COVID-19 WORK DOWNTURN: OPTIONS FOR BUSINESSES - NECA
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COVID-19 WORK DOWNTURN: OPTIONS FOR BUSINESSES
COVID-19 Downturn in Work: Options for Businesses
Contents
Other Options ......................................................................................................................................... 2
JobKeeper Eligibility ............................................................................................................................... 2
Reduction of Hours................................................................................................................................. 3
Stand down using the general Fair Work Act stand down provisions ................................................. 3
Stand down using the temporary JobKeeper enabling stand down directions ................................... 4
Step 1 .................................................................................................................................................. 4
Step 2 .................................................................................................................................................. 4
Step 3 .................................................................................................................................................. 4
Reasons for Redundancy........................................................................................................................ 5
Meaning of genuine redundancy ........................................................................................................ 5
Redundancies may be unfair ............................................................................................................... 5
Deciding who should be made redundant ............................................................................................ 5
Making an employee redundant ........................................................................................................... 6
The Award Obligations........................................................................................................................ 6
A five-step redundancy procedure ...................................................................................................... 7
Step 1 – The Decision ...................................................................................................................... 7
Step 2 – The Consultation Meeting................................................................................................. 7
Step 3 – Providing Written Information.......................................................................................... 8
Step 4 – Suitable Alternative Positions ........................................................................................... 8
Step 5 – Termination....................................................................................................................... 8
Payments ................................................................................................................................................ 8
Redundancy payments ........................................................................................................................ 8
Notice Payments ................................................................................................................................. 9
Annexure A – Stand down letter (not eligible for JobKeeper) Template ........................................... 10
Annexure B – Notification of stand down letter (eligible for JobKeeper) Template ......................... 11
Annexure C – Stand down letter (eligible for JobKeeper) Template .................................................. 12
Annexure D – General Redundancy Consultation Letter Template ................................................... 13
Annexure E – Termination of Employment Letter Template .............................................................. 14
Annexure F – Termination of Employment Letter (Small Business) Template .................................. 15
Annexure G – Certificate of Service ..................................................................................................... 16
August 10, 2020 1
COVID-19 and all the restrictions that have been put in place have caused unprecedented
disruptions resulting in an economic downturn. As an employer, you are most likely looking at your
options to reduce costs over the coming months to protect your business.
In doing so, you may be considering making some of your employee(s) redundant.
Other Options
Instead of resorting to redundancy, you should consider options such as:
Accessing government financial support (such as the JobKeeper wage subsidy scheme)
Allowing employees to access paid or unpaid leave
Modifying duties or rosters
Reduction of hours by agreement
Stand downs
For example, you may choose to retain all your employees but at reduced hours. This may be a
good option given that many workers are being asked to isolate during this pandemic. If such a
scenario were to happen to one of your employees, you would still have the ability to finish the
job by bringing other employees on, or by increasing another individual’s hours.
JobKeeper Eligibility
In the past months you may not have been eligible for JobKeeper. However, given the recent Stage 4
restrictions, and the impact it is having on the construction industry, it is highly likely that you may
now be eligible for it.
In order to assess if you are eligible for JobKeeper, please refer to this link on the ATO website:
JobKeeper eligibility.
In addition, please take note that on 21 July, the government announced changes to JobKeeper
which extends the scheme to 28 March 2021. However, as of 28 September 2020, the payment will
change to a two-tiered payment system as follows:
Date Eligible employees who in Other eligible employees – in
February 2020 worked for an February 2020 worked for an
average of more than 20 hours average of less than 20 hours per
per week week
Up to 27 September
$1,500
2020
28 September 2020 $1,200 $750
to 3 January 2021
4 January 2021 to 28
$1,000 $650
March 2021
Further to the above, from 3 August 2020, the relevant date of employment will move from 1 March
2020 to 1 July 2020, increasing your employee eligibility for the existing scheme and the extension.
You will also be required to reassess your eligibility by reference to your actual turnovers to
demonstrate that you have suffered an ongoing significant decline in turnover.
To reassess your eligibility for JobKeeper:
August 10, 2020 2
- For 28 September 2020 to 3 January 2021, you must demonstrate that you have met the
relevant continuing decline in turnover test for the previous quarter; and
- For 4 January 2021 to 28 March 2021, you must demonstrate that you have met the relevant
continuing decline in turnover test in the previous quarter of 28 September 2020 to 3
January 2021.
For more information: https://treasury.gov.au/coronavirus/jobkeeper/extension
Reduction of Hours
There is a difference between generally reducing your employees’ hours of work versus doing so
under JobKeeper. Reduction of hours under JobKeeper is discussed under “Stand down using the
temporary JobKeeper enabling stand down directions”.
If you want to reduce the hours of work your employee performs, you must do so in compliance
with the consultation provision of whatever Modern Award, Enterprise Agreement, employment
contract or policy that covers your employees. In the Electrical, Electronic and Communications
Contracting Award 2010 (the “Electrical Award”) the consultation clause is located at clauses 8 and
8A. In the Clerks – Private Sector Award 2020 (the “Clerks Award”) the consultation clause is located
at clauses 38 and 39.
If you are unsure where the consultation provision is located or you need help understanding what
process you must follow, please get in touch with the NECA Workplace Relations (WR) team.
Do note you cannot unilaterally reduce an employee’s hours of work, they must agree to it. If they
do not agree to it, you may have to consider other options which may include a stand down (if it is
applicable) or redundancy.
Stand down using the general Fair Work Act stand down provisions
If you are considering standing down your employees and you are not eligible for JobKeeper, then
you will need to stand them down under the general Fair Work Act stand down provisions.
You can stand your employees down, not to do any work at all and without pay, where they cannot
be usefully employed because of a stoppage of work for any cause for which you cannot be
reasonably held responsible.
Please note you cannot stand an employee down just because of a deterioration of business
conditions or because an employee has COVID-19. There must be a stoppage of work, where the
employee cannot be usefully employed because of the stoppage and the stoppage is not something
you can be reasonably held responsible for.
If your employees are covered by a Modern Award, Enterprise Agreement, employment contract or
policy that has a stand down provision, you must use the provisions of those documents. You cannot
use the general Fair Work Act provisions.
A “Stand down letter (not eligible for JobKeeper)” template from the Fair Work Ombudsman (FWO)
can be found in Annexure A of this document. In this document, the FWO has provided some
guidance on the process and a template letter can be found on page 4.
August 10, 2020 3Stand down using the temporary JobKeeper enabling stand down
directions
This only applies when:
a. You are qualified to access JobKeeper;
b. You have enrolled to the scheme;
c. The employee you want to stand down is eligible for JobKeeper; and
d. That employee cannot be usefully employed for their normal days or hours because of
business changes that are attributable to the pandemic, or government initiatives to slow
down the transmissions of the pandemic.
If so, you can issue a ‘JobKeeper enabling stand down direction’. Such a direction includes your
eligible employee temporarily:
have their hours worked in a day reduced;
have the number of days they work reduced;
have their overall number of hours reduced; or
being stood down entirely (not coming into work at all).
The following documents (developed by the Fair Work Ombudsman) can be found in this guide:
Annexure B: A “Notification of stand down letter (eligible for JobKeeper)” template from the
Fair Work Ombudsman (FWO). In this document, the FWO has provided some guidance on
the process and a template letter can be found on page 5.
Annexure C: A “Stand down letter (eligible for JobKeeper)” template from the FWO. In this
document, the FWO has provided some guidance on the process and a template letter can
be found on page 5.
Step 1
Your first step would be to issue the notification of stand down letter (Annexure B). This is in line
with the requirement that the intention should be issued in writing at least 3 days before issuing the
direction (unless your employees genuinely agree to a shorter timeframe).
Step 2
Next you will need to have the consultation with the employee (or their representative) about the
direction. You should keep a written record of the consultation. During the consultation meeting,
you can discuss other options such as the employee using any accrued leave entitlements they may
have. If you want, you can include these other options in your notification letter (Annexure B).
Step 3
Your final step would be to issue the stand down letter (Annexure C).
You must amend the template letters referred to above in accordance to your company’s situation.
If you need help with these documents, please get in touch with the WR team.
August 10, 2020 4Reasons for Redundancy
Redundancy occurs where a particular job no longer needs to be done, resulting in an employee
being made redundant. Redundancy does not result from any factor arising from the employee’s
performance or behaviour, but from such things as:
Economic downturn.
Technological change.
Company mergers and restructuring.
Changes to production methods.
Meaning of genuine redundancy
Section 389 of the Fair Work Act 2009 (Cth) provides as follows:
1. A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone
because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement
that applied to the employment to consult about the redundancy.
2. A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in
all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
Redundancies may be unfair
An employee who has been selected to be made redundant for a prohibited reason (such as union
membership, making a complaint or race, sex, age etc) may be able to challenge a decision to make
them redundant and indeed make an unlawful dismissal (General Protections) application. Similarly,
a failure to consult with or give adequate notice to employees to be made redundant has been held
by tribunals to lack procedural fairness and therefore may result in a finding that the termination
was “unfair”.
Deciding who should be made redundant
Deciding who is to be made redundant can often be a difficult process. Many trade unions still
vigorously pursue a policy of “last on, first off”. However, this approach has no regard to the needs
of the business and may offend various anti-discrimination laws.
The recommended approach to adopt, and the approach that has been approved by various
tribunals, is for you to select who is to be made redundant, referring to the skills, experience,
training and performance of individuals compared to the current and future needs of your
organisation.
Members are strongly advised to contact the NECA Workplace Relations (WR) team for assistance
prior to developing selection criteria or making any decision as to which employees are to be made
redundant.
August 10, 2020 5Making an employee redundant
When making an employee redundant, you must consider your obligations regarding consultation.
These obligations can be found in either:
A Modern Award;
Enterprise Agreement;
Employment Contract; or
Company Policy.
If your employees are covered by an enterprise agreement employment contract or company policy,
please refer to your consultation obligations within those documents to determine what process you
must follow.
Most Modern Awards have consultation clauses appearing at clause 8 and every new enterprise
agreement made after 2009 is also required to have a consultation clause.
If you are unsure what your obligations are, please contact the NECA WR team for assistance.
The Award Obligations
Majority of employees engaged by NECA members are covered by the Electrical, Electronic and
Communications Contracting Industry Award 2010 (the “Award”). Below is an extract from the
Award which outlines some critical obligations that an Employer must observe when making
employees redundant:
Clause 8 Consultation regarding major workplace change
8.1 Employer to notify
(a) Where an employer has made a definite decision to introduce major changes
in production, program, organisation, structure or technology that are likely to
have significant effects on employees, the employer must notify the
employees who may be affected by the proposed changes and their
representatives, if any.
Significant effects include termination of employment; major changes in the
composition, operation or size of the employer’s workforce or in the skills required;
the elimination or diminution of job opportunities, promotion opportunities or job
tenure; the alteration of hours of work; the need for retraining or transfer of
employees to other work or locations; and the restructuring of jobs. Provided that
where this award makes provision for alteration of any of these matters an
alteration is deemed not to have significant effect.
8.2 Employer to discuss change
(a) The employer must discuss with the employees affected and their
representatives, if any, the introduction of the changes referred to in clause
8.1, the effects the changes are likely to have on employees and measures to
avert or mitigate the adverse effects of such changes on employees and must
give prompt consideration to matters raised by the employees and/or their
representatives in relation to the changes.
(b) The discussions must commence as early as practicable after a definite
decision has been made by the employer to make the changes referred to in
clause 8.1.
August 10, 2020 6(c) For the purposes of such discussion, the employer must provide in writing to
the employees concerned and their representatives, if any, all relevant
information about the changes including the nature of the changes proposed,
the expected effects of the changes on employees and any other matters likely
to affect employees provided that no employer is required to disclose
confidential information the disclosure of which would be contrary to the
employer’s interests.
A five-step redundancy procedure
In line with what’s provided for in the Award, below are the steps you should take to ensure
compliance with your consultation obligations.
It is important that you follow the steps outlined below correctly, as it will also protect your business
from any unfair dismissal claims that may be made by your outgoing employee.
Step 1 – The Decision
You must ensure that the employee’s position will no longer be required to be performed by anyone
because of changes in the operational requirements of the business. Redundancy is about not
requiring the role to be performed so this means you cannot employ someone else shortly after you
make an employee redundant. It is however, permitted to redistribute an employee’s tasks to other
existing employees or to outsource the work.
Step 2 – The Consultation Meeting
You are required to consult with those employees affected by the redundancy in accordance with
the consultation obligations in either an Enterprise Agreement, Award, Employment contract or
company policy.
You should initially have a meeting with all staff that may be affected by the decision to have
redundancies. Recent Fair Work Commission (FWC) case law has demonstrated that you should not
make a pre-determination of which employees will be terminated prior to consultation and
therefore it is not enough to only consult with employees that will be terminated. As all employees
in a workplace are affected by redundancies, all employees should be consulted.
For example, if you are looking to make 2 electricians from a particular team redundant, instead
of only consulting with 2 electricians, you should consult with all the electricians in that team.
You can inform affected employees and their representatives of the meeting via email.
The purpose of the meeting is to:
a. Notify employees of the decision to enact redundancies and the impact it might have.
For example, this might involve explaining that due to the restrictions in place in Victoria
there has been a downturn in work and as such there is going to be downsizing and
some positions may be made redundant as a result.
b. Provide employees with the opportunity to ask questions.
c. Provide employees with the opportunity to discuss and voice any ideas or suggestions
they have about the change.
d. Consider all options and alternatives to redundancies, such as redeployment, job
sharing, reduced hours, stand down, etc. You should genuinely consider any viable
alternative options your employees put forward.
August 10, 2020 7Do note you are not obliged to provide confidential information that would be contrary to your
business’ interests.
Step 3 – Providing Written Information
Following the meeting, you are also required to provide written information about the changes to
the employees and their representatives. A “General Redundancy Consultation Letter” template can
be found in Annexure D of this document.
You may of course choose to provide written information prior to having the consultation meeting
(performing step 3 first, then step 2).
Step 4 – Suitable Alternative Positions
You must ensure that there are no other positions within your organisation or an associated entity
that could be suitable for the employee(s) you are looking to make redundant. Regardless of
whether the alternative position is full time, part time or casual, if the skills required for the role are
within the redundant employee’s skill set, you would be obliged to offer the role to the employee.
Step 5 – Termination
Take a reasonable amount of time (a few days) to consider the discussions had during the
consultation meeting. This gives you the time to genuinely consider any suggestions or ideas that
may have been put forward by your employees. If at the end of your consideration, you still decide
to go ahead with making some of your employees redundant, you will need to have a meeting with
the employees you have picked to make redundant so that you can advise them of the termination
of their employment. Ensure that you offer them the option to bring a support person to the
meeting.
You will also need to provide them notice of termination in writing. A “Termination of Employment
Letter” template can be found in Annexure E of this document.
If you are a small business (15 employees and less), you may use the “Termination of Employment
Letter (Small Business)” template in Annexure F of this document. Please note though that if you are
a small business but contribute to a severance fund for your employee (e.g. Protect), it may mean
your employee is eligible to receive redundancy payments. If so, please amend the template
accordingly.
If you decide to terminate the employment of 15 or more employees and it is for reasons of an
economic, technological, structural or similar nature (or if the reasons include any of these things)
you must provide Centrelink with written notice of the dismissals.
You may choose to provide a Certificate of Service to your employee. A “Certificate of Service”
template can be found in Annexure G of this document.
Payments
Redundancy payments
Where an Employer engages 15 or more employees, an employee whose position is made
redundant shall be entitled to redundancy pay in accordance with the following table:
Period of continuous service Severance pay
Less than 1 year Nil
August 10, 2020 81 year and less than 2 years 4 weeks’ pay
2 years and less than 3 years 6 weeks’ pay
3 years and less than 4 years 7 weeks’ pay
4 years and less than 5 years 8 weeks’ pay
5 years and less than 6 years 10 weeks’ pay
6 years and less than 7 years 11 weeks’ pay
7 years and less than 8 years 13 weeks’ pay
8 years and less than 9 years 14 weeks’ pay
9 years and less than 10 years 16 weeks’ pay
10 years and over 12 weeks’ pay
This table of payments is in accordance with the National Employment Standards under the Fair
Work Act 2009 (Cth). To ensure that you are making the correct payment you should double check
this scale with any scale provided in an applicable Modern Award or Enterprise Agreement.
The above scale applies to the Electrical Award.
Do take note that the Electrical Award at clause 15.2 provides that an employee will be entitled to a
pro-rata payment for any period of continuous service which is less than a full year at any of the year
levels referred to above.
If you pay into a severance fund (such as Protect), even as a small business, your employee would be
entitled to receive redundancy pay. As soon as you decide to make an employee redundant, contact
the severance fund to determine if there is sufficient funds to pay out the employee with. You may
need to top up payment.
Notice Payments
You must give the employee notice of termination in accordance with the following table:
Employee’s period of continuous service with Period of notice
the employer at the end of the day the notice is
given
Not more than 1 year 1 week
More than 1 year but not more than 3 years 2 weeks
More than 3 years but not more than 5 years 3 weeks
More than 5 years 4 weeks
* Employees over 45 years old who have completed at least 2 years of service when they receive
notice are given an additional week of notice.
The table of payments above is in accordance with the NES. To ensure that you are making the
correct payment you should double check this scale with any scale provided in an applicable Modern
Award or Enterprise Agreement.
The above scale applies to the Electrical Award.
WARNING: Enterprise Agreements, some Modern Awards, Employment Contracts or Company
Policies may provide for greater levels of severance payments. Contact NECA’s WR team if you are
unsure.
The WR team can be contacted via workplace.relations@neca.asn.au or 1300 300 031.
August 10, 2020 9Annexure A – Stand down letter (not eligible for JobKeeper) Template
If you would like to access the document produced by the Fair Work Ombudsman (FWO), double
click on the image below.
August 10, 2020 10Annexure B – Notification of stand down letter (eligible for JobKeeper)
Template
If you would like to access the document produced by the Fair Work Ombudsman (FWO), double
click on the image below.
August 10, 2020 11Annexure C – Stand down letter (eligible for JobKeeper) Template
If you would like to access the document produced by the Fair Work Ombudsman (FWO), double
click on the image below.
August 10, 2020 12Annexure D – General Redundancy Consultation Letter Template
[Date]
[Name]
[Address]
Dear [Name],
RE: Redundancy Consultation
I write to confirm the discussions held on [insert date and time] between yourself and [insert anyone
else present].
At the meeting we discussed:
The COVID-19 pandemic and the impacts that this has had on [insert company name],
operations moving forward. As you are aware the outbreak has been declared a Public
Health Emergency of International Concern by the World Health Organisation and Victoria
has declared a state of disaster with recent spike in cases;
The issues currently faced by [insert company name] as a result of the pandemic and the
restrictions imposed by the Victorian government. This has resulted in a downturn of work
and [insert company name] must now consider restructuring the business.
The reduction in work due to site closures and we anticipate that this may continue. [Insert
update on situation and impact on business operations.]
Due to this situation, your position may be at risk of being made redundant as there is simply not
enough work to retain everyone’s employment.
In order to try and mitigate the adverse effects of the downturn in work on your employment, we
discussed a few options, during the meeting, as below:
The taking of paid or unpaid leave
Potential redeployment
Reduction in working hours (e.g. Part time)
We discussed these options in the hope to maintain your employment for as long as possible whilst
we wait for the restrictions to be lifted and for work to return to normal.
If you have any questions or concerns about anything we have discussed, please get in touch with
me via [insert contact details], by [insert date].
I will now be considering the discussions we had during our meeting on [insert date] and expect to
make a decision by [insert date].
The company is obligated to inform a representative(s) of your choice, so if you would like us to
inform anyone on your behalf about this discussion, please let us know.
Yours sincerely
[insert name]
[insert title]
August 10, 2020 13Annexure E – Termination of Employment Letter Template
[Date]
[Name]
[Address]
Dear [Name],
RE: Termination of employment due to redundancy
As discussed in our meeting of [insert date], a downturn in work as a result of the COVID-19
pandemic [or restructure] has resulted in your position becoming redundant. Further to this, despite
considerable effort, we have been unable to identify a suitable redeployment opportunity or suitable
alternative employment for you elsewhere within the Business.
We therefore regret to advise that your employment contract is to be terminated by way of bona fide
redundancy, with this effective as at close of business [insert date if employee is to work out notice
period].
[or if employee is not going to work out entire notice period]
You will receive ____ week’s payment in lieu of notice making [insert date] your last working day.
Details of your termination entitlement, including outstanding leave, severance pay and any other
entitlements are detailed in the attached schedule.
We will also provide you with a Certificate of Service giving details of your employment with [insert
business name] and the reason for the termination. Should you require a separation certificate,
please do not hesitate to ask.
Should you have any questions regarding this matter, please do not hesitate to contact me. In the
meantime, we wish to extend our sincere appreciation for the commitment you have maintained
towards your responsibilities and to wish you every success with your future endeavours.
Yours sincerely
[insert name]
[insert title]
August 10, 2020 14Annexure F – Termination of Employment Letter (Small Business)
Template
[Date]
[Name]
[Address]
Dear [Name],
RE: Termination of employment due to redundancy
As discussed in our meeting of [insert date], a downturn in work as a result of the COVID-19
pandemic [or restructure] has resulted in your position becoming redundant. Further to this, despite
considerable effort, we have been unable to identify a suitable redeployment opportunity or suitable
alternative employment for you elsewhere within the Business.
We therefore regret to advise that your employment contract is to be terminated by way of bona fide
redundancy, with this effective as at close of business [insert date if employee is to work out notice
period].
[or if employee is not going to work out entire notice period]
You will receive ____ week’s payment in lieu of notice, along with any other termination
monies/accruals outstanding.
[if the business is obliged to make a severance payment by an award, enterprise agreement or
contract of employment]
You will receive redundancy pay in accordance with your [award/ enterprise agreement/ contract of
employment]. Details of your termination entitlement, including outstanding leave, severance pay and
any other entitlements are detailed in the attached schedule.
or
[If the business does not intend to pay redundancy pay]
As our Business employs less than 15 employees, severance payments under the National
Employment Standards are not applicable.
We will also provide you with a Certificate of Service giving details of your employment with [insert
business name] and the reason for the termination. Should you require a separation certificate,
please do not hesitate to ask.
Should you have any questions regarding this matter, please do not hesitate to contact me. In the
meantime, we wish to extend our sincere appreciation for the commitment you have maintained
towards your responsibilities and to wish you every success with your future endeavours.
Yours sincerely
[insert name]
[insert title]
August 10, 2020 15Annexure G – Certificate of Service
[Date]
This is to certify that [name of former employee] commenced employment with [insert business name]
on [insert date] and ceased employment on [insert date].
[Name] was [job title] in the [insert department].
The duties performed in this position were:
[list duties].
...................................................
[Relevant officer]
August 10, 2020 16You can also read
