As the COVID-19 pandemic evolves, organisations are grappling with a multitude of questions regarding risks to their business, workplace and employees. Below we summarise our answers to the next five frequently asked questions.

An employee has tested positive for COVID-19. What are the immediate steps we should take?

If an employee (or health authority) informs you that they have tested positive for COVID-19, the first step you should take is to direct the employee to self-isolate – this will be consistent with the instructions that the employee receives from the health authority. You should also direct the employee to provide you with a list of other employees who they have had close personal contact with and direct those employees to self-isolate. If the employees feel well enough to work from home and this option is available they can do so.

To date, contact tracing has been conducted by health authorities who have been relying on the close personal contact lists provided by an affected employee. However, as those resources become stretched, as an employer you should discuss with the affected employee their contact with others in the workplace – including potentially clients, customers and suppliers, who will also need to be notified. Provision of appropriate information is important so that these individuals may make their own decisions in relation to the actions they wish to take, which may include self-isolation. From a privacy perspective, the amount of personal information disclosed should be restricted to that which is reasonably necessary.

You should consider whether you need immediate medical advice (from an infectious diseases specialist or an occupational physician) about the impact on others in the workplace. Much will depend on the degree of contact the affected employee has had with others, the nature of the work performed at the workplace and the size of the workplace.

In many workplaces, it will be advisable to send communications regarding what has occurred. This will address speculation but also the sense of panic that may emerge. Due to privacy laws, it is important not to disclose the identity of the affected person unless it is reasonably necessary to do so to ensure safety. Consider sending an organisation-wide communication and a more targeted communication for close personal contacts of the affected employee. Employees who identify as being high risk because of age or a medical condition may contact you for additional information. In most cases it will be reasonable to provide them with sufficient information for them to make an informed decision about their potential exposure to infection.

You may also need to notify the relevant safety regulator if the situation meets the definition of a notifiable incident (which includes a serious illness). The safety regulator may request a range of information from you, including details of the employee and their time in the workplace, as well as exposure to others and the steps you have and will take to mitigate the risks arising from the exposure.

While it is likely that the health authority will contact you, due to delays that are occurring, we also recommend that the employer make contact with the authority directly. The employer should advise that it is aware of the positive test result of the affected employee and ensure there are no additional steps that the authority wishes the employer to take

Cleaning and disinfection measures ought to be carried out to the standard required by government guidelines. Depending on the circumstances, this may involve the whole or part of the premises.

Our business has dropped significantly and we may not be able to afford to continue to pay our employees. Can we reduce their salaries so that our business can remain viable?

A reduction in salary is always possible if the employee agrees. Of course, the reduced salary must not fall below minimum rates (in a modern award, enterprise agreement or the Federal Minimum Wage). This can be a problem if you are contemplating a commission only arrangement.

However, a unilateral reduction in salary is more problematic.

Many employment contracts contemplate that an employee will have a salary review every year (without any commitment to an increase). During this review, an employer generally takes into account a range of factors – including the individual performance of the employee, the performance of the organisation generally, and other matters that are likely to impact future financial outcomes. Fast-forwarding your employee's annual salary review may be the only contractually valid way to unilaterally reduce their salary.

A decision of the Federal Circuit Court last week considered this very issue - although not in a COVID–19 context. The question was whether an employer (Bluescope Steel) had lawfully reduced the salaries of two employees during a difficult financial period that was caused by a business downturn. The Court rejected the argument that Bluescope Steel could unilaterally reduce the employees' salaries at any time, but it acknowledged the possibility of doing so as part of a formal salary review under their employment contracts. To do so by any other means will be a repudiation (fundamental breach) of their employment contract.

There are some practical steps for your organisation to take to reduce your salary costs, including:

  • Assessing whether the employee will be required to work the same hours and perform the same or similar duties (if available), even if you are proposing a reduction in their salary – it may be easier to reach agreement if you offer reduced pay for reduced hours;
  • Considering whether it can vary or withdraw any bonus or incentive schemes – especially if they are discretionary;
  • Notifying employees of your intention to expedite their annual formal salary review under their employment contracts in light of the business downturn caused by COVID-19; and
  • Meeting with employees to discuss their salary and the practical impact of COVID-19 on the availability of work and the financial performance of the organisation, including the impact across your relevant industry.

Another option to consider is reducing employees' hours of work – so their take home pay goes down. This will usually require agreement, but changes to the Hospitality Award giving employers the right to reduce hours may also be included in other modern awards.

We have been forced to finish up some employees - do we need to make redundancy payments to them? Is there any basis for us to delay those payments, or make them in instalments when cash flow permits?

If you dismiss an employee because the work that they perform is no longer required, the employee will be entitled to redundancy pay under the National Employment Standards or any applicable industrial instrument or contractual entitlement. These entitlements crystallise on termination, and there is no lawful basis for delaying their payment.

If an employee is on unpaid leave or has been stood down because of COVID-19, are they eligible for any payments from the Government?

Yes – the Commonwealth Government has passed legislation (the Coronavirus Economic Response Package Omnibus Act 2020) expanding eligibility for some payments, including the Jobseeker Payment and the Youth Allowance. This includes temporarily waiving the asset test and some waiting periods.

After 27 April 2020, those in receipt of some benefits will also be eligible for a 'COVID-19 supplement' of $550 per fortnight.

The Services Australia website sets out all of the information about entitlements in easy to understand language:

Can we direct our employees to take leave without pay? Are employees entitled to exhaust their annual leave before we can do so?

Employees who have been stood down (as discussed in our previous article, COVID-19: Managing the effects on your workplace,) will remain employees but will generally not be entitled to receive any pay, subject to the terms of any applicable award or enterprise agreement – and so for the most part will effectively be on unpaid leave. But not all employers will be able to establish a lawful basis to stand down their employees (this may change as government restrictions ramp up), and there may be reasons why they do not wish to do so.

Generally, employers do not otherwise have a legal right to direct their employees to take leave without pay.

However, employers will have a right to direct their employee to take annual leave or long service leave in some circumstances – possibly at half pay over an extended period. Annual leave is likely to be straight forward for employees who are not covered by any award – for the purposes of the Fair Work Act a direction to take annual leave in the present circumstances is likely to be reasonable. Anticipated changes to some modern awards, along the lines of those made to the Hospitality Award on 25 March, will mean employers have more flexibility to direct annual leave be taken.

The position on long service leave varies across the States, and changes to legislation in some States have been made or are being contemplated.

Our employee can do his job from home, but he is also home-schooling his two children. Can he work reduced hours and use his carer's leave for the rest of each day?

It is possible for an employee to work a part day, and take leave for the remainder of the day – although you will need to reach an agreement with your employee about the hours he will work and care for his children each day, or if you are able to accommodate some flexibility, have a method for him to record his hours of work. Personal/carer's leave can be used by employees when they have an 'unexpected emergency', which would encompass when a school is initially closed.

If your employee is working unorthodox hours to accommodate his caring responsibilities, you must keep in mind his entitlements under any applicable award or enterprise agreement – for example, in relation to overtime and penalties. However, individual flexibility agreements can usually be made to accommodate those arrangements without triggering the additional entitlements. There may well, in any event, be variations to some awards so that if an employee works his ordinary hours at times that would usually attract penalty rates those rates will not apply.