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18th March, 2020

COVID-19: Knowing your employees’ leave entitlements

In light of the COVID-19 pandemic, guidance has been released by the Fair Work Ombudsman regarding paid leave entitlements. Here’s what you need to know.

As the days go by, an increasing number of businesses are asking their staff to either work from home (if possible), use their annual or long service leave, or even take unpaid leave if they’re prepared to do so.

Given the uncertainty of the situation, small business owners around Australia are asking questions about their employees’ paid leave entitlements – and as this dynamic situation continues to unfold and impacts more SMEs, it’s crucial for these business owners to be aware of how to approach the subject.

Official guidance has been released by the Fair Work Ombudsman for employers who are in doubt of how to deal with various employment issues that have surfaced due to the coronavirus.

UPDATE: Since this article was written, the Government has ordered non-essential businesses to cease operating for the duration of the COVID-19 pandemic. For a list of impacted businesses, see the Australian Government website.

Here’s a summary of that guidance and how it relates to SMEs, together with some commentary from Alison Baker, an experienced employment lawyer and partner at Hall & Wilcox.


Working from home


The Ombudsman strongly encourages employers (if and wherever possible) to direct their employees to start working from home.

In doing so, the employees can remain productive and the company can continue to operate while playing its part in flattening the pandemic’s curve.

READ: COVID-19 government stimulus packages in Australia and New Zealand

Working from home has its own set of rules, and according to Baker, as workforces continue to go remote, employers need to treat their employees’ home offices the same as they would their work offices.

“It’s important for employers to remember that work, health and safety obligations remain the same when employees are directed to work from home.

“Ensuring a person’s home office is safe and equipped, wellbeing check-ins, offering assistance, creating virtual get-togethers and coming up with ways to boost productivity are all part of the employer’s responsibility.

“Communication is the key.”

Where it is expected of an employee to record their hours of work in regular circumstances, the Ombudsman highlights that the employer is entitled to maintain those expectations from them when working from home too.

Baker notes that, “ensuring employees record their hours of work will also assist employers in monitoring employee hours of work to ensure they are not working additional hours that may attract overtime rates and in meeting their record-keeping obligations under the Fair Work Act 2009 (Cth) and the Fair Work Regulations 2009.”


Standard personal/carer’s leave rules apply to COVID-19


Just like with any other illness or injury, the Ombudsman states that if an employee has been diagnosed with coronavirus, or if a household/family member has contracted the virus and requires assistance, the employee in question is entitled take paid personal/ carer’s leave – which, unless otherwise agreed upon, is limited to 10 days per year (although any untaken personal/carer’s leave in one year is carried over to the next year and may be taken).

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In the event a household or family member falls ill, and the employee has run out of carer’s leave, they are entitled to take two days of unpaid leave to care for their dependent without having to worry about their job.


Staying home to look after children due to school closures


Many parents are being left with no choice but to stay at home and look after their children as schools continue to close in an attempt to slow the spread of COVID-19 down.

In the event these circumstances arise and the parent is unable to work (even from home), the employee is required to use their leave entitlements during that period.

Unless otherwise agreed upon, those leave entitlements may include their balance of paid carer’s leave, two days unpaid carer’s leave, annual leave or long service leave.


Directed and voluntary isolation


There are some instances in which an employee might be totally healthy, but due to government direction, or the request of their employer, they are asked not to go to work (and are unable to work from home).

According to Baker, whether or not an employee is entitled to their regular salary in these circumstances will depend on where the direction to stay home comes from.

“Employers won’t normally be held responsible to pay wages when their staff are required to stay home due to government direction,” she told The Pulse.

“However, if an employee has been asked to stay home from work due to their employer taking non-government mandated precautionary measures, the employer would normally be required to continue paying their employees’ salaries.”

Baker also explained that those employees who haven’t been directed by the government or their employer to go into isolation but still decide to do so would likely need to use their annual or long service leave entitlements in order to get paid for time taken off work.


Standing employees down and changing rosters


Although the COVID-19 outbreak has been threatening to bring many small businesses to their knees, it’s important for employers to know that business deterioration is generally not enough of a reason to stand an employee down without pay.

“Small business owners need to be very careful with shut-downs,” warned Baker.

“If things are looking grim and you’re considering making significant changes to your workforce, make sure to retain legal advice before making any decisions.

“The ability to use shutdowns works on a case-by-case basis.”

In light of the increasing amount of restrictions being enforced by government, it’s important to note that a business that, as a result of a government enforced restriction, needs to temporarily close its doors, would likely be able to stand their employees down without pay.

In saying that, employers are not to stand an employee down while they are on leave – both paid or unpaid.

The Ombudsman explains that the reason for this is due to the decision being out of the employer’s hands and therefore not something that can be considered their responsibility.

READ: 10 tips for protecting your business from coronavirus

When businesses experience sudden deterioration, rosters and shifts often need to be altered in order to adapt to the circumstances.

The Ombudsman advises employers who need to make changes to their rosters to review the enterprise agreement that they have in place with their employee to see what the terms are for each specific employee.

As a general rule, an employer normally has to seek the employee’s consent before changing any shifts.


Rationalising costs with redundancies


Business downturn can often warrant an employer to implement redundancies across the company.

Depending on the size of the business, there will be cases where an employee who is made redundant may be eligible to receive a severance package.

Employees who would be entitled to severance packages in regular circumstances are still entitled to them if they are being made redundant due to the impact of COVID-19.

“Employers implementing redundancies need to be mindful of complying with applicable consultation and redeployment obligations, as well as meeting required severance package payments, even in the current unprecedented circumstances,” said Baker.