During this period of economic slow-down and uncertainty during the Covid-19 Pandemic, it may be necessary for some seriously affected businesses to consider standing down employees.
The Fair Work Act provides for a Stand Down under Section 524. It allows for employees to be stood down “during a period in which the employee cannot be usefully employed” due to “a stoppage of work for any cause for which the employer cannot reasonably be held responsible”.
The circumstances for some businesses during this pandemic will be enough to meet the requirements of the Act. The requirements for a stand down are going to be most likely met by industries and businesses which have been forced to stop work entirely, or have had to substantially cease operations, especially if it is due to a government direction.
In deciding whether or not an employee can be stood down you need to consider why there has been a stoppage of work, and whether the employer could be held reasonably responsible for that stoppage. For the stand down to be legitimate, the circumstances need to be outside of the control of the employer.
Where Covid-19 has merely resulted in a downturn of trade, depending on the severity, it may not be sufficient to allow for a stand down of a business’ work force.
The employer needs to show that all reasonable steps were taken to find useful work for the employee. Employees do not need to be moved into substantially different roles than their usual work, and workplaces are not required to completely change the whole system of work purely to create work for staff.
Many enterprise agreements and awards also contain industry specific provisions relating to stand downs, which will need to be complied with if they apply to a business’ workforce. Where there may be inconsistencies, the award supersedes the default provisions of the Fair Work Act.
Whilst employees are stood down, the Fair Work Act still considers this to be a period of service, therefore they will continue to accrue annual and personal leave as if they were working their ordinary hours. They are also still entitled to Public Holidays that fall on an ordinary work day for that employee.
Standing down an employee in circumstances where there were no proper grounds to do so may result in a finding that there was a breach of the Fair Work Act, and employers may be liable for the back pay of wages owed for the stand down period.