To stand down or not? That is the question.

The COVID-19 virus is placing pressure on all businesses. Many employers are considering redundancies and reducing or cutting hours for casuals. An alternative for permanent workers is standing them down.

There is no general right for employers to be able to stand down employees without pay. Standing down employees should be approached very carefully. The starting point is to check the employee’s contract of employment and any applicable Modern Award or Enterprise Agreement.

If there are provisions in the contract of employment or the industrial instrument applying to stand downs these need to be followed.

Section 524 of the Fair Work Act enables stand downs in some circumstances. There are three criteria’s relevant to this COVID-19 crisis. They are:

• There is a stoppage of work
• The employees to be stood down cannot be usefully employed, (such as working from home)
• The cause of the stoppage must be something that the employer cannot reasonably be held responsible for.

A stoppage of work is not a slow down nor is a deterioration of business conditions. Some examples of a stoppage of work are:

• if there was an enforceable government direction requiring a business to close
• if a large proportion of the workforce was required to be self-quarantined; and this stopped production.

Often the most difficult areas is whether or not the stoppage was something which an employer cannot reasonably be held responsible for. Clearly, if there is an enforceable government direction requiring the business to close this falls within the definition.

The New South Wales government has said that, clubs, pubs and restaurants are to shutdown. If employees in those industries cannot be usefully employed they can be lawfully stood down.

Many other industries are not yet subject to a requirement to shut down. Standing down employees due to a shortage (rather than a stoppage) of work may not be lawful. When, and if, Australia or an individual states move, to a the higher level of shutdowns, more employees are likely to be lawfully stood down.

Please note that this article is not legal advice and is only general in nature. You should obtain specific legal advice concerning the circumstances that you are facing. Kells offers a telephone advice service for $99.00 inclusive of GST on this issue. For bookings, please email David Potts at dpotts@kells.com.au or contact Sophie Donovan on 42219327 or via email sdonovan@kells.com.au.

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