Can your boss cut your pay or conditions without asking you? How does coronavirus affect workplace rights?
More than a million Australians are officially unemployed, and the number would probably be at least twice that without government supports such as JobKeeper.
Even with government subsidies, a quarter of Australia’s top 200 share market-listed companies posted a loss last financial year, and more than half that made a profit saw their earnings fall from the year before.
And those are results that include just the first four months of the pandemic.
So it’s no surprise that many companies are slashing costs to match lower revenues — and for most companies, one of the biggest costs is staff.
You’ve probably read a lot about the stand-downs or mass layoffs of millions of workers during the pandemic, but there are other ways companies are trying to cut staff costs.
Here’s a basic guide to some of the workplace conditions your employer may ask you to give up, and whether they’re allowed to.
Can my boss cut or freeze my pay?
Perhaps the most obvious way to reduce staff costs is simply to reduce your workers’ hourly rates, but it is also something that’s virtually impossible for employers to do legally by themselves.
Most workers’ pay is set by a legal instrument, whether that’s an award, enterprise agreement or individual contract.
Only the Fair Work Commission (FWC) can alter the rates of pay in awards or the minimum wage.
In its most recent decision, it actually increased those pay rates by 1.75 per cent, although this increase was only intended to roughly keep up with the rising cost of living.
As of July 1, 2020 the national minimum wage has been $753.80 per week or $19.84 per hour.
However, the FWC did defer that pay rise for workers earning above the minimum wage on awards that cover industries most affected by the pandemic.
One group of workers (about 40 per cent of those who rely on awards to set their wages) will have to wait until November 1 for a pay rise.
Another group, in the most-affected sectors of hospitality, arts and recreation, retail trade, aviation and tourism — just over a third of award-reliant employees — will have to wait until February 1, 2021 to get their 1.75 per cent pay bump.
Many public sector workers have also had their pay frozen by the governments that employ them.
But for those on enterprise agreements or individual contracts, any pay cut must be by agreement between the worker(s) and employer.
Can my boss sack me if I don’t agree to a pay cut?
As leading labour law expert Andrew Stewart from the University of Adelaide explains, a boss generally can’t directly threaten you with the sack if you refuse to take a pay freeze or pay cut.
“The employer that threatens its workers with sacking you tomorrow if you don’t agree instantly on a pay cut is running the risk of legal action on the basis that they’re victimising their workers on the basis of their entitlement to current awards or enterprise agreements,” he said.
But he added it was not hard for smart bosses to find legal ways around that by making the threat of redundancy less direct and immediate, citing the example of his own university, which recently negotiated a pay cut with its staff.
“Employers can do that, as long as they’re careful about how they say it,” he explained.
“The University of Adelaide came to its staff and basically said, ‘Look, we’d like you to agree to these changes, it’s going to mean pay cuts and we’ll still lose 200 full-time equivalent positions … whereas if you don’t agree we’re going to need to lose 400 full-time equivalent positions.'”
“There’s nothing unlawful about an employer pointing out to its staff what the consequences would be of continuing with existing pay and conditions.”
In doing this, the employer can’t lie about how the business is going or make other false claims to pressure staff into accepting a pay cut.
Aside from universities, other high-profile examples of companies where workers have been asked to take temporary pay cuts include the big four consulting/accounting firms, Deloitte, KPMG, PwC and EY. In the latter two companies, it came with a corresponding reduction in work hours.
If my hourly pay can’t be cut, what about my hours?
Professor Stewart says this really depends on how you’re employed.
“If you’re casual, for example, it’s far more likely that your employer is going to be able to make changes to your hours of work and, indeed, in some cases reduce that to zero,” he explained.
“[It is] much harder to do if you’ve got a continuing job, either full-time or permanent part-time. Then it depends under what instrument you’re employed.”
But, even if you are in a permanent position where your employer would normally have to negotiate with you to cut your hours, if the company you work for is receiving JobKeeper, that all changes.
The laws around JobKeeper, an extension of which is being debated in Federal Parliament this week, allow employers to reduce hours of work for employees covered by that scheme.
The condition is that the employee must receive at least the JobKeeper payment ($1,500 a fortnight).
These powers are being extended for employers no longer eligible for JobKeeper after September, but whose turnover remains at least 10 per cent down on last year’s levels.
The Centre for Future Work’s Jim Stanford said workers whose employers fell into this category could see their incomes cut by 40 per cent or more.
“The new JobKeeper measures allow companies who are not qualified for JobKeeper to stand down workers to 60 per cent of their previous hours without agreement. That would apply to companies whose revenue fell by 10-30 per cent year over year,” he told the ABC.
“They could cut pay by more than 40 per cent if the hours that are being cut were subject to penalty rates (e.g. weekends).”
However, if you are a permanent employee in a company whose income has not been significantly negatively affected by COVID-19, then your employer must seek your agreement to vary your work hours.
Can my boss force me to take leave?
Again, it depends if they are signed up for JobKeeper.
If they are, then probably yes, unless the request is unreasonable or leaves you with less than a fortnight’s leave balance.
This provision is one aspect of the special JobKeeper industrial law changes that won’t continue with the extension of the scheme beyond September.
If you’re not on JobKeeper, then annual leave generally has to be taken by agreement between the employee and the employer.
One cost-saving measure common in the university sector, which has generally been ineligible for JobKeeper, is for temporary changes to enterprise agreements allowing the employers to direct staff to take annual, or even long service, leave.
Some university workforces have even agreed to buy extra leave using their salaries, which the university can direct them to take.
All of these agreements, except the one at ANU, have been agreed upon between the universities and the National Tertiary Education Union.
All had to receive a majority of yes votes from workers to be approved.
“Staff here at the University of Adelaide just voted up a series of pay cuts and purchased annual leave arrangements,” Professor Stewart said.
The NTEU told the ABC that so far around 1,500 jobs will be saved due to the cost savings from these measures, with more deals expected to be struck across the struggling sector.
Can my boss just outsource my job to someone cheaper?
Again, there’s no definitive answer, but Andrew Stewart said the law made it very difficult for employers to outsource existing jobs in order to reduce pay or conditions.
“If any company outsources its labour needs to another company … any industrial instruments which applied to the old employer are going to cover the new employer,” he noted.
There are two possible exceptions.
One is if no staff from the existing operations continue to work for the new provider, at least during the first three months.
This is obviously not practical for a lot of jobs, where at least some staff would need to be retained to train the new workers in the company’s technology, systems and procedures.
Professor Stewart said the Fair Work Commission could also sign off on an outsourcing arrangement that results in the loss of some existing staff conditions or reduced pay rates, “but it doesn’t normally do that.”
Qantas is currently trying to navigate this area of industrial law as it tries to outsource its ground handling operations in an attempt to find $100 million in savings.
What if my boss just ignores the law?
Australian Council of Trade Unions secretary Sally McManus said, where unions have a significant presence in a workplace, bosses are generally open to working with employers to negotiate changes that will minimise redundancies.
“In many instances, unions and employers have worked together to find mutually beneficial solutions that protect jobs and keep people in work,” she told the ABC.
“However, we are also seeing a large number of employers cynically exploiting the current crisis to cut jobs or slash pay and conditions.
“As we recover from this pandemic, we need to ensure that the rights of working people are strengthened.”
Professor Stewart agrees there are likely to be some employers out there seeking to illegally cut their staff’s pay or conditions.
“It’s really, really hard to get a handle on this, except I’m pretty positive it’s happening,” he said.
“Employers just basically going to their workers and saying, ‘Look, we need to make changes’, and either doing it unilaterally even though they don’t have the power or basically asking for some kind of informal consent, and making changes even though they don’t have a legal basis to do that,” he said.
In its latest President’s Statement, the Fair Work Commission observed a 67 per cent increase in unfair dismissal claims in April compared to the same month a year earlier.
“It’s reasonable to suppose that some of what we’re seeing with the increase in unfair dismissal claims are hidden redundancies,” Professor Stewart said.
This is where employers try to sack a staff member for misconduct or underperformance so that they do not have to make a redundancy payment to them.
However, Professor Stewart added that, “Some of the pick-up is in the genuine redundancy category as well,” which is where a redundancy might be challenged because the employer allegedly didn’t follow the correct process.
Employees who are concerned that their employer is trying to cut their pay or conditions, or fire them, against the rules can contact the Fair Work Ombudsman for advice.