Rehiring an employee who was an ‘eligible employee’ on 1 March 2020

MTA NSW Employment Relations have been approached by Members who wish to re-hire an employee for the JobKeeper Scheme, who was an ‘eligible employee’ on 1 March 2020 with the employer but are no longer an employee. In other words, our Members would like to re-employ a former employee who was an ‘eligible employee’ on 1 March 2020 and receive the wage subsidy from the ATO.

This is an interesting dilemma and one that poses significant risks should you engage the employee and they exercise their workplace right to refuse to sign the JobKeeper employee nomination form. Where you then terminate the employee, it may expose an employer to an adverse action risk and general protections claim as the employee has exercised their workplace right.

In cases where the employee was an ‘eligible employee’ for the purposes of the JobKeeper Scheme on 1 March 2020 and is no longer eligible because they are no longer an employee, the MTA NSW Employment Relations Department suggest that the contract of employment is amended if you wish to re-engage them.

In particular, we propose that the contract is amended so that the employee expressly agrees to be nominated. This agreement will satisfy the requirements under section 9 of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 where an employee needs to sign and return the employee nomination form to become an ‘eligible employee’.

Include a clause in the contract of employment

The MTA Employment Relations Department propose the following clause to be included in their contract of employment:

“You agree to be nominated by [business name] [ABN] for the purposes of the Job Keeper scheme pursuant to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020. You confirm that you agree to be nominated as an eligible employee for the purposes of the JobKeeper Payment scheme, meet the eligibility criteria and have not agreed to be nominated by any other employer/entity and have not given another entity a nomination form for the purposes of the JobKeeper Payment scheme. The terms of this agreement are set out in Annexure A.”

The following Annexure is also to be attached to their contract of employment in addition to the above-mentioned clause:

“Annexure A

You expressly acknowledge and certify that you qualify for the purposes of the JobKeeper scheme pursuant to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (“the Rules”) and are aware of and understand the eligibility criteria for an ‘eligible employee’ pursuant to section 9 of the Rules 2020.

The Employer is [business name] [ABN].

You expressly acknowledge and certify that:

1. on 1 March 2020,

a) you were at least 16 years of age and are independent within the meaning of the Social Security Act 1991 or not a full time student within the meaning of the Social Security Act 1991; or

b) you were at least 18 years of age on 1 March 2020; and

2. on 1 March 2020,

a) you were employed by the Employer; and

b) you were a permanent or fixed term employee, or a casual employee employed on a regular and systematic basis during the period of 12 months ending on 1 March 2020; and

c) you were:

i) residing in Australia and an Australian citizen or permanent resident; or

ii) an Australian resident for income tax purposes and a Subclause 44 (Special Category) visa holder; and

d) you are not in receipt of a JobKeeper payment as a sole trader, nor is another employer, religious institution or eligible business in receipt of a JobKeeper payment for you.

3. You are not currently receiving parental leave pay or dad and partner pay.

4. You are not currently totally incapacitated for work and receiving payments under an Australian workers’ compensation law in respect of your total incapacity to work.

5. Your full name is [insert name].

6. Your date of birth is [date of birth].

7. Your residential address is [insert address].

8. Your email address is [insert email].

You expressly acknowledge that should you cease to qualify for the JobKeeper scheme, you will immediate notify the Employer.”

Ensure that the contract of employment is signed and returned prior to their commencement

If the employee commences employment and they have not signed and returned a copy of the contract of employment, you will find yourself in a difficult position to obtain their signature and agreement to the terms contained in the employment agreement. In such cases, you should tread lightly as you cannot force or coerce the employee into signing their contract of

employment and such action may give rise to an adverse action claim, should you terminate the their employment because they have not signed the contract of employment.

Implications on continuous service when rehiring an employee

For the purposes of the qualifying period (the period of service which entitles an employee to make an unfair dismissal claim) and redundancy, when rehiring an employee in such circumstances the period of continuous service is deemed to have been broken. This essentially means that their employment has started from ‘scratch’ and prior service is not counted for the purposes of calculating redundancy pay and the ability to claim unfair dismissal.

However, for the purposes of long service leave (LSL) there may not necessarily be a break in service depending on the reason for termination and the LSL provisions that apply to the employee.

Under the Long Service Leave Act 1955 (NSW), where the employee is re-engaged by the employer within 2 months of their termination, the employee’s service will be considered continuous but does not count towards the calculation of service. This does not apply where the employee’s employment ceased due to their resignation.

Under the Federal Vehicle Industry Repair Services and Retail (Long Service Leave) Award 1977 (“the Federal Award”), if the employee is re-engaged by the employer with 6 months of their termination and the reason for their termination was due to slackness of trade (i.e. downturn in business/economy), the employee’s service will be considered continuous but does not count towards the calculation of service.

Similarly, under the Federal Award, if the employee is re-engaged by the employer with 2 months of their termination and they were terminated by the employee for any reason other than the above mentioned, the employee’s service will be considered continuous but does not count towards the calculation of service (unless termination is made by the employer with the intention of avoiding their obligation under the LSL Award).

We recommend clearly stating in the employee’s contract of employment the provisions of their continuous service by using the following clause:

“For the purposes of the qualifying period and redundancy, your previous service with [business name] will not be counted.

For the purposes of long service leave, if you are re-employed within [2 months, 6 months – insert the correct timeframe based on LSL provision and reason for termination] then your service will be deemed continuous but the period that you were not employed [business name] will not count towards the calculation of your service.”

Please contact the MTA NSW Employment Relations Department on
P: 02 9016 9000 or
E: eradvice@mtansw.com.au
if you have any questions regarding the above