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Reigning in the unreasonableness of JobKeeper enabled stand downs

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Reigning in the unreasonableness of JobKeeper enabled stand downs

16 July 2020 by Nina Hoang

In another test of the concept of ‘reasonableness’, a Full Bench of the Fair Work Commission have reiterated that employers cannot make any JobKeeper enabled stand down direction that they please. The Commission clarified that the ‘unreasonable test’ in s 789GK of the Fair Work Act 2009 (Cth) is intended for “protection of the interests of the employee from unreasonable use of the JobKeeper direction power.”

This is an Appeal case of Deputy President Sam’s previous decision that the JobKeeper enabled stand down direction issued by Prosegur was reasonable. Prosegur had directed their 8 full-time employees, 6 part-time employees and 11 long-term casuals that their hours would all be reduced to a minimum of 50 hours per fortnight. Deputy President Sams found the direction reasonable, having considered a table of rolling averages of the hours worked by the employees (dated 11 June which was before direction came into force) which showed that they were all receiving in excess of the 50 hours per fortnight. He also considered it reasonable that some employees may be required to work more or less hours in order to suitably balance between the needs of the business and the employees.

This was appealed by the TWU on the following grounds:

  1. The Deputy President failed to assess the reasonableness of the direction;
  2. They Deputy President focused exclusively on the number of hours employees worked before the direction came into effect; and
  3. There was an error by mistaking that full-time and part-time employees were not working 23 hours a week and that full-time employees were working close to or in excess of 38 hours per week.

The Full Bench of Vice President Hatcher, Deputy President Young and Commissioner Cirkovic determined that the earlier decision had been made in error. Firstly because Deputy President Sams had applied Wednesbury standard of legal unreasonableness, which focuses on the fact that something must be irrational to be consider unreasonable. The correct test of unreasonableness is whether the direction is “inequitable, unfair or unjustifiable having regard to the object in s 789GB and the respective circumstances of the employer and the employee.” The Full Bench also held it was incorrect that the substance of the direction was not considered, but instead an assessment had been made on the table which concerned a period before the direction came into effect.

Most relevantly to us, the Full Bench made comments highlighting the application of JobKeeper enabled stand down directions and their ‘reasonableness’.

  • You cannot deprive or reduce one category of employee over another – e.g. it was unfair for part-time hours to get increased while full-time hours were decreased.
  • Casuals do not have ordinary hours, so no direction is required to reduce their hours
  • Direction should reflect reality of what hours business can actually afford to provide to employees
  • It is necessary to consider what are the Award, Enterprise Agreement or contractual entitlements of the employees being affected by the direction
  • There is no entitlement to overtime, so you do not need a direction to reduce overtime
  • Any direction must be balanced against business requirements so it is not necessary to implement a direction so that each employee is receiving the same proportionate reduction in hours as compared to their position prior to the pandemic

Ultimately the Full Bench determined the direction was unreasonable and both parties were required to confer as to the appropriate modification of the direction.

Key lessons

  • Make sure you have a clear business case behind any direction you issue, this will make it defensible
  • Any direction must be fairly applied across the different categories of employees
  • Do not forget to consult before implementing any direction!

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. Contact Andrew Douglas at andrew.douglas@fcwlawyers.com.au or on 0488 151 503.

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