Stand down provisions under the Fair Work Act

By 2 February 2022Workplace
Stand down provisions under the Fair Work Act

With the spread of COVID-19 and government health directions affecting business operations, many employers are again considering whether they are able to rely on the stand down provisions under the Fair Work Act 2009 (Fair Work Act).

Under s 524(1) of the Fair Work Act, an employer can stand down employees without pay if they cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible. This means an employer will need to be able to demonstrate the employee cannot usefully be employed during the period of stand down because of either:

(a) industrial action;

(b) breakdown of machinery or equipment (if the employer cannot reasonably be held responsible for the breakdown); or

(c) a stoppage of work for any cause for which the employer cannot be held responsible.

Section 524(1) (c) cannot be used simply because of a mere reduction in available work or an obstruction to the way work is performed. Each instance will come down to whether the employee can be usefully employed over the relevant stand down period. If the employee can be usefully employed, the stand down will not be authorised by s 524.

Stoppage of work is not defined in the Fair Work Act and on its ordinary meaning means a cessation of working activity. Employers should consider all available options before making the decision to stand down employees, including whether alternative arrangements such as working from home, changes to duties, hours of work or accessing paid or unpaid leave.

When an employee cannot perform their normal duties they may be usefully employed if alternative duties of benefit to the employer are available to be performed. Employers should check what limitations might apply under the applicable award, certified agreement or legislation and talk to employees about temporary changes to duties, rosters or hours if this means they can keep working. Employers should also consider whether there is any right to stand down under an applicable industrial instrument or employment contract.

It is important for employers to consult with employees before making a decision to stand down staff and comply with any consultation obligations under an applicable award, enterprise agreement or employment contract.

Circumstances in which a stoppage of work might be established may include:

  • disruptions to supply chain
  • inability to operate due to government directions
  • a large proportion of the workforce is required to self-quarantine.

A mere reduction in available work would not ordinarily constitute a stoppage, even if the business were operating at a substantially reduced capacity. However, if a stand down is found to be invalid it may not result in the employer being ordered to pay monies. Each case will depend on the circumstances surrounding the decision.

Case example

An employer’s entitlement to stand down was considered in Shanks-v-Schwartz Family Co [2021] FWC 6332. Shanks was employed on a permanent full-time basis at the respondent’s hotel. Between 1-8 August 2021, a Public Health Order was in place requiring a lockdown for all non-essential services. The applicant was notified by phone on 3 August 2021 that she was to be stood down without pay until the end of the lockdown mandate on 8 August 2021. The stand down was then extended for several weeks after the Public Health Order had ceased.

During the applicant’s stand down the respondent’s business operated on a skeleton staff arrangement. The respondent had sent the applicant and other employees correspondence asking them to consider an agreement to temporarily reduce their hours in light of the crippling effect the pandemic had upon the business, but she did not sign and return the agreement to reduce her hours. The applicant challenged the stand down extension beyond the Public Health Order on the basis there was no genuine stoppage of work during these periods as she could have been usefully employed.

The Commission applied the dictionary meaning of stoppage as cessation of activity and found a mere reduction in available work could not constitute a stoppage. The Commission, therefore, found that the stand downs outside of the Public Health Order were not stand downs in accordance with s 524 of the Fair Work Act, but declined to make any monetary orders sought by the applicant taking into account fairness between the parties in circumstances where approximately 268 other staff agreed to a temporary reduction in hours to share the burden of the pandemic.

Key Takeaways

Employers should:

  • Consider any alternatives to stand down first.
  • Review employment agreements and relevant industrial instruments for any stand down provisions.
  • Assess the stand down provisions in the Fair Work Act.
  • Comply with any consultation obligations in relation to major workplace change under any applicable industrial instrument.

Given the risks involved, if you are contemplating a stand down it is recommended you seek legal advice from Suzanne Wishart one of our Employment Law experts.

 

This publication has been carefully prepared, but it has been written in brief and general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

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