A Balancing Act – An employer’s JobKeeper Enabling Direction disproportionately favoured one group of employees

The introduction of the JobKeeper scheme has provided employers with flexibility to manage their organisation as the economy traverses through the effects of the COVID-19 pandemic.

In the recent case of Transport Workers’ Union of Australia v Prosegur Australia Pty Limited [2020] FWCFB 3655, the Full Bench (the Full Bench) of the Fair Work Commission (Commission) heard an expedited appeal from the Transport Workers’ Union (TWU) against the earlier decision of Deputy President Sams – who held that Prosegur Australia Pty Limited’s (Prosegur) ‘JobKeeper enabling direction’ that required casual employee’s work more hours while reducing the hours of full-time employees was valid. The TWU contended that the Deputy President’s decision was made in error because it involved a misconstruction of the statute and an error of fact, which resulted in the initial decision of Deputy President Sams being overturned.

Facts

Prosegur is a cash in transit business which performs a combination of armoured car and covert cash transportation operations. The COVID-19 pandemic resulted in a substantive reduction in Prosegur’s work and revenue. On 9 June 2020, Progesur employees were sent correspondence titled “JobKeeper Enabling Direction” (the Direction) which stated:

“… Prosegur intends to reduce your normal working hours to 50 hours per fortnight effective from Tuesday 9^th June 2020. This would continue up to and including 27 September 2020 unless the direction is withdrawn or replaced by a new direction in writing prior to that date.”

On 27 May 2020, the TWU filed an application pursuant to section 789GV(3) of the Fair Work Act 2009 (Cth) (the Act) for the Commission to deal with a dispute concerning the direction made by Prosegur. The TWU argued the Direction was invalid, because Prosegur failed to consult with employees, and was unreasonable within the meaning of section 789GK of the Act. In particular, the TWU submitted the Direction imposed an unfairly disproportionate reduction of hours on permanent employees (compared to casual employees’ hours being increased) as full-time and part-time employees had regularly worked up to 50 hours pre-COVID-19 including overtime. The TWU submitted that all employees should receive a percentage equivalent reduction in hours for the percentage of work lost. The TWU sought orders that the Direction be set aside and be substituted with another JobKeeper enabling direction.

The Deputy President’s Decision

Deputy President Sams rejected TWU’s submission that Prosegur had failed to meet the consultation requirements that are required prior to the Direction. His Honour then dealt with the construction of the term “unreasonable” which, in section 789GK of the Act, “… can be ascertained when it is viewed from the standpoint of what a reasonable person would conclude in the context of the unparalleled circumstances (COVID-19) to be not credible or sensible, illogical, implausible or impractical”.

In determining whether the Direction disproportionately and unfairly disadvantaged full-time and part-time employees over casual employees, Deputy President Sams noted that casual employees had been stood down for two weeks and that evidence indicated casual employees had lost more hours than permanent employees. Further, Deputy President Sams noted that permanent employees could supplement their income by accessing accrued annual leave and RDOs whereas casual employees could not. Deputy President Sams then set out the actual and rolling average hours that all Prosegur employees worked prior to the Direction. Deputy President Sams set out these averages in a table (Table of Hours) which confirmed that full-time employees’ “… weekly hours are close to or exceed minimum award hours of 38 hours a week” and further, that casual employees worked an average of up to 27.43 hours per week. Deputy President Sams held that in consideration of the above, the Direction was not unreasonable.

The TWU appealed Deputy President Sams’ decision on two grounds, namely:

1. The Deputy President erred in construing and applying section 789GK of the Act and failed to resolve the dispute by:
   1. Failing to analyse and assess the reasonableness or otherwise of the Direction; and
   2. Taking in account and / or focusing exclusively on the number of hours employees had worked prior to the Direction coming into effect.
2. The Deputy President had erred by mistaking the facts in holding that full-time and part-time employees were not working 25 hours a week and, in the case of full-time employees, were working close to or in excess of 38-hours a week.

Decision

The Full Bench overturned Deputy President Sams’ decision. The Full Bench considered Deputy President Sams’ position regarding whether the Direction was reasonable excluded notions of unfairness and inequity between Prosegur and their employees. The Full Bench held that the Direction must be equitable, fair and justifiable in all the circumstances and must have regard to the objects of the Act which balances the interests of the employer and the employee. Further, the Full Bench held that the surrounding circumstances of the employer and the employees must be also considered. The Full Bench held that Deputy President Sams’ decision failed on the above points.

The Full Bench held that Deputy President Sams’ decision adopted the incorrect approach to the construction of section 789GK of the Act which, in turn, meant there was a failure to properly take into account the relevant circumstances of employees in the assessment of the reasonableness of the Direction. Further, the Full Bench held that Deputy President Sams failed to direct himself to the substance of the Direction, which was the reduction in hours for all employees, but instead opted to use of the Table of Hours. The Full Bench considered this method was erroneous.

The Full Bench determined that the Direction disproportionately affected permanent employees by reducing their hours to 25 hours per week, while simultaneously increasing the working hours of casual employees.

Take Home Messages

This case serves as a timely reminder that employers who implement a JobKeeper enabling direction must consider what impacts the decision will have on both the organisation and the employees. The direction must be equitable and fair to the organisation and employees. Employers must ensure that one group of employees is not disproportionately or unfairly disadvantaged by the decision compared to another group of employees.

At first instance, and in accordance with the Act, an employer must give employees at least three (3) days’ notice in writing before giving a JobKeeper enabling direction. We then recommend employers consult with all employees about the proposed JobKeeper enabling direction and invite employees to provide input about the direction and how they consider it would affect them. Any employee input must be considered before making (or not making) a JobKeeper enabling direction and a written record kept of the consultation.

For more specific information on any of the material contained in this article please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, Ganesh Krishnan on +61 8 8217 1395 or gkrishnan@normans.com.au or Thomas Tagirara on +61 8 8217 1337 or ttagirara@normans.com.au.