The Full Bench of the Fair Work Commission upheld an appeal by the Transport Workers’ Union on Monday quashing an earlier decision of the Fair Work Commission that the employer Prosegur Australia Pty Limited’s Jobkeeper directions were reasonable.
This decision provides the first Full Bench authority on the reasonableness test required by s. 789GK of the Fair Work Act 2009 (FW Act) and we have set out the lessons for employers below seeking to utilise Jobkeeper directions as a number of employers located in Victoria enter their second week of another lockdown (with other States and Territories perhaps not out of the woods yet either). The full decision is available here.
The facts of the case no doubt resonate with many employers in Australia today. Prosegur operates a cash in transit business and as a result of COVID-19 has seen a 35% decline in work from its Moorooka depot, which provides armoured car and covert cash transportation operations. Prosegur advised its full-time, part-time and long-term casual employees in a written Jobkeeper enabling direction that their hours would be reduced to a minimum of 50 hours per fortnight.
The decision at first instance
The TWU opposed the Jobkeeper enabling direction and sought that the Commission order that a new direction be substituted in its place on the grounds that Prosegur’s direction was invalid in that it was unreasonable in contravention of s789GK of the FW Act. s789GK provides that a direction does not apply to an employee if the direction is unreasonable in all of the circumstances.
The TWU submitted that the direction was unreasonable for a number of reasons including that the direction did not proportionally reduce hours between full-time, part-time and casual employees and was therefore unfair on employees.
The Jobkeeper enabling direction also permitted employees to be directed to work more hours than they had worked prior to COVID.
At first instance, Deputy President Sams held that the direction was reasonable based on an assessment of the rolling average of the hours worked by the employees prior to the Jobkeeper enabling direction being effected, and the hours that they were being directed to work.
The TWU appealed the decision on the ground that the Commission at first instance had failed to correctly construe s789GK of the FW Act by only considering the hours worked by the employees in determining whether the direction was not unreasonable in all the circumstances.
In upholding the appeal, the Full Bench held that the phrase “unreasonable in all of the circumstances” is directed to the protection of the interests of the employee from unreasonable use of the Jobkeeper direction power, and that “all of the circumstances” includes the relevant circumstances of the employee. Support for this is also found in the note for s789GK itself which states that the impact on an employee’s caring responsibilities may result in the Jobkeeper direction being unreasonable.
The Full Bench held that in determining whether a Jobkeeper direction was “unreasonable in all of the circumstances”, the direction must not be inequitable, unfair or unjustifiable.
However, the Full Bench also found that the TWU’s alternative direction, which provided for a proportional reduction in hours, was unreasonable. If there was to be an alternative Jobkeeper enabling direction, the Full Bench held that it “must be administratively workable and allow Prosegur to conduct its operations efficiently”.
A second ground of appeal was that the Deputy President erred by mistaking the facts as to the number of hours worked by full-time and part-time employees. This ground of appeal was also upheld.
Lessons for employers
In applying the reasonableness test required by s789GK of the FW Act, employers need to be vigilant in considering whether a Jobkeeper enabling direction given by them to a particular employee is unreasonable in all the circumstances.
It will not be sufficient for an employer to simply rely on the average hours worked by the employees in the context of an overall downturn in business. Consideration should also be given to other factors such as the specific circumstances of impacted employees, which may include taking into account the impacts of the direction on their caring responsibilities.
If you have any questions about the Full Bench decision or the application and implications of Jobkeeper enabling directions in your business, please contact us.