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First JobKeeper Case – JobKeeper to subsidise running down accruals

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First JobKeeper Case – JobKeeper to subsidise running down accruals

15 May 2020

The question is often asked, does JobKeeper pay for holidays? The answer is yes because once an employer is eligible and has an eligible employee, it is paid money to pay that employee whether at work, not at work as stood down or on leave.

But the further question is if I issue a JobKeeper Enabling Direction to stand down, can I also issue a letter requesting the employee take leave under JobKeeper (run down their accruals) that they can’t unreasonably refuse. For many employees the payment out of leave (supplemented by JobKeeper) would involve a top up of the leave payment (therefore diminish scare cash reserves) but what if the person worked beneath the $1,500 per fortnight? Wouldn’t that be good strategically?

In McCready v Village Roadshow (VR), the first JobKeeper case, VR did just that and a little more. It issued a direction to all staff standing them down and then a letter requiring them to use half their ordinary days’ work as annual leave until down to 10 day accrual. Ms McCready worked 2 days a week, earned less that $1,500 a fortnight and refused the request for her to take one day leave per week.

Hunt C, considered her planned trips and health condition and found the refusal to take the leave was unreasonable. As the purpose of the legislation was to place the business in hibernation and to allow the businesses to safely emerge from hibernation, running down leave to allow the business to safely emerge without larger and expensive accruals was within the spirit of the legislation. But an employee may reasonably refuse such a request, for example  when they rely on leave for a serious medical procedure and have no personal leave, family holidays that are booked and been planned for a long time etc. You must examine carefully each person’s circumstances. To be successful you should have a policy that says don’t plan leave during COVID-19 and its immediate aftermath.

Lessons

  1. An organisation can use a JobKeeper direction to stand down and then require employees to use leave funded by JobKeeper payments
  2. An employee can reasonably refuse if they have demonstrated commitment and need the leave
  3. An organisation should introduce a policy as soon as possible saying no planned leave during COVID-19 or its aftermath  to prevent personal circumstances arising

Have a question or need advice?

Our team is available to clarify any questions you have and provide the right advice for your business and workforce. Please contact Andrew Douglas at andrew.douglas@fcwlawyers.com.au or on 0488 151 503.

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