Designed as a short term mechanism to keep employers and employees connected in their employment relationship, it has resulted in many employers retaining employees in the hope that by the time the subsidy scheme ceases, business will have picked up sufficiently to enable the employment to continue in more or less the normal way.

Keeping your staff employed is obviously the best outcome for everyone and redundancies are never desirable.

But what if it is, sadly, becoming clear that this job is never coming back? What if it is a ‘zombie’ job?

Under section 22 of the Fair Work Act 2009, a period of stand down under the Fair Work Act, despite being unpaid, still counts as service. That means that (unlike leave without pay) an employee continues to accrue service-based entitlements, such as annual leave and personal (sick) leave. Long service leave entitlements depend upon whichever state-based legislation is applicable, unless (in certain circumstances) long service leave is derived from a relevant enterprise agreement.

Similarly, an employee who remains employed on Job Keeper is undoubtedly employed, maintains continuity of service and is not on leave without pay, even if stood down under a ‘Job Keeper enabling stand down direction’, or working reduced hours, because they must be paid at least the amount of the Job Keeper subsidy by their employer. This is expressly recognised by s789GR and s789GS of the Fair Work Act.

Accrued but untaken annual leave must be paid out when employment ends, and employers can be liable for a civil penalty if they fail to do so because they would be breaching the National Employment Standards.

So as time goes by, a redundancy at some future point will become more expensive as accrued leave entitlements continue to mount.

So, what should employers do?

• Do the math. Work out the leave accruals you owe in respect of each employee currently on Job Keeper, and extrapolate those accruals through to the end of September, when the original version of Job Keeper is due to cease or beyond if you consider your business is likely to continue to qualify for the tapered and targeted version to extend through to March 2021;
• Where possible, consider requesting an employee on Job Keeper with an accrued leave balance of more than two weeks to take annual leave under s 789GJ of the Fair Work Act. An employee cannot unreasonably refuse such a request. This enables you to reduce your liabilities and may make the difference between being able to keep an employee employed or not;
• Assess what jobs you can feasibly expect to need as the economy re-opens and what, if any, jobs are unfortunately inevitably unlikely ever to be required in the business again;
• If you have employees in positions that fall into the latter category, carefully calculate the impact on the business of the inevitable redundancy of the role. Assuming that the role is not needed, and is not expected to ever be, required to be performed by anyone and but for Job Keeper would have become redundant by now, what is the impact of that role being kept alive until the Job Keeper wage subsidy ceases? What would be the accrued entitlements the employee then has to untaken annual leave? When this is added to their entitlement to notice (or pay in lieu of notice) and (where applicable) redundancy pay, what will be the impact on the business’ bottom line?
• Does this mean that with the best will in the world, and despite the purpose for which Job Keeper was designed, the business simply cannot afford to keep this ‘zombie’ position, even with the Job Keeper subsidy, until September 27 or beyond? In other words, will the accrual of service-based entitlements make a material difference to the business’ viability?

These are all weighty questions, and no one wants to be in a position of retrenching employees as a result of the redundancy of their positions – whether that be now or later. But whatever decision is made, it needs to be made on an informed basis, and knowing what the impact of the decision is for the viability of the business.