Corporate complexity in COVID-19

Corporate complexity in COVID-19

Corporate complexity in COVID-19

In response to the current COVID-19 situation, there have been drastic changes to the way we work and do business. For Law week 2020, JCU Associate Professor of Law Dr Louise Floyd highlights some of the complexity that exists within Australian corporate and employment law in light of specific COVID-19 initiatives.

In the wake of the COVID-19 economic impact, the Australian Government introduced a number of measures. These included the JobKeeper scheme and the COVID-19 insolvency provisions to help businesses and employees make it through a difficult financial period. Both initiatives have raised big questions and require careful decisions for directors, employers, and employees alike.

Under the JobKeeper scheme, Louise explains, employers must assess their situation carefully before deciding whether to register for the scheme. She says the advantages of the scheme are that it’s a one in all in system. “So, the employer is either in or they’re not, and then they can’t pick or choose particular people to pay.”

As Louise points out though, the complexity of this in practice centres on part-time and casual employees. “If people are part time or casual and they don’t actually work commensurate to $1500 [per fortnight] they still get paid that amount,” she says. “For some people, they’re getting paid more than they’re used to working. The legal complexity here is ‘can an employer force somebody to work extra hours to earn that $1500?’ The answer probably is no,” Louise points out citing comments made by the Fair Work Ombudsman.

Companies that do opt into the JobKeeper scheme need to consider how the requirement to pay first and be reimbursed by the Government might impact them. A key question that company directors need to consider, Louise says, is “if they go down that road, paying first and being reimbursed by the Government, it may raise the question of are they trading in insolvency”. While the COVID-19 insolvency provisions relax the rules around insolvent trading for a six-month period it isn’t a cure-all and requires specialist planning and advice.

The most important thing for everyone managing these changes, Louise says, is that the law still applies. “It not a case of heaven knows, anything goes,” she says. “It is the case that you’ve got a system so make sure you understand how it works.”

Employees must remember, Louise emphasises, that these COVID-19 provisions do not replace existing employment law. “Big bodies of law like unfair dismissal and adverse action, which is when you damage a person in their employment, that’s still there,” she says.

Likewise, company directors also need to remember that they are bound by existing legal frameworks. “They’re still governed by the general directors duties, including the duties to act in the interest of the company in good faith, and to show reasonable care, skill, and diligence,” she says.

For everyone affected, or potentially affected, by these initiatives, Louise recommends seeking advice on your specific circumstances from experts like your accountant, lawyer, or the Fair Work Ombudsman. “All of these laws”, Louise says, “have been done quickly and with very good intentions, and they have the potential to do good. But as with anything in life, you’re well-served to get advice, and be cautious, and think about what these changes mean for you.”

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Feature image: Shutterstock

Published 18 May 2020

Featured JCU researcher

A/Prof Louise Floyd
A/Prof Louise Floyd
Dr Louise Floyd is an Associate Professor of Law (full-time, permanent at JCU) and also a Barrister to the Supreme Court of Queensland.  In 2011, Dr  Floyd became the first Australian to win the MacCormick Fellowship to the University of Edinburgh