Governments, business owners, and workers alike are scrambling to understand their options to financially survive in a COVID-19 world. With memories of the catastrophic effects of the Global Financial Crisis seared into our minds, it can be difficult to remind ourselves that this pain is short term. But it is. And, when Australia moves back to ‘business as normal’, businesses will need to react quickly to recover lost revenue. Uncertainty holds the reins to Australia’s future. The business community must find ways to grapple those reins back.
Qantas has publicly led the way in fighting the upcoming revenue crunch, standing down two-thirds of its workforce and proposing alternative employment opportunities in the meantime. Let’s not mince our words, not paying workers for an indefinite period is a horrible decision to make. Those workers will need to work out how they pay for rent, mortgages, food, and other necessary expenses in the short term. But, on the surface, stand downs are a sound resolution for:
- any business with significant payroll liabilities, which:
- may not survive the next six months of losses; and
- do not want to lose valuable relationships with staff; and
- workers who need certainty about their long-term financial position.
So, let’s dig into what the Fair Work Act says about standing down employees, if that solution is available.
What does the law say?
Under section 524 of the Fair Work Act 2009 (Cth), an employer may stand down an employee in circumstances where the employee cannot be usefully employed because of:
- an industrial action other than an industrial action organised by the employer;
- a breakdown of machinery or equipment, if the employer cannot be reasonable be held responsible for it; or
- a stoppage of work for which the employer cannot be held responsible for.
In circumstances where an employee has been stood down for any of the reasons above, the employer is not required to make payments to the employee for that period. …
What does ‘a stoppage of work for any cause for which the employer cannot reasonably be held responsible’ mean?
Well, according to the Fair Work Commission decision of Construction, Forestry, Maritime, Mining and Energy Union v Ta Ann Tasmania Pty Ltd  FWC 2189 (the FWC Decision), the factual question must be answered by looking at a business’ particular circumstances. This will mean an assessment of how COVID-19 has impacted a business’ ability to carry on revenue-raising activity. For many businesses, the mere fact of a pandemic event will not be enough to trigger this provision.
In the FWC Decision, the respondent in the matter had machinery damaged as a result of a bushfire, could not meaningfully engage the workers and so, stood down its employees.
Additionally, businesses may be subject to industrial instruments that may vary the conditions in which workers may be stood down.
How does this work in practice?
If you have been stood down at work, or conversely, are an employer needing to stand down employees, you need to ask yourself the following questions:
- Are there any provisions within your contract, an applicable award or enterprise agreement which cover standing down employees?
If so, review them to ensure that the proper processes have been followed and that any stand down is compliant with the relevant industrial instruments.
- Have you actually been stood down as a result of COV-19?
In circumstances were an employee brings a general protections claim under the Fair Work Act, the burden to demonstrate that there is a legitimate stand down is on the employer. To demonstrate that there is a legitimate stand down, an employer will need to prove that any direction from government as a result of COVID-19 has caused the stoppage of work. This is particularly important for employees who feel they may have been stood down as a result of an existing grievance within their workplace.
- Has there been a legitimate stoppage of work?
If an employee has the ability to work from another location or work varied hours, there will not be a stoppage of work and the stand down provisions will not be available to an employer. The difference between the two is clear, where a business has had office premises restricted as a result of quarantine, but employees are able to continue work from home, there will be no stoppage of work. Where a laborer works at a construction site, and the site has been closed as a result of a quarantine and there is no ability to access the site, or alternative office work that can be completed from home, there will be a legitimate stoppage of work.
- Is there another role available for an employee to work in during a quarantine period?
If there is another position available within the business that an employee can be redeployed to, stand down provisions will not be accessible to an employer. For example, if a full-time barister at a café can now be employed to carry out deliveries, an employer will not be able to stand down that employee under the Fair Work Act.
Standing down workers should be seen as a last resort and employees should be given as much notice as possible. The financial stress of being without an income for an indeterminate time can be triggering for many workers, especially those who are the primary breadwinners of their families.
Other options available are:
- Moving staff to work less hours;
- Moving staff to casual relationships; or
- Moving staff to alternate working arrangements such as working from home or working in a different position within the business.
At Adero Law, we focus our practice on understanding the employment law. We work to assist businesses and workers understand their rights and obligations under the Fair Work Act, relevant awards, enterprise agreements, and employment contracts. The next six months will require tough decisions and tougher conversations with Australia’s workforce, that’s why many Australian businesses will look to Adero Law.