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Like vultures circling slowly in the sky, the legal industry is lazily eyeing the deliciously litigious possibilities that COVID-19 will leave behind. 

There is much anticipation of a festival of contractual disputes rolling out for many years to come, as businesses fight over the obscure meaning of force majeure and whether COVID-19’s ravages will have relieved parties of their otherwise expensive obligations.

Publicly, it’s mostly about class actions. The Ruby Princess debacle has already been monetised by class action lawyers; predictions of more of the same, to flow against the dozens of aged care providers whose facilities have proved no less deadly a place to be than the floating disease factories we call cruise ships, will undoubtedly come true.

I’m neither advocating nor denigrating these eventualities, merely noting their inevitability, as predictable as maggots populating a corpse.  

However, I am a bit intrigued by another possibility: class actions by employees against employers for what I’ll loosely call COVID fraud.

Back in March, when we all got sent home for the first time, many businesses went very hard and very early on measures to protect their bottom lines. I’m not talking about the industry sectors that simply ceased — tourism, airlines, hospitality, entertainment — but the rest of us, who could continue operating even in a lockdown scenario, but couldn’t be certain about how COVID-19 was going to impact our turnover.

For service businesses, the fastest and most effective way to reduce overheads is to reduce your payroll by cutting employees’ jobs, hours or pay. Many employers did just that. In the legal industry, for example, it quickly became standard for firms to impose across-the-board 20% pay cuts on all staff.

Some law firms also got rid of people, reduced their working days, or forced them to take annual leave. At least one came up with the inventive idea of “offering” extra annual leave which employees could “buy” with salary cuts. 

Most of this happened in March and April, well before any service business had a clear picture of how badly its revenue was going to be hit by the COVID-19 fallout. It was, essentially, pre-emptive.

Now, there’s nothing wrong with a business taking steps to protect itself against financial risks that are contingent or unknowable. 

But the employment relationship is unique. Much of the law built up around it, by courts and legislation, is a reflection of the almost complete imbalance of bargaining power between its parties.

In the COVID-19 situation, when law firm X said to its staff that it needed them to agree to a 20% pay cut so that it could continue to keep them all employed, there was no negotiation, rather a fait accompli. You could hardly say no.

The Fair Work Act makes it illegal to visit “adverse action” — that is, anything that leaves them with less favourable conditions — on employees without their consent. If that consent was obtained by misrepresentation, deceit or just a set of wild guesses, then it wasn’t real.

As it turned out, many businesses who took pre-emptive action against a COVID-19 downturn have done rather a lot better than their worst fears. I know of firms who made their employees pay the risk-price of COVID-19 from very early on, and are now banking the profits they had thought they might not make.

And I haven’t heard of anyone offering retrospective rebates of the wages they cut before there was any real need.

If their workers wanted to take them on, it would be legal carnage. Biting the hand that feeds you, even when it’s offering only starvation rations, would be courageous indeed.

Still, it’s not pleasant to know that, for some workers, COVID-19 has been an opportunity for their employers to do just fine, or better than fine, at their expense.

Peter Fray

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