As Australian businesses scramble to implement a COVID-19 task force, response plan and risk management protocols, at some point they may face a very important issue: to pay or not to pay their employees.

The answer to this question depends upon a number of factors, including:

  • the relevant terms in an employee’s contract of employment or applicable Modern Award or enterprise agreement;
  • the nature of the workplace;
  • whether the employee can work from home;
  • whether the employee is actually infected or simply at risk of possible infection;
  • the requirements, recommendations and guidelines of relevant authorities, such as the Federal Department of Health (DoH), in relation to quarantine or ‘self-isolation’;
  • whether the employee’s illness or need to self-isolate is work related or arises from the employee’s personal activities, such as annual leave or a visit from relatives; and
  • whether a third party, and not the employer, is responsible for the employee’s inability to attend work.

With so many variables, it is impossible to provide general advice or adopt a ‘one size fits all’ approach. Specific advice should be obtained, particularly if an employer is contemplating a period of unpaid leave or unpaid stand down to ensure they do not breach their legal obligations. Further, employers will need to consider their overall risk appetite and industrial relations implications. So, keeping in mind all of the above, here are a few general guidelines.

1. If your employee is actually ill, subject to providing a medical certificate:

  • they will be entitled to paid personal leave and, if that runs out, they should be placed on unpaid personal leave;
  • if it is established that the employee’s illness is work-related (for example, they contracted COVID-19 on a work trip or through contact with clients or patients in performing their duties), this will trigger workers’ compensation liability.

2. If your employee is required to provide care and support for a family or household member who is actually unwell from COVID-19, the employee may be entitled to paid career’s leave.

3. If your employee is not unwell, and is otherwise ready, willing and able to attend work, but you have directed the employee to remain away from the workplace for the quarantine period recommended by the DoH:

  • if they can work from home, or perform reasonable alternative duties from home, they should be paid as per normal;
  • if they cannot work from home, they should be placed on paid leave (but this may not technically be able to be debited from their statutory personal leave entitlements because they are not actually ill or injured). An employer cannot simply place the employee on unpaid leave when it is the employer who is directing the employee to not attend work even though this direction may be lawful and reasonable and in accordance with the employer’s health and safety obligations. Nor can the employer, as a general rule, force the employee to take their paid annual leave or long service leave to cover the absence. Further, the question of how the employee is paid for this absence will require careful consideration.

4. If your employee cannot attend work following a period of annual leave because they have been prevented from re-entering the country, or been placed into a quarantine centre, by the government, and they cannot perform their duties or reasonable alternative duties, they are not ready, willing and able to work and therefore there would likely be no obligation on the employer to pay them. In these circumstances, the employee may wish to take annual leave. The situation will be different if the reason for overseas travel was work-related.

5. If your employee cannot attend work because of the actions of a third party, for which the employer cannot reasonably be held responsible, and cannot otherwise be usefully employed, this may entitle the employer to stand down the employee without pay under s 524(1)(c of the Fair Work Act 2009. Such a situation might arise where, for example:

  • the workplace has been shut down by a government authority due to fears of contamination;
  • essential parts are not available due to a cessation of production caused by COVID-19;
  • the employee cannot attend their usual workplace due to a quarantine ban imposed by the client or customer.

6. If your business is being impacted by COVID-19 (for example, loss of customers) and you are contemplating staff redundancies, you will need to comply with your consultation and payment obligations and first consider all reasonable alternatives to redundancies. This may include reaching agreement with staff to reduce their hours, or perform alternative duties, or take annual leave, unpaid leave or a combination of paid and unpaid leave.

If you need specific advice on your organisation’s options and obligations in dealing with COVIV-19, please contact us.

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