The first in our series of articles on employment issues brought about by the COVID-19 pandemic, this article looks at standing down employees under the Fair Work Act 2009 and what exactly does it mean.
Under Part 3-5 of the Fair Work Act 2009 (FWA), an employer may stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances :
- industrial action (other than industrial action organised or engaged in by the employer)
- a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown, or
- a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
The power to stand down employees comes from the employment contract, award, enterprise agreement and the Fair Work Act 2009 (FWA). Outside of these express rights, employers do not generally at common law have the right to stand down employees without pay during periods where they cannot be usefully employed or due to circumstances beyond the employer’s control, such as the COVID-19 outbreak.
An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (eg. requirements relating to consultation or notice).
Where Commonwealth and/or State Governments make an enforceable order, determination or direction for businesses to temporarily close down or cease operations, (such as shutting down non-essential services, in order to stem the spread of COVID-19), it is probable that such directive would qualify as a cause requiring the stoppage of work for which the employer cannot reasonably be held responsible.
To the extent that employees cannot be usefully employed as a result of that directive, an employer could invoke the stand down provision under the FWA. For the stand down provision under the FWA to available, there must be a causal link between the stoppage of work and the impact of COVID-19.
Generally, stand down periods are unpaid or without pay. The stand down provision under the FWA provides that the employer is not required to make payments to employees for the period of the stand down. It is important to note, however, that employee entitlements continue to accrue during the stand down period.
It should be noted that employees cannot be stood down indefinitely. It may be that where employment cannot resume, redundancy may ultimately apply.
For more on redundancy, see here.
Stand downs should be a last resort. Subject to eligibility, the Commonwealth Government JobKeeper scheme may be a more effective way for your business to get through this period. Check out our articles about the JobKeeper Scheme and the Changes to the Fair Work Act and promptly assess your eligibility.
For more information, see our following articles:
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