COVID-19: Employers' Rights Across the Pacific

By John Ridgway, Feizal Haniff, Andrew Kidu, Primo Afeau, Dirk Heinz and Brad Phillips

Introduction

The COVID-19 pandemic is presenting new and unprecedented challenges for employers across the globe, including the Pacific region. In order to understand the best commercial outcomes and options available during these uncertain times, employers must be aware of their rights and obligations in respect of their employees.

In this article, we explore the legislative position in Fiji, Vanuatu, the Solomon Islands, Papua New Guinea (PNG) and Australia, however as this article is of a general nature and covers a number of countries, employers should always consult locally qualified lawyers in their jurisdiction and discuss their specific needs before taking any actions. If you would like more detailed advice in relation to the options available in your jurisdiction and an introduction to an appropriately qualified lawyer, please contact Dirk Heinz at d.heinz@pln.com.au.

Preliminary Considerations

As a preliminary measure, employers should first consider their obligations under any applicable enterprise agreement, award, employment contracts or workplace policies in place between them and their employees, to understand what rights and arrangements currently exist prior to taking any action.

In addition to contractual and statutory obligations, employers are under a fiduciary obligation to act in ‘good faith’ in their dealings with the employee.

Temporary Options

Subject to what is provided for in the employment contract, there may be are a number of short-term options which may be available to employers to utilise for example Leave Without Pay, reduced hours for reduced pay, using up leave and other entitlements.

Typically, these solutions would be a departure from what is stated in the employees’ contract and so the consent of employee would most likely be required. To limit any potential claims or issues, it is advisable to communicate clearly and effectively the options and also to obtain the consent to the changed working arrangements in writing.

Other Alternatives

‘Standing Down’

In Australia, pursuant to the Fair Work Act, employees who are stood down without pay will remain employed for the period of the stand down.[1]

The Fair Work Act provides that an employer may stand down an employee during a period in which the employee cannot usefully be employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.[2] The employer is not required to make payments to the employee for that period.[3]

In Fiji, Vanuatu, the Solomon Islands and PNG, there is no equivalent legislation which has been passed which provides employers with a right to ‘stand down’ employees for a period of time.

In the absence of such legislation and assuming there is no equivalent common law rights, employers may be left with no option other than to exercise their right to terminate employment in circumstances where they cannot continue to employ their workers – for example through redundancies.

‘Redundancy’

Under the relevant laws, a ‘redundancy’ is:

In Australia, the Fair Work Act places requirements upon the employer prior to terminating employment – including providing notice and paying untaken annual leave.

In Fiji, Vanuatu, the Solomon Islands and PNG, employers also have obligations to their employees prior to terminating both oral and written contracts, which may include providing notice and paying redundancy or severance pay, amongst others.[10] To mitigate any risks associated with unlawful termination, employers should liaise with employees regarding termination decisions and provide written notice which sets out the specific reasons for termination and which addresses any other requirements under that local legislation.

Notice Periods

Where an employment contract, be it written or oral, is in place with an employee for an unspecified time, notice of termination is also required to be given.

In Fiji, Vanuatu and PNG employers must adhere to the length of notice requirements found in the legislation, unless otherwise agreed.

In Fiji, the legislation provides the following notice periods for short-term contracts:

In Vanuatu, the legislation provides the following notice requirements:

In Vanuatu, notice is not required if the employer pays the employee the full renumeration for the appropriate period specified above.[13]

In PNG, the legislation provides the following notice requirements:

In PNG, a contract can be terminated without the above notice requirement if the employer pays to the employee a sum equal to the amount of salary that would have accrued during the period of notice.[15]

In the Solomon Islands, the legislation is silent on the length of notice required; however, employers in the Solomon Islands are required to keep particulars of employees’ contracts in writing, including length of notice requirements.[16]

In Australia, the legislation provides the following notice requirements:

Exceptions to Redundancy/Severance Pay

In Australia, the effects of COVID-19 has resulted in thousands of cases of redundancy. A redundancy may also give rise to an obligation to pay the employee redundancy or severance pay. Exceptions to this requirement include:

Exceptions to Redundancy or Severance Pay

Next Steps

Current legislation in the Pacific is, in many respects, not well designed to deal with the potential effects of COVID-19. While there may be a number of temporary solutions for employers to utilise to maintain their workforce, in the event that more drastic measures are required, employers may need to resort to permanent measures in the form of redundancies.

As a result of the fiduciary relationship that exists between the employer and employee, there is a duty of ‘good faith’ imposed on employers. There are also statutory obligations imposed on employers, including for example notice periods and redundancy payments, so it is important that in discharging their obligations, employers carefully adhere to the legislation to avoid future claims.

The Pacific Legal Network is keeping a watchful eye on legal effects of COVID-19 on employment laws in the Pacific. For further details or information, please email us directly at admin@pln.com.au.

[1] Fair Work Ombudsman, Australian Government, Coronavirus and Australian Workplace Laws <https://coronavirus.fairwork.gov.au/#stand-down>. [2] Fair Work Act 2009 (Cth) s 524(1)(c). [3] Ibid, s 524(3). [4] Ibid, s 389. [5] Employment Relations Act 2007 (Fiji) s 4. [6] Ibid, s 107. [7] Ibid. [8] Ibid, s 41. [9] Employment Act 1996 (Solomon Islands) s 4(1). [10] Employment Relations Act 2007 (Fiji) Part 5 and 12; Employment Act 2006 (Vanuatu) Part 10 and 11; Employment Act 1986 (PNG) Division 6; Employment Act 1996 (Solomon Islands) Part 2. [11] Employment Relations Act 2007 (Fiji) s 107. [12] Employment Relations Act (Fiji) s 29. [13] Employment Act 2006 (Vanuatu) s 49. [14] Employment Act 1986 (PNG) s 34. [15] Ibid, s 35. [16] Employment Act 2006 (Vanuatu) s 18. [17] Above n 2, s 118. [18] Above n 2, s 121. [19] Employment Relations Act (Fiji) s 108(2). [20] Employment Act 1996 (Solomon Islands) s 3. [21] Employment Act 2006 (Vanuatu) s 54. [22] Employment Act 1986 (PNG).