Coronavirus Shut Downs: What Employers Need To Know

Published March 23, 2020 (last updated July 17, 2020) Author: Employsure

employsure advisors advising clients on coronavirus

Stand Downs: What Employers Need To Know

The shutdowns of non-essential services across parts of Australia may trigger conditions in the Fair Work Act that will allow employers to stand staff down without pay, according to Employsure, Australia’s leading workplace relations company.

In a Government-imposed closure of a workplace, employers may be in a position to stand staff down without pay if those employees can’t be usefully deployed in other parts of the business.

Ed Mallett, Employsure Managing Director, said employers are grappling with the entitlements that apply since the COVID-19 outbreak. In the past fortnight alone calls to the company’s Employer Advice Line have doubled. Today, Employsure Advisers have been inundated with calls from clients wanting to know where they stand in the event of a forced shut down.

“This is an incredibly confusing time for employers,” he said. “The conversation has evolved so drastically in the past few weeks and business owners are finding it hard to keep up. We’ve gone from talking self isolation and remote working to complete workplace shut downs. And the entitlements that apply in all of those scenarios are incredibly vast and complex.

“Employers are doing their best to meet an unprecedented challenge. There’s a huge amount of pressure on their business, but they’ve also got employees to think about and legal obligations they must fulfil.”

Addressing shut down specifically, Mr Mallett said the Government announcement may allow employers to access little known conditions in the Fair Work Act.

“If you are ordered by the Government to fully shut down, and your employees can’t reasonably work elsewhere, you may be in a position to stand them down without pay,” Mallett said.

“The employer needs to be able to show that it is a legitimate stoppage of work, and not just a downturn. This certainly appears to be a legitimate stoppage for many businesses, meaning that unpaid stand down provisions in the Fair Work Act may well apply given the circumstances.

“The requirements under the Fair Work Act mean that unpaid stand downs apply when an employee cannot usefully be employed. However, an employer must show that all steps were taken to find useful employment for the affected employees.

“This doesn’t mean an employer is bound to place employees in positions that are drastically different to their contracted position or significantly change the way they operate the business.

“However, prior to standing down an employee, you should consider all other alternatives, including whether the employee could work from home or in another location, and then if this is not possible, discuss the stand down with them and confirm it in writing.”

“If you’re an employer and you’re struggling to get the right advice through traditional channels, please reach out to us. We can support you. We’ve also built a free online resource hub for employers to help them understand and apply their fundamental obligations during this incredibly confusing time.

Stand Downs: 4 Questions Employers Must Ask

  1. Are there stand down provisions in the Modern Award, Enterprise Agreement or Contract of Employment?
  2. Can you establish causation? Is the Coronavirus (COVID-19) the real reason for the stoppage of work? Has the government ordered you to shut down wholly or partly?
  3. Has there actually been a stoppage of work? By definition, this must be more than a downturn.
    • Stoppage of work does not mean:
      • A slow down of work
      • Inability to operate in your usual fashion
      • Inability to operate without difficulty
  4. Are there other opportunities for the employee to be usefully employed? Either in another position or working from home

If you cannot satisfy these requirements, you cannot lawfully stand down your employees. If you proceed withstanding down your employees without satisfying all of these elements, then you may be opening up your business to an underpayment claim. Should this occur, the onus of proof falls on you as the employer to show that the unpaid stand down was legitimate and each of the steps outlined above were fulfilled.

Considerations

  1. Is the Employee on a period of authorised leave (paid or unpaid)? If so, they are not taken to be stood down.
  2. A period of stand down is counted as ‘service’, which means they are considered to be working. This means:
    • Employees still accrue leave entitlements during the period of stand down.
    • Employees can take annual leave and long service leave while they are on stand down as long as it is authorised
    • Employees should be paid for public holidays (if they would have otherwise worked on the public holiday)
    • This period away from work is counted for purposes of termination, unfair dismissal access and redundancy

Stoppage of work does not mean:

  1. A slow down of work
  2. Inability to operate in your usual fashion
  3. Inability to operate without difficulty

Employsure Resource Hub

To help employers meet this unprecedented challenge, Employsure has built a free Resource Hub, containing workplace policies, communications, checklists and FAQs. All information is free for business owners. It can be found at employsure.com.au/coronavirus

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