Due to the COVID-19 pandeimc our business is experiencing work flow problems. (we can still operate but work has dried up). Can we reduce an employee’s hours of work from full time to part time hours to help us through this time?
The following content is based on information availableat the time of publishing.
These are certainly difficult times for businessesand their employees and there are numerous factors that need to be considered in such scenarios.
Basically an employer cannot direct an employee to move from full-time to part-time (i.e decrease their permanent hours) without their approval. Some of the key principles are outlined below but businesses are encouraged to seek tailored advice based on the relevant circumstances.
Any variation an employment contract can only be done by mutual agreement. Contracts cannot be changed unilaterally by one party to the contract. In this way, we start with the position that an employee is within their rights to rely on their contract and compel an employer to continue to provide them with their contracted hours.
An employee may also be able to argue that they were ‘dismissed’ if their employer sought to force the employee to reduce their contracted hours. This could have various consequences, including potential unfair dismissal or breach of contract claims.
Having said this, many employers are understandably seeking to reduce the hours of work of their employees in the current environmentin an attempt to avert potential redundancies.
A temporary reduction in employee hours could be beneficial to all parties in these circumstances.
In this case, it is important to highlight the difference between temporary and permanent reductions in hours. An employer who seeks to reduce hours of work on a permanent basis may be triggering redundancy of employment and all of the processes associated with this move.
An employer can obtain agreement from employees to vary their employment contracts to part time arrangements. The employer would need to ensure that the contractual changes were appropriately documented and recorded. Employers should be aware that such a change cannot be undone without agreement from employees and some employees may later refuse to return to their original working hours.
One option for an employer may be to obtain the agreement of employees to take unpaid leave for a set period of time. When asking employees to take unpaid leave, the employer may explain that agreement is being sought to attempt to avert redundancies.
The employer may then ask employees who agree to the unpaid leave to submit unpaid leave forms to the employer. Alternatively, the employer and employee may otherwise document the agreement to take unpaid leave in writing. The agreement should clearly state how long the agreement will last, including start and end dates.
The employer may seek to make clear to employees at this time that they will be paid out of their original rate of pay if they are later made redundant.
Agreement from employees to temporarily or permanently reduce their hours of work may impact their leave entitlements. For example, under the Fair Work Act 2009 annual leave accrues based on service. If an employee’s hours of work and service are reduced then their leave accruals may be reduced too.
To avoid disputes on this issue, employers may seek to address how leave will accrue before the employee’s hours of work are reduced. For example, an employer may agree to accrue leave according to the employee’s original hours while they are on unpaid leave. Alternatively, an employer may clarify that the employee will only accrue leave according to their reduced ordinary hours.
Any consultationprovisions in the relevant award, enterprise agreement and employment contract that covers an employee must be complied with.
All modern awards impose a requirement on employers to consult with employees and their representatives (if any) about changes to an employee’s regular roster or ordinary hours of work.
In addition, all enterprise agreements made under the Fair Work Act 2009 (FW Act) are required to have a consultation term.. If a consultation term is not included, the model consultation term in Schedule 2.3 of the Fair Work Regulations 2009 (Regulations) is taken to be a term of the agreement. The FW Act and the model term in the Regulations impose obligations on employers to consult about changes to an employee’s regular roster or ordinary hours of work.
It can be seen from the above that it is necessary to consult with award-covered and agreement-covered employees about any significant changes in their hours of work. It is of course also important to consult with award-free employees.
Consultation requirements for any planned redundancies will also need to be investigated.
Members who are considering introducing shorter working hours arrangements during the COVID-19 crisis are urged to contact Ai Group or Ai Group Workplace Lawyers for specific advice or call the Workplace Advice Line on 1300 55 66 77.
For template agreementssee:
More Coronavirus (COVID-19) advice and resources can also be found at Ai Group'sdedicated webpage. Specific COVID-19 HR Resource Centre and Health & Safety Resource Centre content to assist memberscan be foundhere.
Clinton is the Publications Manager at Ai Group. He is responsible for a number of key services including Annotated Modern Awards, Workplace Relations Handbooks and the management of Ai Group’s HR and Health & Safety Resource Centres. Clinton has a Masters in Employment Relations and previously held advisory roles with the Workplace Authority and Fair Work Ombudsman.
