In today’s uncertainty, there’s a workplace term that is becoming more common, and it can be unclear if it’s something you haven’t faced before. What is a Stand Down?
As an employer, you may stand down staff temporarily if they can’t continue to be usefully employed because of reasons beyond your control – in the current climate it is due to the impact of the COVID-19 pandemic. It means the business can implement a stoppage of work and stop all or some employees working and being paid, but they’re still employed by the company and have entitlements. Stand down is different from making a person redundant or being terminated.
What are the Stand Down Terms in the Fair Work Act?
An employer may stand down an employee during a period in which the employee cannot usefully be employed because of several circumstances, including (Fair Work Act s.524–525):
- 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.
For example, severe weather or a natural disaster, such as the recent bushfires, may have caused a workplace to be shut down, and this could trigger the Act’s stand down clause. Industrial action that your employer hasn’t organised or engaged in may also trigger a stand down. A breakdown of machinery or equipment may also cause a lawful stand down, so long as your employer wasn’t responsible for the failure.
But since the Federal Government announced restrictions on business and social gatherings to help slow the spread of COVID-19, businesses affected by these restrictions can now lawfully stand down employees without pay under the Fair Work Act.
What does “usefully employed” mean?
If your business gains some benefit or value from the work that an employee does, they are considered “usefully employed” and cannot be lawfully stood down from their role. Before you can be stood down, your employer must try to find useful work for you in the business that you could reasonably be expected to perform.
Under the Fair Work Act, an employer must be able to show that there is a stoppage of work and that employees can be stood down if they can’t be usefully employed, which is not limited to the work they usually perform. What this means is that if an employee can be employed in a different area, then you are obligated to do that.
Do Employees Continue to Accrue Leave Entitlements?
Yes, during periods of stand down, employees will continue to accrue annual and personal leave in the usual way.
Employees who contract COVID-19 must not attend the workplace for a period of time. Employers must prevent infected workers from attending the workplace in those circumstances under the Work Health and Safety Act 2011 (NSW).
Employees may also take any accrued paid carer’s leave to look after a family member or member of their household who is unwell with COVID-19.
Employers must direct employees who are sick with COVID-19 not to come to work and to obtain medical clearance from a doctor before returning to work.
If an employee who contracts COVID-19 does not have any sick leave accrued or is employed on a casual basis, they are not entitled to paid leave and can be directed to take leave without pay.
Do I Have to Give Notice of Stand Down?
There is no official requirement to give notice of a stand down. You may have formal consultation requirements in your applicable award or enterprise agreement. Many of our clients are discussing these matters with their employees before standing them down where this is possible. There’s not much either party can do to avoid a stand down, but these discussions are a useful way to check in on your employees, assure them that this situation is temporary and you want them back and talk to them about whether they would like to access their accrued leave
How does Payments Work During Stand Downs?
If an employer stands down an employee during a period in accordance with s.524 of the Fair Work Act, then the employer is not required to make payments to the employee for that period.
Section 524 is intended to relieve an employer of the obligation to pay wages to employees who cannot be usefully employed in certain limited circumstances. The consequences of a stand-down can be severe for an employee as the employee may be deprived of wages for a lengthy period. Whether a particular employee can be usefully employed is a question of fact to be determined, having regard to the circumstances that face the employer.
What Are Some Alternatives to Stand Down?
In cases where stand down is not available, some alternatives include:
- Mutually agreeing to reduced hours;
- Mutually agreeing to leave arrangements either with normal pay, reduced pay or without pay; and/or
- Redundancies.
Employees selected for stand-down may alternatively be given the option of taking any accrued paid leave, such as annual leave or long service leave, instead of being stood down without pay.
Generally, you cannot direct employees to take annual leave or long service leave. However, employees may prefer to take paid leave where the alternative would be being stood down without pay.
Alternatively, employers may consult with employees to mutually agree to vary applicable contracts of employment to reduce working hours. Employees who are employed full-time may agree to work on a part-time basis for an interim period. Similarly, employees who are employed on a part-time basis may agree to a temporary reduction of their normal working hours.
In some instances, employers may also move to terminate employment on the grounds of genuine redundancy. This is only available where changes in the operational requirements of business mean the employee’s role is no longer required and where the employee cannot be reasonably deployed in another role, including interstate or overseas.
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