fbpx
What about the Worker? Fair Entitlements Guarantee (FEG) and COVID-19

What about the Worker? Fair Entitlements Guarantee (FEG) and COVID-19

Covid-19 | Boylan Lawyers

The International Labour Organisation (ILO) has suggested that 1 billion workers globally are at risk of a pay-cut or losing their job. Of that billion, 25 million jobs are likely to be lost globally in the foreseeable future.

Recent predictions suggest Australia’s jobless rate will double – so over 10% of the population will be without a job. 800,000 Australian businesses appear to be in significant strife after registering for the JobKeeper payments.

Unfortunately, there are many businesses that simply cannot last, and indeed haven’t been able to last, even up till now. As such they will close and may do so with significant debt.

It’s the debt that cannot be repaid that requires the business to go down the track of bankruptcy. There is no denying this is devastating for the business but spare a thought also for the employees working for that business.

What happens to workers, who were relying and had budgeted on their next fortnights wage?

Or what happens to their entitlements that accrue as a result of being loyal employees over the many years, such as entitlements (that’s right, entitlements) to Annual Leave and Long Service Leave?

What about a further entitlement to ‘notice’ if their employment abruptly comes to a halt?

All the above are part of the National Employment Standards (NES) which are clearly articulated within the pages of the Fair Work Act. They are rights that workers have under Commonwealth law, and dare I say it, International law.

FAIR ENTITLEMENTS GUARANTEE

Under The Fair Entitlements Guarantee Act 2012, workers who are unable to recover their statutory entitlements from their employer due to an insolvent event (enters administration and then liquidation), are able to be reimbursed that shortfall from the Federal Government.

The entitlements workers can claim back from the Government if the employer is unable to pay due to their insolvency consists of:

  1. Wages (capped at 13 weeks)
  2. Annual Leave
  3. Long Service leave
  4. Payment in Lieu of Notice
  5. Redundancy pay (capped at 4 weeks per year of service)

The amount a worker is entitled to be paid will be determined according to the existing terms in the employment contract but the application for assistance needs to be made no later than 12 months after termination, or the insolvency event (whichever is longer).

Stand downs

Continuity of service still applies with respect to a stand down under s524 of the FWA and so workers are not entitled to redundancy pay and therefore notice. Indeed, they are not entitled to a wage during their time in ‘limbo’.

Whilst the worker in the short term can access the increased job seeker payment, it must be borne in mind that enhanced job seeker payment will soon expire. Stand downs are also for a limited duration (though we do not know exactly how long) and so workers who are not reinstated within a reasonable time should be paid a redundancy through their employer, and if the employer cannot afford to pay, through FEG.

Workers shouldn’t have to wait twice!

The insolvent event requirement under FEG is the second waiting game that workers would have to endure. That criteria worked to an extent prior to the pandemic, but it must, like the rest of society, be flexible and change with the times. If you let workers wait too long, then the adage of ‘too little too late’ is obliviously clear!

Employers Paying Less Than The Minimum

Section 119 of the FWA articulates out how much a worker is to be paid for a redundancy. It’s the bare minimum a worker can receive for a redundancy. Any EA’s or contracts of employment are subjected to the best-off overall test (BOOT) and therefore must ensure they are at least the same as, or better than s119.

Despite what I have said above Section 120 of the Fair Work Act 2009 provides an exception to the bare minimum under s119.

It allows an employer to reduce a redundancy payment by up to 100%, if amongst other things they can establish significant financial difficulty (not an ‘insolvent event’). And so even though the employer avoids bankruptcy, the worker may not.

Mason Architectural Joinery is a Sydney business who recently requested respite (likely as a result of the downturn in business due to the pandemic) from the FWC by making an application under s120 FWA. Their application was successful such that the 7 weeks redundancy the worker would have received was reduced to 1 week.

No FEG would apply to the worker as the Order of the FWC provides the new statutory entitlement as 1 week.

Whilst there isn’t an immediate issue with the FWC assisting a business to remain open, there is an issue if it’s at the expense of the worker.

What of the scenario where the FWC allows a reduction for the employer under s120 but then bankrupts the individual in the process?

There must be a widening of the scope of FEG whenever the FWC decides that businesses should be given respite under s120 at the expense of the worker.

Whilst this issue is pertinent now, I suggest any FWC Order reducing a worker’s minimum entitlement under s120 be at the expense of the government, not the worker.

‘Presuming’ COVID-19 arises from work

‘Presuming’ COVID-19 arises from work

Nurse Doctor COVID 19 | Boylan Lawyers

If a nurse, cleaner, doctor, or any other profession working ‘on the front line’ assisting with the Covid-19 virus contracts the virus, then these vulnerable workers should be protected as much as possible under State, Territory or Commonwealth workers compensation laws.

Under the Return To Work Act 2014 (RTW Act) South Australia has a list of jobs and medical conditions that are presumed to have occurred (deemed injuries) because the injury or disease occurred when they were undertaking a task that is likely to have caused that injury or disease. Unless there is proof to the contrary from the insurer/employer (the reverse onus) then the claim for that injury is accepted.

Covid-19 must be included in that list, at least for workers such as nurses, doctors and cleaners who are working in ‘high-risk’ areas, or the front line as mentioned above. Section 9 is the evidentiary provision under the RTW Act

“An injury isn’t compensable unless it can be established on the balance of probabilities it arises from employment

As it stands, our State legislation requires a worker who contracts the virus prove they contracted it from work. Imagine then a nurse working in a clinic who tests and/or treats Covid-19 cases. The law as it stands says the nurse would need to establish, they contracted the virus from work, on the balance of probabilities. That may be difficult if for example other members of the nurse’s family (or friends) also contract the virus around the same time as they did.

S188(1) assists to some extent;

“ An injury…that develops gradually or is a disease will be taken to have occurred when the worker first becomes totally or partially incapacitated for work by the injury”

However, the worker still needs to establish the injury creating the incapacity is ‘a work injury’ as defined under s7(1) of the Act;

“This Act applies to an injury if (and only if) it arises from employment”

 Section 9(4) of the RTW Act allows Regulations to be made ‘on the recommendation, or with the approval of the Corporation’ to add a job and an illness/disease to schedule 2 Injuries.

As an example, Asbestosis is a schedule 2 injury. The worker who contracts Asbestosis need only show they had worked with asbestos previously. So surely contracting Covid-19 should be considered in the same light?

There are 24 schedule 2 injuries at present and that number must be increased to 25 and have retrospective effect.

Recovery/Return To Work Plans & Workers Compensation in the Era of COVID-19

Recovery/Return To Work Plans & Workers Compensation in the Era of COVID-19

COVID 19 | Boylan Lawyers

Recovery Return to Work (RTW) Plans

 

South Australian workers who suffer an injury at work are entitled to a maximum two years of wages and three years of medical expenses. The general exceptions are if you are a seriously injured worker, or if you require surgery.

There is a big emphasis on rehabilitating and returning injured workers to work, and rightfully so. Section 3 of the Return to Work Act 2014 sets out the Objects of the Act and essentially repeats what I have just said, namely that rehabilitation and return to work is paramount. (RTW Act)

Unfortunately, COVID-19 has created barriers for insurers to rehabilitate and return to work injured workers within a 2-year period.  Workers can no longer attend, or no longer effectively attend the likes of physios/surgeons/psychiatrists/gyms/workplaces/study to name just a few rehabilitative services and so most Return to Work Plans currently in force between insurers and injured workers, cannot and are not being achieved. (ss24 and 25) That also raises issues of mutuality (breach of mutuality) though hopefully common sense prevails for each fact that presents.

Whilst a couple of weeks of non-adherence to a plan could be ‘brushed aside’ on the basis that each of the contracting parties to the plan ‘get on with it’, the same cannot be said for the current predicament. Consideration and discussion of this issue now will have less adverse implications in the future. As far as I am aware, insurers have not turned their mind to this issue at all.

Similarly, what of the situation (of which there are many examples) where workers are keen to proceed with elective surgery so they can get the best and most timely treatment to put them in a position to get back to work as soon as possible, thus adhering to the Objects of the Act?

If a worker gets to the end of their entitlements and hasn’t been sufficiently rehabilitated and is no longer employed by his pre-injury employer (not uncommon) and not entitled to weekly payments due to the expiry of two years then why should this worker be at a further disadvantage due to the unavailability of appropriate rehabilitation during the time he was on payments?

S39(3) of the RTW Act makes it clear there is no entitlement to weekly payments after 2 years, but surely that has to be based on the insurer adhering to the Objects of the Act, namely rehabilitating and, if possible returning the worker to work (pre-injury employer or some other new employer)?

The worker must be provided with the best chance possible of selling his labour on the open labour market after the expiry of entitlements. At least, this must have been the intention of the legislature?

Solution

Extend the time allowed for weekly payments commensurate with the delay in ‘access to rehabilitation’.

 

The ‘R’ word

 

Redeeming entitlements under the repealed Act worked. It still works under this Act with the Self-Insured employer, so why can’t a policy decision created by Return To Work (The Corporation) be reconsidered in light of the COVID-19 crisis?

  • It would allow matters to settle much earlier and without the need for judicial intervention. Redemption talks could commence now and without the need for SAET (South Australian Employment Tribunal). In fact, now is the best time as we have the Independent bar without a court room and therefore with time to consider settlements, that could take the form of a redemption.
  • It would reduce the unfunded liability of the scheme. It would possibly encapsulate an overall settlement where the employer may wish to be involved for s18 issues at least. It would give the worker and employer certainty now.
  • It would give the worker money at a time it is needed most.
  • It would alleviate the need to attempt to follow a recovery/return to work plan that cannot be followed or can be followed but at great risk.
  • It would alleviate an influx of arguments from workers representatives that their clients haven’t been adequately rehabilitated and therefore s39 shouldn’t apply.

Solution

Get redemptions back on the table!