FWC varies a JobKeeper enabling direction to an employee to reduce hours of work…but why?

The answer – because the employer “overplayed its hand”.

Allan Jones (no, not that one) was issued a JobKeeper enabling direction by his employer, Live Events Australia Pty Ltd (Live Events).

Live Events is in the business of broadcasting live events, including sport. Mr Jones is employed on a full-time basis as a broadcast engineer, predominantly working on horse racing events.

The direction was in respect of Mr Jones’ minimum hours of work. The direction reduced Mr Jones’ hours from 80 hours to 48 hours per fortnight (a 40% reduction).

Mr Jones lodged an application with the Fair Work Commission (FWC) on two grounds:

  1. that the direction was not authorised by the Fair Work Act 2009 (Cth). He said that the requirement that “the employee cannot be usefully employed for the employee’s normal days or hours” had not been met; and
  2. that the direction was “unreasonable in all the circumstances”.

Live Events was unable to establish that the direction was reasonable in all the circumstances. Primarily because the contingency it had allowed for was disproportionate to the actual (and forecast) circumstances.

Live Events was seeking to reduce Mr Jones’ working hours by 40% in circumstances where Mr Jones had continued to work his contracted hours (with less overtime) and Live Events had announced a guarantee of 80% of salary.

The lessons

  1. While some level of contingency in a direction may be appropriate, it needs to be proportionate to current and predicted circumstances.
  2. Employers must consider whether a proposed direction is consistent with the factual circumstances.
  3. The FWC has the power to vary a direction if it is unreasonable.

The arguments

Mr Jones argued that:

  1. he continued to be rostered and performed work at his regular contracted level of at least 80 hours per fortnight;
  2. Live Events was not able to issue the direction as a mere contingency just in case normal hours could not be worked at some future time;
  3. it was not reasonable for Live Events to reduce his hours when his work had not been disrupted; and
  4. it was not reasonable for Live Events to single him out when he refused a recommended contractual variation and when, as a matter of fact, his work was not materially disrupted.

On the other hand, Live Events submitted that:

  1. Jobkeeper enabling stand down directions can be issued to deal with both actual and contingent circumstances;
  2. the normal hours of employees in the business were disrupted at the time the Direction was issued;
  3. sporting events, including racing in Western Australia, could be cancelled by public health or sporting authorities at short notice, leaving Live Events liable to pay Mr Jones for 80 hours per fortnight even if work cannot be performed due to cancellations at short notice;
  4. the Direction provided fairness amongst employees given that all employees other than Mr Jones agreed to reduce (in percentage terms) hours by the amount in the Direction (40%); and
  5. the Direction was fair to employees because the general application across the workforce reduced the need for redundancies.

Could Mr Jones be usefully employed for his normal days or hours?

The FWC noted that:

  1. consideration must be directed to “the employee” (in this instance, Mr Jones) and not employees as a whole;
  2. the work performed by Mr Jones since the direction as well as his roster for the upcoming month had Mr Jones working around 80 hours per fortnight;
  3. cancellation of a racing event at short notice was not beyond possibility;
  4. the regular nature of overtime, and the level of that overtime had materially reduced Mr Jones’ overall hours of work and earnings in the COVID-19 period; and
  5. Mr Jones’ normal hours (including regular overtime) were not likely to completely restore before the conclusion of the stand down period.

On that basis (as well as the possibility that there could be a sudden cancellation of events), the FWC was satisfied that Mr Jones could not be usefully employed for his normal days or hours.

Was the direction unreasonable?

While the FWC saw reasonableness in a direction being issued, the extent of the reduction in the hours of work was found to be unreasonable. That is, Live Events had “overplayed its hand”.

Rather than a 40% reduction in hours, the FWC varied the direction to a 20% reduction in hours.

This was because:

  1. the level of reduction was not proportionate to the actual rosters, subsequent rosters or prospective rosters;
  2. the evidence showed that employees were being rostered around 80 hours per fortnight whilst horse racing events remained in operation;
  3. Live Events issued a direction reducing the working hours of Mr Jones to 48 per fortnight at the very time it expected to continue to roster Mr Jones more than 48 hours per fortnight; and
  4. employees who were not being rostered their normal hours had been guaranteed 80% of salary (that is, a reduction in salary of no more than 20%).

While the FWC acknowledged that some level of contingency was reasonable, a contingency that was so disproportionate from actual circumstances or forecast circumstances will result in an unreasonable direction.

The FWC ordered that in lieu of the words in the direction:

Your new minimum hours of work will be 48 hours per fortnight

the following be substituted:

Your new minimum hours of work will be no less than 64 per fortnight where in all the circumstances this reduction is necessary and reasonable”.

The FWC cautioned that this was not a green light for Live Events to reduce Mr Jones’ working hours to 64 if there was not an objective or fair basis for doing so.

If you would like to discuss this further and the implications for your business please contact our Employment + Workplace Relations Partner, Erin Lynch.

Erin Lynch, Partner
M +61 477 330 202
E erin.lynch@vincentyoung.com.au

The contents of this publication do not constitute legal advice and are for general information purposes only.  You should seek legal advice regarding your particular circumstances.