The Australian share market was dropping on Monday as COVID cases continued to rise and another major company flagged mandatory vaccination of its staff.

At 1:30pm AEST, the ASX 200 was down 0.5 per cent to 5,448.

Only 66 of the top 200 stock were advancing with 130 in the red and a handful steady.

The biggest loser was Fortescue Metals, which shed 10.4 per cent.

That latest drop has plunged Fortescue's share price down 30 per cent from the record high of $26.58 it reached at the end of July.

It comes as FMG shares go ex-dividend today for its upcoming final dividend payment.

FMG announced during its recent company results that shareholders will get a sizeable dividend of $2.11.

Other losers on Monday included Pro Medicus (-6.3pc), Lendlease (-4.3pc) and Viva Energy (-4.4pc).

The financials were also down, with all the major banks losing between 0.2 and 0.9 per cent.

On the flip side, the strongest performer at midday was bauxite miner Alumina, with a gain of 4.8 per cent.

Telstra considering no jab, no job policy

Telstra has emailed its staff with a proposal to make COVID-19 vaccination mandatory for 8,300 frontline staff.

That staff are those who work in customer-facing roles. It does not include staff who work from home or offshore.

Chief executive Andy Penn told staff they would consult for a week over the policy.

"We will start a one-week consultation period with you, our unions and some of our partners on a proposed COVID vaccination policy," he wrote.

"We would require people in these roles to get their first vaccination by 15 October and the second by 15 November. That said, we would be flexible if there are vaccine supply issues.

"We would also add this requirement to employment contracts for new starters in these types of roles – whether they are new to Telstra or transferring from another role.

"I understand some people may choose not to get vaccinated – whether that is for personal or medical reasons. But given what’s at stake when it comes to protecting people’s health we would only consider exceptions on established medical grounds."

It follows several companies now coming out with various vaccination policies, including food company SPC.

RBA set to make taper decision

Meanwhile, the Reserve Bank of Australia is set to make a decision on whether it will reduce, or taper, its economic stimulus at its monthly meeting on Tuesday.

Analysts are predicting that it will hold off for now as COVID cases continue to rise, locking down Sydney and Melbourne.

"An alternative choice is to continue with taper, but delay the next review until February," ANZ predicted.

"We think a simple delay is much easier to communicate than this alternative.

"We would emphasise that this decision is likely to be a close call."

ABC/Reuters