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Standing Down Employees – What Employers Need to Know

As we are all aware, the COVID-19 pandemic has caused significant disruption to many businesses and employees. With many businesses being forced to close, employers are having to make difficult decisions in relation to managing employees in the face of financial hardship. One option which employers may be considering is standing down employees.  Employers need to be aware that even during a global pandemic, they must comply with normal workplace laws which continue to apply. 

What does it mean to “stand down” employees? 

A “stand down” refers to a temporary work stoppage or lay off of an employee. If an employer stands down an employee, the employer is not required to make payments to the employee during the stand down period.  However, the Fair Work Act 2009 (“the FWA”) recognises a period of stand down as ‘service’. This means employees who are stood down still accrue leave and other entitlements in accordance with the FWA and are entitled to payment of public holidays that fall within the stand down period.

When can employers stand down employees? 

The FWA contains provisions allowing stand downs in specified circumstances. However, the provisions contained in the FWA only apply if there are no provisions relating to standing down employees in an applicable employment contract or enterprise agreement. If an employment contract or enterprise agreement contains stand down provisions, an employer must comply with those provisions. 

Stand down provisions under the FWA

Section 524(1)(c) of the FWA allows an employer to stand down an employee during a period in which the employee cannot usefully be employed because of a stoppage of work, for any cause for which the employer cannot reasonably be held responsible. Section 524(1)(c) requires that there has actually been a stoppage of work. It is not sufficient to stand down employees due to a downturn in business.
  
The FWA requires that all prospects of useful employment in the business are exhausted before an employee can be stood down from employment. Employers therefore need to explore all options, such as working from home and redeployment opportunities, before standing down employees. 

In the context of the COVID-19 pandemic, employers may be able to stand down employees if their business has closed because of an enforceable government direction relating to non-essential services and where there is no work at all for employees to do even from another location; or if a large proportion of the workforce is in self-quarantine, meaning the remaining employees can’t be usefully employed. 

Employers should exercise the option to stand down employees cautiously. If employers do not satisfy the stand down requirements outlined above, they may be exposed to a dispute application under section 526 of the FWA. If a dispute arises, the Fair Work Commission is required to take into account fairness between the parties concerned. The employer should ensure that written notice of stand down is provided in writing to each employee in a timely manner confirming the reason for the stand down and the length of time that the employee will be stood down. If the Fair Work Commission is satisfied that the stand down is unlawful, employees may be able to recover unpaid wages from the stand down period.

If you have any questions about the requirements for standing down employees, please contact us. 

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