One option that many businesses are considering to combat the effects of COVID-19 is a stand down of their employees. However, organisations must be aware there are great risks in standing down employees inconsistently with the provisions of the Fair Work Act 2009 and if they do so, this will be a breach of the Act and the business may face severe consequences. This blog post answers some frequently asked questions about stand down.
The following content is based on information availableat the time of publishing.
8 September 2020:This blog post has been updated to include a section addressing Victorian business restrictions.
Under the Fair Work Act 2009 (the FW Act) employers have the right to temporarily stand down employees without pay during a period in which the employees cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible. Other circumstances are industrial action and breakdown of machinery or equipment.
If a stand down is held by a Court or the FWC to not meet the requirements of the FW Act, the employer will have an obligation to pay the employees who were invalidly stood down. Therefore, it is essential for employers to carefully consider whether the various requirements are met before proceeding to stand down any employees.
Further information about stand down can be found in our article 'Stand down under the Fair Work Act 2009'.
Ai Group Members are urged to contact Ai Group or Ai Group Workplace Lawyers for advice before standing-down employees. Please call our Workplace Advice Line on 1300 55 66 77 for assistance.
In the context of the COVID-19 pandemic, key questions that would need to be asked in considering whether there is a right to stand down employees include:
Some enterprise agreements contain limitations on an employer’s right to stand down employees, so any relevant provisions in an applicable enterprise agreement need to be considered as well as the provisions of the FW Act.
Before considering standing down employees, employers should consider a number of alternatives such as:
Where employees have significant leave accruals, they can be encouraged to take their leave, or perhaps reduce to a four-day week and take the fifth day as annual leave. The parties must agree to the taking of leave, however, in some circumstances the employer may have the right to direct an employee to take leave (such as excessive leave accruals).
New entitlements (that will operate until 30 June 2020) have been included in 99 modern awards including allowing an employer to reach agreement with employees to take twice as much annual leave for half the pay. See our Member Advice for further information.
Assess whether it is reasonable in the circumstances for employees to be redeployed into other areas of the business where they can perform the role.
Reaching agreement with employees to implement shorter working hours arrangements or go on unpaid leave for a temporary period (please note that an employer cannot generally direct an employee to reduce their hours, there must be agreement). Consultation and managing expectations is key here.
See our Agreement to Vary Ordinary Hours (Temporary Arrangement) Letter for assistance.
The Federal Government has introduced a subsidy that assists employers impacted by COVID-19 to continue to pay eligible employees. Employers who qualify for the scheme can claim a payment of $1,500 per fortnight per eligible employee from 30 March 2020, for a maximum period of 6 months.
In addition,'JobKeeper enabling directions' allow employers to vary certain terms of the employee’s employment, such as reducing their hours of work, duties and location of work are an option. See our Member Advice and our JobKeeper Notification Letter for further information and assistance.
Under the FW Act an employer cannot stand down an employee if they are on approved leave.
Yes. An employee that is stood down without pay will continue to accrue annual and personal/carer’s leave.
Under the FW Act, if an employee is already on annual leave when a stand-down commences, the employee is entitled to be paid for the remaining period of annual leave. The period of annual leave has been authorised by the employer and therefore the employee is taken to not be stood down during the period.
Yes.
Under the FW Act, an employee is entitled to make a request to their employer to take annual leave during a stand down and the employer cannot unreasonably refuse.
If the employer agrees to the leave being taken, the employer is taken to not be stood down for the period of the leave as the leave has been "authorised by the employer" (s.525(a) of the FW Act).
Some employers may not be in a financial position to pay annual leave to an employee or several employees if there are significant accruals.
It may be considered reasonable to refuse requests for annual leave where these payments would mean that the business would go into liquidation. Instead, the employer could seek to reach agreement with employees to take some of the leave.
For example, it may be possible to agree to annual leave being ‘spread out’, for example 2 days of annual leave per week over several weeks, with the other 3 days per week being unpaid.
Members are encouraged to call the Workplace Advice Line on 1300 55 66 77 to discuss refusing requests for annual leave.
If an employee refuses an employee’s request to take annual leave during a period of shut down an employee can make an application to the Fair Work Commission to deal with the dispute.
No, an employee cannot access personal/carer's leave during a stand down.
This is because personal/carer's leave is not like annual leave, which is a leave entitlement “authorised by the employer”. Instead, personal/carer’s leave is an entitlement that exists as a form of income protection for employees that are unable to work in defined circumstances such as illness or injury.
A recent Federal Court decision held that where an employee is not entitled to income because they are stood down, an employee is not entitled to access personal/carer’s leave as there is no income that needs to be protected by the provision of personal/carer’s leave.
Ai Group’s view is that public holidays that occur during a stand down must be paid if the employee would have otherwise worked ordinary hours on that day. This view is shared by the Fair Work Ombudsman.
Under Victorian Stage 4 restrictions, some businesses in certain industries are required to reduce the number of workers that can be on site.
The situation where government restrictions allow the continued operation of a business, as opposed to where the restrictions cause a complete stoppage of work is uncertain under the stand down provisions under s.524 of the FW Act.
This is most likely to be an issue for employers that are not eligible for JobKeeper, as JobKeeper enabled directions relating to stand down do not require a complete stoppage of work before then can be implemented.
For more information, see Ai Group member advice NAT 077/20 – Victorian Government Stage 4 restrictions – Temporary reduction in staffing levels and employer payment obligations.
Stand downs can be challenged by an employee or union and are likely to come under much scrutiny during the COVID-19 pandemic.
As mentioned above businesses are urged to contact Ai Group or Ai Group Workplace Lawyers for advice before implementing a stand down. Please call our Workplace Advice Line on 1300 55 66 77 for assistance.
Members can contact us orcall the Workplace Advice Line on 1300 55 66 77 for assistance with their workplace matters.
Ai Group is continually publishing new COVID-19 advice and resources for employers:
Clinton is the Publications Manager at Ai Group. He is responsible for a number of key services including Annotated Modern Awards, Workplace Relations Handbooks and the management of Ai Group’s HR and Health & Safety Resource Centres. Clinton has a Masters in Employment Relations and previously held advisory roles with the Workplace Authority and Fair Work Ombudsman.
