Legal Insights

Unpaid pandemic leave to be introduced into over 100 modern awards – What this means for you

By Ross Jackson, Michael Nicolazzo

• 07 April 2020 • 7 min read
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On 1 April 2020, a 6-member full bench of the Fair Work Commission (Commission) issued a statement detailing proposed variations to 103 modern awards in response to the COVID-19 pandemic. The Commission has proposed to vary the awards to include 2 weeks of unpaid pandemic leave, as well as providing employers and employees with the ability to agree to take annual leave at half pay.

At this point in time, the variations have not come into effect. The Commission has asked for submissions and, depending on any submissions or objections received, we expect the variations to come into effect from around 8 April 2020.

The significance of the variations

The statement from the Commission is extremely significant for a number of reasons.

Firstly, the Commission acted on its own initiative to propose the variations rather than acting on the basis of applications from interested parties, as it did earlier with the variations to the Clerks – Private Sector Award, the Restaurant Industry Award and the Hospitality Industry (General) Award.

Secondly, the Commission has identified a ‘regulatory gap’ between government and public health directives in response to COVID-19 and protections afforded to employees in the Fair Work Act. It has proposed the variations to address this gap.

Thirdly, the Commission’s actions are independent of government and business responses to COVID-19, and seek to achieve a balance between keeping people in employment while simultaneously supporting the public policy objective of encouraging self-isolation in order to lessen the impact of COVID-19.

The regulatory gap identified

The Commission identified that some employees who have contracted COVID-19 may have an entitlement to paid personal leave under the National Employment Standards (NES). However, the number of employees able to utilise paid personal leave to cover a period of self-isolation is limited because:

  • the NES entitlement to paid personal leave does not apply to casual employees
  • as the NES entitlement is for 10 days' paid leave for each year of service, it is likely that a significant proportion of employees have already used some of their entitlement, and would therefore have less than 10 days' paid leave available
  • employees who have less than 12 months service with their employer would have less than 10 days’ paid leave (as the entitlement accrues progressively during a year of service)
  • an employee who is required to self-isolate (because, for example, they have been exposed to someone infected with COVID-19) is not necessarily unfit for work because of personal illness (as is required by section 97(a) of the Fair Work Act).

The Commission noted that, because of the above issues, those employees who could not reach agreement with their employer about paid (or unpaid leave) in those circumstances, were possibly forced to make a choice between contravening a public health direction and keeping their job.

In addition, an employee required to self-isolate (as opposed to one who contracts COVID-19) is not necessarily protected from dismissal under the temporary illness provisions of section 352 of the Fair Work Act.

Addressing the regulatory gap

In order to address the above gap, the Commission has proposed to introduce 2 weeks’ unpaid pandemic leave if employees are required, by government or medical authorities or on medical advice, to self-isolate or are otherwise prevented from attending work, despite being required by their employer to attend work.

The proposed variation also expressly states that the entitlement to unpaid pandemic leave is a workplace right for the purposes of the general protections provisions. This means if an employee seeks to exercise their workplace right to unpaid pandemic leave, an employer is prohibited from taking adverse action (which includes dismissal) against the employee for reasons that include them having taken that leave.

Unpaid pandemic leave – how will it work

There are a number of matters to note in relation to unpaid pandemic leave:

  • the entitlement will not apply where an employee can work from home. The provision is proposed to apply ‘where the employee is required to work at premises operated by an employer’
  • the employee must provide notice of leave and provide evidence in accordance with the usual arrangements for taking paid leave under the NES
  • the taking of unpaid leave does not affect any other entitlement to paid or unpaid leave under the NES, and counts as service for the purposes of the Award and the NES
  • it will be available, in full, immediately – that is, it is not contingent on service and does not accrue progressively
  • the entitlement will only be available until 30 June 2020, unless extended by further variation
  • all employees will be able to access the entitlement – full-time, part-time and casuals – and the entitlement will not be pro-rated
  • it is not necessary for employees to exhaust other entitlements before accessing the unpaid pandemic leave.

Annual leave flexibility

In addition to the entitlement to unpaid pandemic leave, the Commission has also proposed to provide additional flexibility in relation to the taking of annual leave.

A model term is proposed to be included that provides that employers and employees can agree to take up to twice as much annual leave at half the rate of pay. A provision of this kind was recently inserted into the Hospitality Award, the Clerks Award and the Restaurant Award.

That is, employers and employees can agree, for example, to take one week of annual leave over 2 weeks. In this example, the employee’s pay for the 2 weeks is the same as it would have been for 1 week, and 1 week of leave is deducted from the employee’s annual leave balance.

The applicable awards

The awards to which the amendments would be made are set out below. The Commission has prioritised those industries with greater award-reliance and which cover a high proportion of small businesses.

Awards within the construction, maritime, mining and resource industries are proposed to be excluded from the current phase of variations. If applications are made to vary those awards, and for any further variations on the other awards, the Commission will consider those separately.

How will the unpaid pandemic leave interact with the JobKeeper Payments

When the Commission published the statement, it was not clear whether employees who take unpaid pandemic leave will be paid the JobKeeper payment recently announced by the Government (see our eAlert here on the JobKeeper payment scheme).

The Attorney-General has confirmed the new JobKeeper Payment will be available to eligible employees on unpaid leave.

Next steps

At this point in time, the Commission’s statement is only a provisional view regarding the above variations and the variations are not yet operational.

The Commission has asked for submissions in response to its proposed variations by 6 April 2020. Unless a submission is received, the Commission will determine the matter without holding a hearing. If a hearing is required, it will take place on 8 April 2020.

We will issue a further update once the proposed variations have been determined, or if there is further guidance from the Commission.

If you have any queries about the proposed variations, please contact Michael Nicolazzo, Lindy Richardson or Ross Jackson.

Maddocks has produced guides on legal issues raised by the coronavirus which may be of interest, and we encourage you to share these with colleagues who may also find them useful.

Need help responding to COVID-19?

Get in touch with the Employment, Remuneration & Benefits team.

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