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JobKeeper-enabling directions need to be fair for all employee categories

In a previous bulletin we discussed a legal challenge made against a JobKeeper-enabling direction issued by an employer requiring its employees’ normal working hours to reduce to 50 hours per fortnight (TWU v Prosegur (2020)). The Fair Work Commission (FWC) determined the direction was not unreasonable because the employer had a rational and reasonable basis to issue the direction.

This decision was successfully appealed on the ground that the FWC didn’t consider whether the impact of the direction was inequitable, unfair or unjust in terms of the impact on the employees subject to the direction.

A JobKeeper-enabling direction given by an employer to an employee of the employer does not apply to the employee if the direction is unreasonable in all of the circumstances. On appeal the FWC Full Bench ruled that, when assessing whether a direction is unreasonable, regard should be had to the balance between the employer’s interests in keeping their businesses viable and maintaining the contribution of employees to their business, with employee interests including the maintenance of employment and the continuation of productive employment during the pandemic.

Given the JobKeeper-enabling direction gives the employer power to modify or remove employee entitlements, the reasonableness requirement needs the employees’ interests to be considered.

The Full Bench made the following observations:

  • A 35% reduction in the pre-pandemic working hours at the depot justified some form of Jobkeeper direction reducing hours of work for full-time employees.
  • If the effect of the direction was to increase the ordinary hours of part-time employees (because their contractual ordinary hours were less than 25 per week), in circumstances where full-time employees were having their ordinary hours reduced, this would be unreasonable and unfair.
  • There is no need for any direction to be issued to reduce the ordinary hours of work of casual employees, since casual employees are engaged to perform work as required and do not usually have any defined number of ordinary hours.
  • It might be reasonable for long-term regular casual employees to be provided with some guarantee of hours in order to maintain their connection with the workplace and for the employer to derive commercial value from the JobKeeper subsidy it is receiving in respect of them (because the value of the JobKeeper subsidy for casual employees approximately equated to payment for 50 hours per fortnight).
  • Whether a direction is reasonable is assessed by reference to the position that would apply if the direction was not made. It should consider the impact on employee entitlements and whether reducing pre-existing entitlements to hours of work disproportionately and unfairly affects one category of employee over another. It should be recognised that permanent employees can supplement their income in the face of reduced hours of work through leave and RDOs, whereas casuals cannot.
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