COVID-19: WHAT/HOW Do Employers Execute Payroll? - Australian Workplace Laws
- Suzanne Johnstone
- Mar 20, 2020
- 6 min read
Updated: Mar 25, 2020
Working from Home, Personal/Sick Leave, Annual Leave, Compassionate/Bereavement Leave, Annual Shut Down & Standing Down Employees…
Small Medium Enterprises (SME's) have limited funds/budgets and often can't afford to hire a full-time staff member with specialist expertise.
In the current climate, information needs to be shared to these businesses, in a way that is easily understood. I recently had a SME Client ask me questions regarding how they should manage paying their staff if they encounter the following scenarios.
My initial response was to quote what I know from my Industrial Relations and Payroll experience (with the disclaimer that I would quantify the data with the Fair Work Ombudsman and other Government departments).
This article is general advice only. The appropriate Modern Award or Enterprise Agreement must be reviewed independently.
I discovered after doing my Due Diligence, that although existing legislation and guidelines do largely apply, there are NEW SCENARIOS that simply aren’t catered for, either in the relevant Modern Award, Fair Work Act, or anywhere else I’ve studied.
The response I got from the FWO regarding whether a business can implement a “Standing Down Employees” as a result of “a deterioration of business conditions” could be legally enacted, if not specifically covered in the relevant Modern Award, took a couple of days to get a response.
Sure, there are provisions in Modern Awards for “Annual Shut Down”, however in the current climate, an Employer won’t be able to give the mandatory 4 weeks’ notice to the staff.
Here are the standard questions that my Client asked, and the official answers I found from the Fair Work Ombudsman’s website, and through the FWO Web Chat feature.
What if an employer wants their employees to stay home as a precaution?
What if an employee wants to stay home as a precaution?
What if an employee asks for Compassionate/Bereavement Leave?
If the Business needs to temporarily close because of Government Regulations and/or sanctions (e.g. closure of Restaurants, Bars, Cafes, etc.), what options does the Employer have with regards to paying staff?
Boosting cash flow for employers
The common queries with each of these questions below, are:
How/What do they pay Full Time and Part Time staff; and
How/What do they pay Casual staff?
1. What happens if an employee or their family member is sick with COVID-19 and requires self-isolation?
How/What do they pay Full Time and Part Time staff? As per the extract below, as long as the employee has a medical certificate that covers the period they need to self-isolate, they are entitled to PAID Personal/Sick Leave, assuming they have enough accrued.
How/What do they pay Casual staff? If a Casual staff member needs to CARE for a family member who is sick, they are entitled to 2 days of UNPAID Carer’s Leave, per occasion. Where this would be applicable is the employee is protected from being dismissed because of their temporary absence due to illness or injury.
National Employment Standards (see link below) are applicable.
2. What if an employer wants their employees to stay home as a precaution?
How/What do they pay Full Time and Part Time staff? If the staff member was instructed to self-isolate from the Employer due to illness, and are at risk of infection from coronavirus, the first option is to offer that they work from home (if practical and they are well enough), or not work during the risk period. If they are unable to work from home during this period (either not a practical option or they are too sick to do so, if practical), then they would need to be PAID Personal/Sick Leave, upon receipt of a medical certificate.
How/What do they pay Casual staff? If a Casual staff member needs to CARE for a family member who is sick, they are entitled to 2 days of UNPAID Carer’s Leave, per occasion. Where this would be applicable is the employee is protected from being dismissed because of their temporary absence due to illness or injury.
3. What if an employee wants to stay home as a precaution?
How/What do they pay Full Time and Part Time staff? If an employee voluntarily wants to stay at home as a precaution, however are not ill, then if the Employer is unable to offer remote working, they would have to take either Annual Leave or Long Service Leave, if available to them. Otherwise they would be Leave Without Pay. If the staff member was instructed/required to self-isolate due to illness, and are at risk of infection from coronavirus, the 1st option is to offer that they work from home (if practical and they are well enough), or not work during the risk period. If they are unable to work from home during this period (either not a practical option or they are too sick to do so, if practical), then they would need to be paid Personal/Sick Leave, upon receipt of a medical certificate.
How/What do they pay Casual staff? Casual staff are not entitled to leave, as their casual loading has already provided them with this penalty. If the casual employee was able to work remotely and it was agreeable by the Employer, then this would be up to you as the Employer to consider.
4. What if an employee asks for Compassionate/Bereavement Leave?
In the event that an employee finds themselves in the situation where an immediate family member or member of their household dies or contracts or develops a life-threatening illness (or injury), as per the National Employment Standards, they are entitled to either 2 days PAID or UNPAID Compassionate Leave.
Full-time and part-time employees receive paid compassionate leave and casual employees receive unpaid compassionate leave.
An important thing for an Employer to be aware of, is that Compassionate Leave is not limited to 1 instance per annum. An employee is entitled to Compassionate Leave EACH TIME an immediate family or household member dies or suffers a life-threatening illness (or injury).
5. If the Business needs to temporarily close because of Government Regulations and/or sanctions (e.g. closure of Restaurants, Bars, Cafes, etc.), what options does the Employer have with regards to paying staff? Can a business enact “Annual Close Down”, even if they don’t have 4 weeks’ notice?
Unless your Award or Agreement includes a “Stand Down” clause, the reply I have received from the FWO is;
We understand this is a difficult time for everyone. In response to your question unfortunately you would not be able to force your employee's to take their annual leave under “Annual Close-Down” if you have not provided the 4 weeks’ notice under the relevant Clause of the appropriate Modern Award.
If you are going to close the business down temporarily due to a down-turn and your employee's are ready and willing to work and they are full time and part time then they need to be paid at their ordinary rate of pay not asked to use their Annual Leave.
You could ask if your employees are willing to reduce their hours during this time however, they need to agree to this. If they do not, then some employers may need to make employees’ positions redundant in response to a business downturn.
If an employee’s job is made redundant their employer may have to give them redundancy pay.
The Fair Work Act has requirements that employers have to meet before they can terminate an employee’s employment, such as providing notice and consultation further more you would also need to check if employee's are entitled to redundancy pay.
However, if an employee cannot work because they are subject to a government order requiring them to self-quarantine, the employee is not ordinarily entitled to be paid (unless they use leave entitlements). In this case, their inability to work is because of a government order, not because you have directed them as the employer.
The situation of corona virus is evolving very quickly, and we encourage to keep update regarding some frequently asked questions. We will continue to update our website with updated information as the situations continues to evolve.
6. Boosting cash flow for employers
Last Updated: 19 March 2020
The Australian Government have implemented “The Boosting Cash Flow for Employers” measure to help Small and Medium Business entities (SME’s) with aggregated annual turnover under $50 million, and that employ workers. Eligibility will generally be based on prior year turnover.
Provides $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff. The payment will be tax free.
This Government Assistance is not an “up-front” payment.
The payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements.
Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
This measure will benefit around 690,000 businesses employing around 7.8 million people.
For more information on this the “Boosting Cash Flow” measure, go to:
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