Employers must answer four questions before making the decision to stand down employees due to the impacts of COVID-19.
As businesses continue to struggle to survive, many may consider standing down employees. Businesses tackling this difficult decision must ensure the stand downs are in compliance with the provisions of the Fair Work Act. Those that breach the Act can face severe consequences. So when can employers legally stand down employees and what are the alternatives?
The following content is based on information available at the time of publishing and is not a substitute legal advice.
What is a stand down?
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. This can be 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 Fair Work Commission 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.
Four questions to consider
In the context of COVID-19, key questions to ask when considering stand downs include:
- Can the employees proposed to be stood down be ‘usefully employed’? The 2011 decision of the FWC in AMWU v McCain Foods is one of many decisions on this topic. There will be no right to stand down an employee if there is useful work available and it is within the terms of the employee’s contract of employment (it need not be work the employee normally carries out).
- Has there been a ‘stoppage of work’ for the relevant employees, or just a significant slowdown? A stand down relates to circumstances where there is a stoppage of work for the relevant employees – not just a slowdown.
- Is the stoppage of work for a cause that ‘the employer cannot reasonably be held responsible’?
- Will the stoppage of work be temporary? Stand downs are not able to continue for an excessive, indefinite period.
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.
Alternatives to standing down
Before considering standing down employees, employers should consider a number of alternatives such as:
- Allowing employees to take paid annual or long service leave if they request this;
- Making use of new entitlements that have been included in 99 modern awards (and will operate until 30 June 2020) and reach agreement with employees to take twice as much annual leave for half the pay;
- Redeployment in 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 (an employer cannot generally direct an employee to reduce their hours – there must be agreement).
- Are employees eligible for Government funding such as the JobKeeper Payment?
- If eligible for the JobKeeper payment, ‘JobKeeper enabling directions’ to vary certain terms of the employee’s employment, such as reducing their hours of work, duties and location of work are an option.
Where do I find more information?
Ai Group is offering the following services and information to your business:
- Access to experienced Industrial Relations advisers on our COVID-19 IR Advice Line: 1300 312 733
- Access to COVID-19 IR Advices on Ai Group’s website and the ability to sign up to alerts
- Access to Online Employer IR Webinars, Podcasts and Industry Sector Meetings which allow you to engage with Ai Group’s IR experts and industry peers live during the sessions. Webinars and podcasts can be accessed on-demand later to review with the team.
Click here to take advantage of Ai Group’s offer now.