Hair and Beauty Salon COVID-19 Lockdowns – what salon owners need to know.

Workplace Relations implications of the current lockdown – what salon owners need to know.

As the coronavirus continues to disrupt business operations across the country, salon owners need to stay on top of their obligations to staff throughout this challenging period. For those members affected by the current lockdown, it is also crucial they understand what options they have if they are temporarily unable to utilise their staff during the current crisis.

Employers may be able to stand their employees down without pay under the Fair Work Act (the Act) when the business has closed because of an enforceable government direction if this means the employee can’t be usefully employed.

Implementing stand-downs may enable employers to preserve jobs and avoid taking more drastic measures in response to the government-directed closures and stay-at-home orders intended to prevent the transmission of the virus. There are however other options that employers may wish to consider and discuss with their staff, such as agreeing to permit full-time and part-time employees to take annual leave.

Set out below is a brief overview of these issues, as well as a reminder of provisions in the Hair & Beauty Industry Award 2010 (the Award) dealing with ‘Unpaid Pandemic Leave’.

Members are reminded that they can contact the HABA on 02 9221 9911 to obtain free specialist advice on any workplace relations issues.

Explanation of stand down provisions in the Fair Work Act

The Fair Work Act allows an employer to stand down an employee without pay if they can’t usefully be employed because of a stoppage of work because of a cause for which the employer can’t be reasonably held responsible. This may include circumstances such as an enforceable government direction requiring an employer’s business to close.

Section 524 of the Act states: (underlining added)

Employer may stand down employees in certain circumstances

(1)     An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:

(a)   industrial action (other than industrial action organised or engaged in by the employer);

(b)  a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;

(c)  a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

(2)   However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:

(a)  an enterprise agreement, or a contract of employment, applies to the employer and the employee; and

(b)  the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.

Note 1:  If an employer may not stand down an employee under subsection (1), the employer may be able to stand down the employee in accordance with the enterprise agreement or the contract of employment.

Note 2:  An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).

(3)   If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.

Employers should check the terms of any applicable enterprise agreement or employment contract

Some enterprise agreements and contracts of employment contain limitations on an employer’s right to stand down employees.  Any relevant provisions in these instruments need to be considered as well as the provisions of section 524 of the Act.

Can an employee access personal/carer’s leave while stood down?

No, an employee who is stood down without pay is not able to access their accrued personal/carers leave under the Act.

Do employee entitlements accrue during a stand down?

Leave entitlements under the National Employment Standards (NES), such as personal/carer’s leave and annual leave, still accrue while an employee is stood down without pay. The period during which an employee is stood down must also be counted when calculating employee entitlements under the NES relating to notice of termination and redundancy pay.

Communication with employees

Employers should contact their employees to notify them of any requirement to stand them down and to potentially discuss other possible approaches to dealing with the current situation. Potential alternate options for employers to consider are explained below.

It is also advisable that employers provide employees with written confirmation of any decision to stand them down, if possible.

Further advice and assistance is available to HABA members

The requirements of the Act relating to stand downs can be complex to apply in practice. If a stand down is held by a Court or the FWC to not meet the requirements of the FW Act, the employer will have an obligation to pay the employees who were invalidly stood down.

It is essential for employers to carefully consider whether the various requirements of the Act set out above are met before proceeding to stand down any employees.

Employers should contact HABA for advice before standing down employees if they are unclear whether the provisions of the Act apply in their specific circumstances.

What alternate options to stand downs are available?

Employers may wish to consider permitting their employees to take paid leave instead of standing them down. This could take the form of:

• Accrued annual leave
• Annual leave ‘in advance’
• Annual leave at half pay
• Long Service Leave

Provisions in the Award dealing with the granting of annual leave ‘in advance’ or ‘at half pay’ are explained below.

 

Annual Leave in Advance – Award requirements

The award permits employers to allow employees to take a period ‘in advance’. That is, an employer can agree to an employee taking a period of annual leave before they have accrued an entitlement.

Clause 33.4 of the award deals with taking annual leave in advance. In short, the Award requires that any agreement for an employee to take annual leave in advanced must:

• State the amount of leave to be taken and the date on which leave is to commence; and
• Be signed by the employer and employee, and if the employee is under 18 years of age, by the employee’s parent or guardian.

Schedule G of the Award includes an example ‘Agreement to Take Annual Leave in Advance.’

If an employee’s employment ends before they have accrued an entitlement to any annual leave that they have been granted in advance the Award permits an employer to make a deduction of the amounts paid in respect of any unaccrued annual leave from the amounts otherwise payable to the employee on termination.

Annual leave at half pay – Award requirements

Schedule X – Additional measures During the COVID-19 Pandemic, of the Award allows employers and employees to agree that, instead of taking paid annual leave on full pay, the employee may take twice as much leave on half pay.

EXAMPLE: Instead of an employee taking one week’s annual leave on full pay, the employee and their employer may agree to the employee taking 2 weeks’ annual leave on half pay. In this example:

• the employee’s pay for the 2 weeks’ leave is the same as the pay the employee would have been entitled to for one week’s leave on full pay (where one week’s full pay includes leave loading under the Annual Leave clause of this award); and
• one week of leave is deducted from the employee’s annual leave accrual.

Reminder – Employee entitlement to take ‘unpaid pandemic leave’

Under Schedule X of the Award, an employee is entitled to take up to 2 weeks’ unpaid leave if the employee is required by government or medical authorities or on the advice of a medical practitioner to self-isolate and is consequently prevented from working, or is otherwise prevented from working by measures taken by the government or medical authorities in response to the COVID-19 pandemic.

An employee must give their employer notice of the taking of unpaid pandemic leave and of the reason the employee requires the leave, as soon as practicable.

An employee who has given their employer notice of taking leave unpaid pandemic leave must, if required by the employer, give the employer evidence that would satisfy a reasonable person that the leave is taken for the abovementioned reasons.