**As different rules apply in relation to standing down employees – Information in this blog is only applicable for businesses that don’t receive the JobKeeper payment **
The COVID-19 crisis has seen businesses such as Qantas, Flight Centre and AFL stand down thousands of employees across Australia. The rules to comply with before standing down anyone are often misunderstood by employers, so in this article, we offer some clarification around what you can and can’t do before standing down employees.
What is a stand-down?
Section 524 of the Fair Work Act states that “an employer may stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
- 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;
- a stoppage of work for any cause for which the employer cannot reasonably be held responsible.”
Therefore, in the context of COVID-19, an employer may be allowed to stand down its employees. This means that the employees will not be required to work because there is a stoppage of work.
Enterprise agreements and contracts of employment might contain different standing down clauses, so it’s important to check the wording and the conditions around standing down in these documents before acting on anything.
Can employees be stood down if the business experiences a downturn?
Standing down should not be taken lightly and cannot be done if the employer is merely experiencing a downturn in productivity. An employer can stand down employees when there is ‘stoppage of work’ caused by something outside the employer’s responsibility. For example, when government directives enforce a shutdown of non-essential businesses such as gym, pools, restaurant, cafes etc, these businesses might have to stand down their employee as they can no longer operate. However, if a business is experiencing a downturn of activity due to the COVID-19, and the business is struggling financially, it is unlikely that the criteria for standing down employees would be met because the business is still operating. Redundancies in this scenario might be more appropriate.
We strongly recommend to seek advice before doing so, to avoid any missteps. If employees are stood down unlawfully, lost wages must be back paid, and penalties might be issued to the employer. After exploring all the other reasonable opportunities and you’re convinced ‘Standing down’ is your only option for your business – you should consult with affected employees to discuss what this will mean for them.
How can you stand down employees?
Employees should be consulted before they are stood down. A confirmation letter should be sent outlining their rights when being stood down. Please contact us for a template to send to your employees.
What happens when employees are stood down?
When employees are stood down, they are still employed and being stood down does not break the continuity of service. Employees, therefore, continue to accrue their normal entitlements (personal/carer’s leave, annual leave) but they are not paid any wages for the hours that they would have ordinarily been required to work.
However, during a public holiday, the stood down employees should be paid. Employees can take any accrued Annual Leave and Long Service Leave while being stood down to minimise any financial impact. Payslips should still be sent to employees while they are stood down to reflect the leave accruals.
If you have questions or need advice in relation to ‘Standing down’, Please contact us on 1300 4ADVICE.