Stand Down Advice

Stand Down under the Fair Work Act

Stand Down Generally

Section 524 of the Fair Work Act 2009 (Cth) (FW Act) provides as follows:

      1. An employer may, under this subsection, stand down an employee during a period in which the employee cannot be usefully employed because of one of the following circumstances:

1. industrial action (other than industrial action organised or engaged in by the employer);
2. a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
3. a stoppage of work for any cause for which the employer cannot be held responsible.

…

3. If an employer stands down an employee during a period under subsection (1) the employer is not required to make payments to the employee for that period.

In summary, an employee can only be stood down without pay if they cannot be usefully employed because of a stoppage of work (in the case of COVID-19) for any cause for which the employer cannot reasonably be held responsible for. Employers may allow employees, during a stand down period, to use accrued annual leave, RDO’s or long service leave entitlements (if applicable). Further, employees will continue to accrue leave entitlements as usual.

An employer’s decision to stand down employees should be treated cautiously and employers should seek specific advice about their specific circumstances.  For a stand down to occur, the employer must be able to show the following:

1. there is a stoppage of work;
2. the employees to be stood down cannot usefully be employed (which is not limited to the work the employee usually performs); and
3. the cause of the stoppage must also be the one that the employer cannot be reasonably responsible for.

Lack of Work or Deterioration in Business Conditions

It should be noted that employers cannot stand employees down pursuant to the FW Act due to a lack of work or a deterioration of business conditions.

We note that a number of members hold service contracts and the like that may be directly affected by the closures/restrictions placed on the categories of business as set out above. If a direct link can be established between COVID-19 and the suspension/cessation of a particular service contract, and the employer can satisfy the requirements of section 524 of the FW Act, then the likely position is that the employer can utilise section 524 of the FW Act to stand down the relevant employees. An example of this would be:

• where an employer holds a service contract with a pub;
• the pub has been directed to close due to a government order; and
• as a result of that direction, the pub no longer requires the service work to be carried out and thereby suspends or terminates the service contract.

This aspect may be more difficult to establish for our smaller members, particularly in circumstances where they carry out residential works. In this case, a lack of calls or jobs may be as a result of the COVID-19, however a direct causal link may not be able to be established.

Prior to initiating a stand down, particularly in circumstances where it may be construed as being due to a “lack of work”, we strongly recommend that you contact NECA Legal to obtain specific advice about your circumstances.

Examples of When Employers may Stand Down Employees

Examples for which an employee may be stood down include (but are not limited to):

1. if there is an enforceable government order or direction requiring the business to close (thereby resulting in no work at all for the employees to do); or
2. if there was a stoppage of work due to lack of supply (such as materials) for which the employer cannot be held responsible.

It should be noted that enterprise agreements and employment contracts can have different or extra rules about when an employer can stand down an employee without pay. Members are encouraged to review these industrial instruments prior to standing down any employees.

Disclaimer: This summary is a guide only and is not legal advice. For more information on legislative or contractual obligations, please contact NECA Legal on 1300 361 099 or email law.clerk@neca.asn.au.