In what circumstances can business owners stand down their workers?

RM Williams, Myer, Kathmandu, Country Road and Cotton on shops are just some of the larger retailers whose doors closed on the weekend due to COVID-19, with thousands of its workers stood down.

Business owners are grappling with whether stand down of workers is a viable option as their businesses are being crippled by the effects of the government’s recent measures to slow down the COVID-19 pandemic.

Under the Fair Work Act 2009 (Cth) a worker can be stood down without pay if they cannot be usefully employed due to a stoppage of work for any cause for which the employer cannot reasonably be held responsible (section 524 (1)(c)).

Stand down can be an excellent option for a business owner as the worker remains employed during the stand down. The worker has continuity of service and access to statutory benefits and leave accrual, and in return the business can request the return of the worker when it is deemed safe to do so.  

Business owners do need to be careful when exercising this option. If the stand down is unlawful they may be liable to pay the workers’ wages for the stand down period.

A question being asked is whether a downturn in work qualifies as a stoppage of work? In normal times employers can’t generally stand down their workers due to a deterioration in the business. But these are not normal times.

The Fair Work Ombudsman has provided clarification as to what circumstances would be an event that would allow business owners to stand down workers. These circumstances include:

  1. where there is an enforceable Government direction requiring the business to close (ie there is no work at all for the employees to do, even from another location);
  2. if a large proportion of the workforce were required to self-quarantine with the result that the remaining workers cannot usefully be employed; or
  3. if there was a stoppage of work due to lack of supply for which the employer could not be held responsible.

It is important to consider applicable employment contracts, modern awards or enterprise agreements and employment contracts which may say something different about when an employer can stand down an employee without pay, but note a Government direction will prevail over other instruments.

Business owners need to be careful not to breach unfair dismissal, general protections or anti-discrimination provisions when considering stand down.

Contact us should you require further advice including tips to reduce risk of litigation from first consultation with workers throughout the entire period of stand down.

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on email
Email it to your friend