Who pays stay-at-home employees if they won't get Job Keeper?


COVID-19: If the Federal Government orders people to stay home under Biosecurity Alert, do employers need to pay employees?

For those businesses that don’t qualify for Job Keeper payments, this article points out some interesting situations regarding employees in the current crisis.

Ah COVID-19, scourge of toilet paper and other essential household supplies. Whilst mainstream media has been kind enough to entertain us all by showcasing thousands of Australians across the country frantically bulk buying toilet paper, surgical masks and baby formula, it neglects to shed the same light on the ramifications of a far more serious scenario – the possibility of mass closure of schools, workplaces and public gatherings.

If you’re wondering “what happens to daily life if the Federal Government decides to utilise powers under the Biosecurity Act 2015 (Cth)?” you have come to the right place.

According to our Constitution, the Federal Government has the power to enact legislation in order to restrict the movements of citizens (and non-citizens) in the event of a biosecurity risk. Enter the Biosecurity Act 2015, which has recently been discussed by Attorney-General Christian Porter as a viable strategy to combat the spread of COVID-19.

If utilised, the Biosecurity Act will empower the Federal Government to make ‘human biosecurity control orders’ and declare ‘human health response zones’ if there is a high likelihood of COVID-19 spreading through an Australian state or territory and if that spread is likely to cause harm to human health and/or the economy. The Biosecurity Act will also empower health officials to detain infected persons who violate quarantine.  

It is important to understand that such powers may be used to compel all persons within the country into quarantine, regardless if they are infected with the virus or show symptoms.

So what happens if this situation becomes a reality? You’re probably thinking, ‘how will I be able to go to work?’ or ‘is my employer still required to pay my salary?’. The answer lies predominantly in two places:

1.    Section 524-526 of the Fair Work Act 2009 (Cth); and

2.    Your employment contract and/or the relevant enterprise agreement.

In a nutshell, both sources of law point out that it depends on the employee’s capacity to perform their obligations under their employment contract.

The Fair Work Act 2009 (Cth)

The Fair Work Act is the primary source of legislation which deals with the relationship between employees and employers.

In the event that the Federal Government declares a shutdown of schools, workplaces and public gatherings, section 524 of the Fair Work Act may allow an employer to ‘Stand Down’ employees if a stoppage of work occurs for reasons which the employer cannot mitigate.  The effect of an employee being ‘stood down’ would mean that employers are not obligated to pay wages for the period of time that work is suspended. However, pursuant to section 525 of the Fair Work Act, an employee is not taken to be stood down if they have taken paid or unpaid leave.

Employment Contract and/or Relevant Enterprise Agreement

It is not uncommon for some employment contracts and/or enterprise agreements to address the possibility of a stand down situation. If your employment contract does stipulate terms for a stand down, your employer must adhere to these terms in order to effect a stand down.

In the event that your employment contract does not address the possibility of stand down situations, the common law principle of ‘frustration’ may also be relied upon by your employer.

Under the principle of ‘frustration’, parties to a contract may cease their contractual obligations if such obligations have become too burdensome or impossible to fulfil. For the purposes of this article, a nationwide shutdown due to the occurrence of a biohazard enforced quarantine is an unforeseen event that is beyond the control of either parties.

Despite this, in our fortunate age of computers and easily accessible internet, employees working in an office environment have little to fear. By now, most employers would have prepared for an office shutdown and arranged for employees to work from home. In such instances, working from home should not frustrate your employment contract if you are able to fulfil your duties as an employee.  In this instance your employer cannot rely on section 524 of the Fair Work Act to have your employment stood down. They are therefore obligated to pay your wages as normal.

The situation may become worrisome for employees who are required to complete physical labour or be present at a certain place at a certain time. For full-time and part-time workers of this calibre, the Fair Work Act allows employees to take out paid-leave, personal carer’s leave or if desired by the employee, unpaid leave. It should be noted however that employers cannot compel their employees to take paid leave unless the request is reasonable and part of the employment contract.

Unfortunately, any mass shut down of schools, workplaces and public places will affect how we live our daily lives. However, as an employee, it is always important to be aware of your rights and the obligations your employment contract requires of you.

For further information, please call (02) 8296 6222 or email info@townsendslaw.com.au

Media Release