding that this was more reasonable in the circumstances.

The FWC cautioned that its variation order was not a green light for the employer to reduce hours without an objective or fair basis for doing so. Even if objective circumstances exist to allow the full flexibility of the varied direction to be utilised, the FWC said that Live Events should first explore reasonable alternatives to a reduction in hours or income. Finally, the FWC stated that it would be inappropriate for Live Events to leave the varied direction in place if, during the period of its operation, the employer lifted the 20% reduction for other employees and returned its workforce to 100% of hours and salary.

Decision considers fairness between different employees

In Transport Workers’ Union of Australia v Prosegur Australia Pty Limited [2020] FWCFB 3865 (23 July 2020) the relevant JobKeeper enabling direction to reduce hours was found to be reasonable.

In this case, Prosegur initially proposed a blanket reduction in working hours to a minimum of 25 hours per week for full-time, part-time and casual employees. Concerned that this direction would disproportionately affect the entitlement of full-time employees, the Fair Work Commission Full Bench directed Prosegur and the Transport Workers’ Union (TWU) to seek to reach agreement on a direction that would be workable and reasonable. Prosegur and the TWU both agreed that it was necessary and appropriate to reduce the ordinary hours of the full-time employees to a minimum of 60 hours per fortnight.

The parties further agreed that this direction should be conditioned by a distribution method. The proposed method was that work would be allocated first to full-time employees, then to part-time employees and finally to casual employees to ensure they could all achieve their minimum work hours. Any extra available work would then be prioritised in the same order.

Though it was legally unnecessary to issue a JobKeeper enabling direction to casual employees, Prosegur proposed to provide casual workers with a minimum of 25 working hours per week, while the TWU proposed a minimum of 20 hours. The Commission had regard to a spreadsheet provided by Prosegur of hours worked in the period from April to July 2020 and was satisfied that there were sufficient hours available to be distributed in the manner Prosegur proposed. Accordingly, the FWC accepted the alternative JobKeeper enabling directions proposed by Prosegur on the basis it was fair to all employees – it would allow full-time employees to maintain approximately full-time pay, while retaining the minimum hours for part-time and casual employees.

Key takeaways

The unpredictable nature of today’s business conditions (particularly in Victoria) mean it is sensible that JobKeeper enabling directions continue to be available beyond 28 September 2020 to allow employers to trade through this crisis. However, it is important to remember that these directions cannot be given carte blanche. Employers must properly consider practical solutions to the challenges presented by the coronavirus pandemic, and utilise JobKeeper enabling directions to the extent that they are reasonable, necessary and appropriate in the circumstances.

Whether a direction is reasonable should include consideration of how similar employees are being treated. The differing contractual entitlements of full-time, part-time and casual employees should also be taken into account, so that these three classes of employees are not treated in identical fashion.

If you or your business have been affected by JobKeeper enabling directions and you would like advice on this matter, please contact the Employment Team at Hunt & Hunt.


with Michelle Nguyen
Graduate at Law

Our Lawyers