Pay, leave and ending employment for legacy employers under JobKeeper
Legacy employers were employers that:
- previously participated in the JobKeeper scheme, but no longer qualified, or chose not to participate, from 28 September 2020
- demonstrated at least a 10% decline in turnover for a relevant quarter and got either:
- a 10% decline in turnover certificate from an eligible financial service provider, or
- if they were a small business, a statutory declaration.
Legacy employers had to follow the usual rules for paying employees. This meant the minimum terms and conditions set under any award, enterprise agreement, employment contract and workplace policy that applied. This included payment of their minimum pay rates as well as any penalties, such as overtime or public holiday pay.
However, a JobKeeper enabling direction or agreement applied instead if the direction or agreement was different to the employee's usual terms and conditions.
If a legacy employer issued a direction or made an agreement under the JobKeeper provisions, it didn’t reduce the employee's minimum pay rates. An employee that worked reduced or different hours under these arrangements still had to be paid any applicable penalty or overtime rates for any hours that attracted those extra rates.
Any terms and conditions not related to the direction or agreement continued (such as sick and carer’s leave).
If a legacy employer gave an employee a JobKeeper enabling stand down direction, it didn’t change the employee’s entitlement to public holiday pay. This is because the direction didn’t apply when the employee was entitled to be absent from work, including on a public holiday.
Pay slips and paying wages
Pay slip and record-keeping obligations continued to apply for all legacy employers.
Employers also needed to pay their employees’ wages in accordance with their usual requirements, including frequency of pay.
Employers covered by an award had to pay employees the applicable minimum and penalty rates as set out in the award.
All the usual rules for taking and accumulating leave applied to employees of a legacy employer. This included the rules found in any applicable award or agreement.
Employees of a legacy employer continued to accumulate their usual leave entitlements. This included employees that had been given a JobKeeper enabling stand down direction to work less hours. They continued to accumulate leave entitlements as if they had worked their normal hours.
Example: Accumulating leave during JobKeeper stand down
Reece worked 38 hours per week for a food manufacturer. The food manufacturer qualified as a legacy employer. A temporary enforceable government direction was made after 28 September 2020 that meant the food manufacturer needed fewer workers. Reece’s employer gave him a JobKeeper enabling stand down direction to work 30 hours for 3 weeks.
During this period, Reece’s leave entitlements continue to accumulate based on his full-time hours, as if the JobKeeper enabling stand down direction hadn’t been given. This included annual leave and sick or carer’s leave.
If an employee of a legacy employer had been given a JobKeeper enabling stand down direction to work less hours, they could have agreed with their employer to take paid leave to top up the amount they were being paid. If that happened, for the time they were on paid leave, they were not on a JobKeeper enabling stand down.
Agreements to take annual leave
Under the original JobKeeper provisions, employers could make agreements with eligible employees to take annual leave. This included taking annual leave at half pay. This stopped applying from 28 September 2020.
From 28 September 2020, all employers and employees under JobKeeper needed to follow the usual rules for taking and requesting annual leave. This included the rules set by an award or agreement.
Sick or carer’s leave
On 27 November 2020, the Full Federal Court of Australia confirmed that an employee who has been stood down under the Fair Work Act can’t take paid sick and carer’s leave or compassionate leave. On 21 May 2021, the High Court of Australia refused an application for special leave to appeal this decision.
Employees of a legacy employer continued to accumulate their usual sick or carer’s leave entitlements.
The JobKeeper provisions didn’t affect an employee’s entitlement to take paid sick or carer’s leave, unless they had been given a JobKeeper enabling stand down direction.
An employee of a legacy employer who had been directed to work less hours under the JobKeeper provisions couldn’t use paid sick and carer’s leave or compassionate leave for the days or hours that they had been directed not to work.
Long service leave
The JobKeeper provisions didn’t impact or change an employee’s long service leave entitlements.
All the usual rules applied for legacy employers and their employees for ending employment.
If a legacy employer ended an employee’s employment, the employee may have been entitled to:
- payment of accumulated entitlements including pay, annual and long service leave
- redundancy pay
- other entitlements.
When dismissing an employee, a legacy employer should have checked the applicable award, enterprise agreement, employment contract and workplace policies that applied. They also should have checked the National Employment Standards (NES). These set out the rules and obligations when dismissing an employee. They applied when a legacy employer was dismissing an employee.
The Fair Work Act also includes protections against being dismissed because of:
- a reason that is harsh, unjust or unreasonable, or
- in a way that is harsh, unjust or unreasonable
- another protected right.
These protections at work continued to apply to employees of legacy employers.
If an employee was given notice of termination while a JobKeeper enabling stand down direction to work reduced hours was in place, and their legacy employer wanted them to stay employed during their notice period, they continued to work the reduced hours for the notice period.
For the time they were still employed and the JobKeeper enabling stand down direction still applied, the employee needed to be paid their usual pay for any work they performed during that fortnight (including any leave payments or public holiday pay they were entitled to).
Employees could have been paid out notice instead of being asked to work during a notice period. This is called payment in lieu of notice.
If this happened, the employee’s final pay was calculated on their full pay rate and usual hours and days of work, as if the JobKeeper enabling stand down direction hadn’t been given. For example, an employee who was entitled to 3 weeks’ notice received 3 weeks’ pay at their full rate of pay for their usual hours.
Redundancy happens when:
- an employer doesn’t need the employee’s job to be done by anyone, or
- the business becomes insolvent or bankrupt.
The JobKeeper scheme didn’t change the rules for calculating an employee’s redundancy entitlements. When an employee’s role is made redundant, they may:
- get notice (or payment in lieu of notice)
- be entitled to redundancy pay (also known as severance pay)
- need to be consulted about the redundancy before it happens.
Redundancy pay is paid based on an employee’s original and usual rostered hours, not the hours under any JobKeeper direction. For example, an employee who worked fewer or no hours under a JobKeeper enabling stand down direction was entitled to redundancy pay based on their ordinary and rostered hours before the stand down direction was given.
When making a position redundant, a legacy employer should have checked the applicable award, enterprise agreement, employment contract and workplace policies that applied. They should also have checked the NES. These set out the rules and obligations when dismissing an employee, including redundancy.
An employee of a legacy employer could resign at any time, provided they followed the usual rules. They could resign when a JobKeeper enabling direction or agreement was in place including to work fewer hours, change duties, or change work location.
When an employee resigned, they needed to give their employer any required notice. Employees should have checked the rules about giving notice in any award, enterprise agreement, employment contract or workplace policy.
An employee’s notice period could have run at the same time as a JobKeeper enabling stand down direction and any rostered work. Employment ended at the end of the notice period. It could also have ended earlier if the employer and employee both agreed.
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