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COVID-19: Your Legal Questions Answered (9 April 2020)

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Leading network lawyer Damin Murdock covers everything from JobKeeper and common employment questions to commercial leases and debt collection.

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COVID-19: Your Legal Questions Answered (9 April 2020)

  1. 1. COVID-19: Business Questions Answered With Damin Murdock
  2. 2. Today’s Presenter Damin Murdock ● Co-Founder: MurdockCheng Legal Practice ● Top Commercial Lawyer on Lawpath network ● Expertise in business law, consumer law, litigation, IP law & more
  3. 3. What we’ll cover ●Commercial Leases ●Changes to the Fair Work Act and Awards ●JobKeeper and JobSeeker Payments ●Leave allowances for staff who are self-isolating, in quarantine or ill ●What you can do if an employee has COVID-19 ●Implementing remote working ●Legal requirements for redundancy & standing down employees
  4. 4. Just before we start... ● Please note: we encourage you to ask questions and really value your input. ● Although we would love to answer every question we unfortunately won't have the time to cover every single question we have received. DISCLAIMER: This webinar is general information only and does not substitute for the need to obtain legal advice on specific circumstances.
  5. 5. COVID-19 and Businesses National Cabinet Mandatory Code of Conduct
  6. 6. National Cabinet Mandatory Code of Conduct The National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principals During COVID-19 can be found by visiting Mandatory Code (or www.pm.gov.au). Purpose ● Good faith leasing principles for retain, office and industrial sites ● Only applies to companies who are eligible for the JobKeeper Payments with a turnover of less than $50 million (franchises at the franchisee level, retail corporate groups at the group level) ● The period of the Code is during the COVID-19 pandemic period (being the period JobKeeper Payments are offered) ● The Code will be passed through state and territory legislation or regulations, but has not been passed
  7. 7. National Cabinet Mandatory Code of Conduct Overarching Principles ● Share, in a proportionate, measured manner, the financial risk and cashflow impact during COVID-19 period, with a balance of interests between tenants and landlords ● Each situation will be tailored, bespoke and appropriate temporary arrangements for each SME tenant, taking into account their particular circumstance o Work together to ensure continuity o Facilitate the resumption of normal trading at the end of the COVID-19 period o Requirement to discuss issues, negotiate in good faith temporary leasing arrangements o Parties must be open, honest and transparent with sufficient and accurate information o Parties to consider revenue, expenses and profitability and arrangements will be proportionate to those figures o Parties will assist each other with their respective dealings with other stakeholders such as governments, utility companies
  8. 8. National Cabinet Mandatory Code of Conduct Leasing Principles 1. Landlords must not terminate leases due to non-payment of rent during the COVID-19 period 2. Tenants must remain committed to the terms of the leas, subject to any amendments (a material failure to abide by the substantial terms of the lease will forfeit any protections provided to the tenant under the Code) 3. Landlords must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable based on the reduction of the tenant’s trade reductions (ie, if 50% reduction in revenue, then 25% reduction and 25% deferral) “Waiver and deferral” means and includes any agreed variations to existing leases and any amount of reduction provided may not be recouped by the Landlord over the term of the lease 4. Rental waivers must constitute no less than 50% of the total reduction in rent payable under point 3 and should be greater than 50% in cases where failure to comply with the Code would compromise the tenant’s capacity to fulfil ongoing obligations under the lease (but must also have regards to the landlord’s financial ability to apply waivers and tenants can, by way of agreement, waive the 50% minimum waiver in writing)
  9. 9. National Cabinet Mandatory Code of Conduct Leasing Principles 5. Payments of rental deferrals are to be amortised over the balance of the lease period and for a period of no less than 24 months, whichever is greater 6. If a landlord receives a reduction in a statutory charge (eg land tax, council rates), the landlord must pass on the proportion to the tenants 7. The landlord should seek to share any benefit it receives due to deferral of loan payments provided by financiers as part of the Australian Bankers Association’s COVID-19 response 8. Landlords should seek to waiver recovery of any other expense (or outgoing payable) by the tenant during the period the tenant is not able to trade 9. If the arrangements under the Code require repayments at a later date, this should be over an extended period to avoid placing undue financial burden on the tenant with the first repayment not occurring until the COVID-19 period is over or the lease expiring 10. No interest or charges should be applied to the deferred rental payments
  10. 10. National Cabinet Mandatory Code of Conduct Leasing Principles (continued) 8. Landlords should not draw upon a tenant’s security for non-payment of rent (ie cash bond, band guarantee or personal guarantee) during COVID-19 period 9. Tenant should be provided with an opportunity to extend its lease for the period of the COVID-19 period (this is intended to provide the tenant with additional time to trade on existing terms during the COVID-19 period and the recovery period thereafter) 10. Landlords agree to freeze rent increases (except for retail leases based on turnover rent) during COVID-19 period and subsequent recovery period 11. Landlords must not apply any prohibition on levy any penalties for tenants reducing opening hours or ceasing trade during COVID-19 pandemic 12. The landlord should seek to share any benefit it receives due to deferral of loan payments provided by financiers as part of the Australian Bankers Association’s COVID-19 response Legally Binding Mediation Where an agreement cannot be reached due to the COVID-19 pandemic, the matter should be referred to binding mediation but should not be referred to prolong or frustrate the facilitation of an amicable resolution or outcome
  11. 11. Commercial Leases Key Provisions in a Commercial Lease • Right to quiet enjoyment • Right to amenities • Frustration • Force majeure What can you do? • Ask for a rental abatement (where you have lost your quiet enjoyment or amenities) • Negotiate with your landlord • Seek orders from QCAT, NCAT, VCAT for rental abatement • See if Frustration or Force Majeure applies • Communication is key and wait for more Government updates
  12. 12. COVID-19 and Businesses Fair Work Act Amendments Coronavirus Economic Response Package (payments and Benefits) Bill 2020
  13. 13. Fair Work Act Amendments Variation of Awards and Fair Work Act Part 6-4C (and s 789GB) • Unpaid pandemic leave: all employees are entitled to take 2 weeks unpaid leave if required by government or medical authorities or acting on advice from a medical practitioner to self-isolate (notice from employee must be given with evidence if the employer requests and leave must start before 30 June 2020) • Annual leave half pay: all employees may ask their employers to take twice as much leave, but on half pay (for instance if an employee makes $1,000.00 a week and has 2 weeks of accrued but untaken leave, then the employee can be paid $250.00 over 4 weeks) (must start before 30 June 2020) • Reduction in Hours (see Hospitality Industry Award as an example) o Reduce full-time hours from 38 to 22.8 hours o Reduce part-time to 60% of their normal hours o Force annual leave on 24 hours notice • Stand down direction (reducing hours and direction to perform alternative duties whilst on JobKeeper Payments)
  14. 14. COVID-19 and Businesses 1. JobKeeper Payment
  15. 15. JobKeeper Payment Common Questions Answered • Stand downs should only apply if there are changes attributable to COVID-19 and there is a real requirement to reduce hours • Employers must reasonably believe the stand down or reduction of hours is necessary • You can only direct to stand down if you are eligible for JobKeeper payments • You still need to comply with the applicable laws to stand down such as Fair Work Act and Award requirements
  16. 16. JobKeeper Payment STEP 1: Eligible Employers • Less than $1 billion turnover and the turnover has fallen by more than 30 percent due to COVID-19, when comparing to a “typical month” in the last 12 months • The law has not been enacted, but based on commentary, this does not mean March 2020 turnover is 30% or less than March 2019, and it does not mean the employer must have been trading for 12 months The ATO will consider: • where the usual or average turnover has decreased by 30% • additional information which shows the company is “significantly affected by the impacts of the Coronavirus” • Discretion having consideration to specific circumstances • Using tolerances where the employer has acted in “good faith” and there is a slightly smaller fall • “the economic downturn due to the Coronavirus has adversely affected” the business and expects the turnover to fall
  17. 17. JobKeeper Payment STEP 2: Eligible Employees • Was engaged by the employer as at 1 March 2020 (does not matter if terminated after 1 March 2020, can be re-engaged) • All full-time and part-time employees plus casuals employed on a regular basis for more than 12 months as at 1 March 2020 • Over the age of 16 • Is a permanent resident, citizen, protected special category visa holder, non-protected special category visa holder who has been residing in Australia for more than 10 years, or New Zealand citizens on 444 visas • Must not be receiving the JobSeeker Payment • It does not apply to temporary visa holders such as bridging visas, 457 or 482 visa holders • It does include self-employed via an ABN plus statutory declaration regarding the business activity
  18. 18. JobKeeper Payment STEP 3: Employer Apply • Register your interest at www.ato.gov.au • Apply via an online application • Must identify which employees will receive the JobKeeper Payment • Pay the employee $1,500.00 per fortnight, before tax • Superannuation is not compulsory on the JobKeeper Payment, but discretionary • Receive reimbursement from the ATO (not a credit) of $1,500.00 per employee on 1 May 2020
  19. 19. JobKeeper Payment STEP 4: How does it work? • The purpose is to keep people in jobs, and not at the doors of Centrelink and to subsidise wages, not payment 100% • It is to minimise redundancies and terminations where employers have no other option but to stand down employees • It is on top of the cashflow assistance program (up to $50,000.00 credit on PAYG paid discussed later) Employee 1 • Normally pay $3,000.00 per fortnight before tax (and super on $3,000) • You pay $3,000.00 per fortnight before tax • ATO refunds you $1,500.00 via the JobKeeper Payment as a subsidy Employee 2 • Normally pay $1,000.00 per fortnight before tax • You pay $1,000.00 per fortnight before tax (and super on $1,000) • You pay $500.00 more per fortnight before tax (no super required)
  20. 20. COVID-19 and Businesses 1. JobSeeker Payment
  21. 21. JobSeeker Payment What is it? • Payment to employees who have been stood down or dismissed from employment (but must be over the age of 22, and under the pension age; meets the income test meaning; and meets the residency rules) • Self-employed, casual workers, and contract workers who now earn less than $1,086.50 (Income Threshold) per fortnight due to COVID-19 • Those who are caring for someone with COVID-19 If an employer closes its office, is the employee entitled to JobSeeker Payment? • Yes, after any income maintenance payment (for instance, if employer paid 4 weeks notice or accrued but untaken leave, then may need to wait 4 weeks + leave paid) If an employee offers an employer to take reduced salary, is the employee entitled to JobSeeker Payment • Yes, if the employee is a casual and as a result of the reduced salary, it falls below the Income Threshold • Yes, if the employee is a permanent employee and they have been stood down or dismissed If an employee is made redundant, but is redeployed into a new role with 20% less pay, is the employee entitled to JobSeeker
  22. 22. COVID-19 and Businesses 1. Employees Leave
  23. 23. Leave for your employees ● This all depends on whether your employee comes under a national award or employment contract. ● Most Awards have a consultation requirement (Clause 8), close-down clause (Clause 34), advance payment of annual leave (Clause 34) and excessive leave accruals (Clause 34). ● If you have an employment contract, see whether an employee can take forced leave, otherwise, s 94(5) of the Fair Work Act allows for forced annual leave if it is reasonable. ● This also depends on whether your employee is a casual or permanent employee - to be permanent, an employee needs to have been employed on a casual basis for at least 12 months.
  24. 24. ● You cannot dismiss an employee simply for having COVID-19 ● Section 352 of the Fair Work Act says "an employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury." ● Regulation 3.01 of the Fair Work Regulations also provides "it is not a temporary absence if the employee's absence extends for more than 3 months or the total absences of the employee, within a 12 month period have been more than 3 months (exclusive of an absence on paid personal/carer's leave or workers compensation)". ● You can enforce self-isolation provisions that have been legislated by the government, i.e. you can prevent them from coming into work if they are sick. What if an employee tests positive for COVID-19?
  25. 25. If your employees will be working from home, you should have policy in place because: ● You are liable for Occupational Health and Safety of Staff whilst at work (this includes if employees are at home) ● You are required to have a safe working environment, free from hazards ● You should state which insurance will apply - WorkCover or Home Public Liability Insurance Be sure to monitor and communicate with staff regularly through: ● Maintaining time recording ● Having clear KPI requirements recorded and having regular meetings/check-ins ● Using remote working tools such as Slack, Zoom, and WorkflowMax Current circumstances have meant that many businesses need to implement measures to allow their employees to work remotely Working From Home (WFH)
  26. 26. ● Redundancy occurs where an employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of an employer AND the employer has complied with any Modern Award requirements to consult (see section 389 of the Fair Work Act) ● A redundancy needs to be genuine in order to be legal (see section 385 of the Fair Work Act) ● Redundancy is not a genuine redundancy where the employer could have taken reasonable steps to redeploy the employee into another position (see section 389(2) of the Fair Work Act) ● Casual employees are not entitled to redundancy pay, and small businesses are not required to pay redundancy pay, unless otherwise stated in a Modern Award (ie, s 17 of the Building and Construction General On-Site Award 2010) Redundancy
  27. 27. Grounds for Refusal You must consider the legitimacy of the refusal to attend work Legitimate concerns include lawful compliance with Government sanctions; people at risk (see Department of Health - People at Risk); evidence they can expose other people at risk; evidence that the employee could be exposed if attended work; evidence the employer has failed to minimize risk; employee is acting reasonably Unreasonable or Unlawful Refusal Consider disciplinary action; warning letters; flexible work arrangements; standing down employee and if only necessary, dismissal but risking General Protection Application on grounds that the dismissal is an adverse action due to the employee exercising a legitimate workplace right to safety (get legal advice) My Employee Refuses to come to work
  28. 28. COVID-19 and Businesses Past Webinars
  29. 29. Past Webinars For more information regarding Occupational Health & Safety, Australian Consumer Law, Managing Cashflow, Collecting Debts, changes to the Corporations Act (statutory demands) Employment Law (such as redundancies), Cashflow Assistance ($100,000.00 of PAYG credits), Instant Write-Offs ($150,000.00), Coronavirus SME Guarantee Scheme ($250,000 loan guaranteed by Government) Please visit our COVID-19 resources page: lawpath.com.au/covid19
  30. 30. Our Working from Home (WFH) policy can be downloaded for free here: https://lawpath.com.au/legal-documents/working-from-home-policy You can also sign documents on our platform for free here: https://lawpath.com.au/esignature Guides ● Remote Working: How to Introduce it to Your Business: https://lawpath.com.au/blog/remote-working-how-to-introduce-it-to-your-business ● COVID-19 and Small Businesses: What Financial Relief is There?: https://lawpath.com.au/blog/covid-19-and-small-businesses-what-financial-relief-is-there ● Insolvency Laws See Sweeping Changes to Help Businesses Cope: https://lawpath.com.au/blog/insolvency-laws-see-sweeping-changes-to-help-businesses-cope ● How Should Employers Deal With Coronavirus?: https://lawpath.com.au/blog/how-should-employers-deal-with-coronavirus Resources
  31. 31. COVID-19 and Businesses Questions?

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