Standing down employees
Updated information on this issue can be found at Standing down employees (Update).
Even with the government supports announced to date, businesses are considering a variety of options regarding how to manage employees during Covid-19, particularly when the business needs to close, or demand has reduced.
One question our well-intentioned clients frequently ask is 'can I stand my employees down until this is over?'. In doing so, they hope to stand down employees with no pay while the pandemic runs its course, so when normality resumes their employees come back to work. Annual and long service leave entitlements continue to accrue over the stand down period.
However, for us the notion of 'stand down' instantly rings alarm bells.
Employers need to know they have no general right to stand employees down without pay. Standing down employees is provided for under section 524 of the Fair Work Act 2009 (Cth) (FW Act). This section is normally applied where a natural disaster has destroyed the business premises. Employers are permitted to stand down employees who cannot be usefully employed in circumstances where there is 'a stoppage of work for any cause for which the employer cannot reasonably be held responsible'. The key word there is stoppage, not a down turn in business, not less appointments being made or less customers coming in, but a complete stoppage. You may only stand an employee down if they 'cannot be usefully employed' due to the stoppage. Employees should be given the opportunity to perform any available work they can perform, even if it falls outside their regular duties.
As with most legal issues, the answer on whether you can do it 'depends on the circumstances'. The relevant Award your employees are covered by, any applicable enterprise agreements or contracts of employment play a large role in your ability to stand employees down without pay, as these would override the Fair Work Act provisions. The potential consequences for unlawfully standing down employees could include:
- An order to backpay the wages the employee otherwise would have earned during the stand down period.
- Incurring penalties for the breach of the Fair Work Act
If you are considering any options regarding your employees it is vital that you get legal advice, specific to your individual situation. Our business lawyers Siobhan Liston and Lachlan Edwards can provide that advice, you can get in touch with them on 0427 916 442 (Lachlan) or 5445 1067 (Siobhan). The exceptional circumstances we are in call for unique solutions.