Standing down employment

Table of Contents

An employee may be stood down in accordance with the terms of an employment contract, award, enterprise agreement, or under the Fair Work Act 2009 (Cth) (‘the Act’). While an employer may pay a portion of wages to an employee during a stand down period, they are not obligated to make such payments under the Act. This means that in some circumstances, an employee may essentially be stood down without pay, or alterantively, the employee may be required to exhaust any accrued annual leave to ensure they can maintain an income during the stand down period. As such, stand downs can have severe economic consequences for an employee who may be deprived of a wage for an unspecified amount of time.

 It is important to look to the relevant legislation, contracts, awards or other agreements that may be in place when an employer is looking to stand down one or more of its employees as there are limited circumstances where an employee may be stood down, and the wrongful standing down of an employee in breach of applicable regulations or agreements can have serious consequences.

The meaning of 'standing down' under the Fair Work Act 2009 (Cth)

An employee may be stood down pursuant to sections 524 and 525 of the Act.1 The Act specifically stipulates that an employer may stand down an employee if the employee cannot be usefully employed for one of the following reasons:

  • Industrial action (if the industrial action has not been organised or engaged in by the employer);
  • Breakdown of machinery or equipment where the employer is not reasonably responsible for the breakdown; and
  • Any stoppage of work for which the employer cannot reasonably be held responsible (such as due to inclement weather). Standing down an employee as a result of the COVID-19 pandemic will generally fall within this category.

It is also important to consider whether an employee can relevantly be stood down pursuant to the terms of their employment contract, or alternatively under a relevant award or enterprise agreement. The terms of the employment contract or enterprise agreement may enable the employer to stand down an employee for other reasons outside of the limited circumstances provided for under the legislation. Conversely, the employment contract or agreement may provide terms to the benefit of the employee, including things such as the employee being entitled to a specified period of notice or a consultation prior to being stood down. However, the inclusion of such terms is not a requirement under the Act.

Both employers and employees should always carefully consider the reasons why a particular stand down is occurring as there may be times where the employer, whether delibberately or unknowingly, has acted outside the scope of the legislation and/or other applicable regulations and agreements in making the decision to stand an employee down. Whether the employee could have been “usefully employed” by the employer is a further question that can often be a key point in determining whether a stand down was lawfully or unlawfully done.

Can an employee be “usefully employed”?

Whether an employee can be “usefully employed” by the employer is a question that is particularly important to consider in relation to employee stand downs, whether in the context of the COVID-19 pandemic or otherwise. Whilst many employers have had to consider alternative options to reduce the financial impact of the pandemic on their businesses so that they can continue to operate, including standing down employees or even redundancies, and whilst the legislation does provide that an employer may stand down an employee for a stoppage of work for any cause of which the employer cannot be reasonably held responsible, this does not simply provide the employer with the opportunity to stand down employees merely due to a downturn in business or change in the market.

A stand down due to the COVID-19 pandemic may still be deemed wrongful if the employer has failed to consider all available options to ensure the continued employment of its employees.

Such options may include, but are not limited to:

  • Implementing a work-from-home arrangement;
  • Reaching an agreement with an employee regarding a change in duties or work hours;
  • Allowing the employee to access paid or unpaid leave; or
  • Accessing a government support scheme.

Whether or not an employee may be usefully employed by their employer is something that needs to be considered on a case-by-case basis as it involves a consideration of many different factors, including the employee’s role and skills,  the nature of the employer’s enterprise, or other things that may justify redeployment of the employee to another department. If it is found that an employee could have been usefully employed in another department of the employer business, the employee would effectively have been wrongfully stood down, and vice versa.

One important factor that many businesses have recently relied heavily on, and continue to rely on, in electing to stand down their employees is where the government imposes a regulation preventing or limiting the operation of a particular type of business because of a lockdown or restrictions. This will generally provide stronger grounds for an employer to legally stand down an employee, provided they are operating in accordance with all other applicable regulations and requirements.

What is a “stoppage of work”?

A simple downturn in the activities or profits of a business will not usually be sufficient to justify the standing down of an employee. The law is clear that a stand down may only occur in the limited circumstances provided for under section 524(1) of the Act, or otherwise in accordance with the terms of an applicable employment contract, award or enterprise agreement.2 The Fair Work Commission recognises a difference between a downturn in trade and a stoppage of work, with the latter largely enabling an employer to legally stand down an employee. An employer is not ordinarily entitled to stand an employee down because business was simply slowing down. If this were the case, employers would be able to stand down employees depending on changes in the market, which would likely result in a very volatile employment market.

In the case of CEPU & Anor v FMP Group (Australia) Pty Ltd,3 an employer stood down a total of 31 maintenance employees who gave notice of an intention to take industrial action. The employees had not expressed an intention to stop work during the action, but merely that they cease completing paperwork as part of their duties (with the exception of workplace health and safety paperwork). It was held by the Fair Work Commission that the employer had acted outside of the scope of the Act in standing down the employees because the employees had not initiated any industrial action at the time of the stand down and had only expressed an intention to take such action. As a result, the Fair Work Commission found that the employer did not have a proper basis for the stand down and ordered that the employer pay its employees for any lost wages that they would have earned during the period in which they were stood down.

Stand downs during periods of authorised leave or absence during course of employment

Section 525 of the Act states that an employee is not considered to be stood down during a period of authorised paid or unpaid leave, or during a period where the employee is authorised to be absent from their employment. It is also important to note that an employee who is normally entitled to be absent from work on public holidays may be entitled to payment on such days, even during period of stand down.

That said, a recent decision of the Full Federal Court in the case of CEPU & Ors v Qantas Airways Ltd4 provided that during a period of stand down, an employee cannot take sick leave or compassionate or carer’s leave.

Stand downs due to inclement weather

Inclement weather refers to conditions where work may be deemed unsafe or unreasonable due to severe weather conditions. Employees who are normally affected by inclement weather generally conduct work outdoors. Whilst an employer will ordinarily be legally entitled to stand down an employee due to inclement weather, it is still  important to look to the specific provisions of the Act, as well as any employment contracts, awards or enterprise agreements that may apply, as there could be alternative provisions applicable which may provide for things such as an employee’s entitlement to payment during periods of stand downs caused by inclement weather.

Main elements

In the 2020 case of Marson v Coral Princess Cruises6, the Fair Work Commission considered three main elements to assess the lawful standing down an employee in accordance with the Act. The three elements noted were:

  1. The employee was stood down during the time that they could not be usefully employed;
  2. There was a stoppage of work which the employer could not be held responsible for; and
  3. The employee could not be usefully employed because of the stoppage of work.

The Fair Work Commission held that where all three elements can be satisfied, the employer will likely have stood the employee down lawfully.

Damages

The Fair Work Commission has the power to hear matters relating to stand downs. You are able to apply to the Fair Work Commission if you have been stood down or have requested to take leave instead of being stood down without pay. The Commission will need to hear the case on all the facts and circumstances and deliver a ruling as to the legality of the stand down. If appropriate, the Fair Work Commission can order that the employee receive the wages that they would have earned but for the unlawful stand down.

Frequently asked questions

An employer may stand down an employee during a period where the employee cannot be usefully employed because of a stoppage or halt in work that the employer is not responsible for. Standing an employee down is usually considered to be a temporary measure and commonly occurs when companies want their employees to return to work eventually.

An employee can only legally be stood down if they “cannot be usefully employed”. An employee is generally considered to be “usefully employed” of the employer is gaining some form of benefit or value from the employment of that employee. This means that even where an employee’s specific role may no longer be useful to the employer, the employee could still be “usefully employed” in a separate department of the business. As such, an employer must attempt to fund ‘useful work” for the employee elsewhere in the business before standing them down.

Stand down is commonly confused with redundancy, but these measures are significantly different. A stand down is a temporary measure, which means that employees still remain employed. However, where an employee is made redundant, the employee’s position is effectively no longer necessary or required by the employer and results in the permanent termination of the employee’s employment.

You can stand down your employees where there is a stoppage of work that you, as the employer, cannot be held responsible for, and where the employee can no longer be usefully employed because of that stoppage of work – whether in their current role or in a separate role. For example, your business is required to close due to government requirements (e.g. COVID-19 lockdown requirements), and there is no useful work or role for your employee to do or fill. You should ensure that you examine your employee’s employment contract and any applicable award or enterprise agreements that may otherwise apply to your employee’s employment to confirm whether there are any special rules that need to be adhered to (e.g. payment of wages during a stand down in certain circumstances).

A downturn in work (such as a shift in the market) is, in and of itself, usually not sufficient to justify a stand down of an employee. This is because a downturn in work generally won’t satisfy the requirement for there to be a “stoppage of work that the employer cannot reasonably be held responsible for”.

If you have been stood down but you believe that you could still be “usefully employed” in some capacity by your employer, you may be able to dispute your employer’s decision to stand you down on the grounds that your employer would not be adhering to the requirements imposed by the Act. If it can be shown that your employer wrongfully stood you down, you may be entitled to backpay for the time in which you were stood down. Under Section 526 of the Act, an employee can dispute a stand down by applying to the Fair Work Commission.

Under the Act, an employer is not required to give a notice of stand down to the employee. However, a particular employee’s employment contract, award or other agreement may provide that an employee is entitled to a specified period of notice, or terms to the effect that the employee is entitled a consultation prior to being stood down. It is therefore important that employers consider all applicable requirements and agreements before proceeding to stand an employee down to ensure the stand down is properly conducted.

Even where an employee has been stood down, the employee still continues to accrue the same employee entitlements according to the usual number of hours the employee would ordinarily have worked had they not been stood down. However, there is no requirement under the Act for an employer to pay its employees during a stand down. As such, it is important to distinguish between benefits accrued during a stand down period and payment of wages during that same period.

Contact Gibbs Wright Litigation Lawyers

At Gibbs Wright Litigation Lawyers, we act for employees and employers alikein a wide range of employment matters. Whether you are an employee who suspects that you may have been stood down unreasonably or unlawfully by your employer, or you are an employer involved in a dispute with a current or previous employee regarding a stand down, our employment team can assist..

Contact Gibbs Wright Litigation Lawyers today today for a free and confidential consultation about your matter to discuss your legal rights and options.

[1] Fair Work Act 2009 (Cth) ss 524-525.

[2] Ibid.

[3] [2013] FWC 2554.

[4] [2020] FCA 656.

[5] *Please note that at the time of writing, an application for special leave to appeal the decision to the High Court of Australia has been made, which may alter the law on an employee’s right to take sick leave and compassionate or carer’s leave.

[6] Marson v Coral Princess Cruises (N.Q.) Pty Ltd t/a Coral Expeditions [2020] FWC 2721.

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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