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 an employee can be stood down without pay. Because of this, stand downs can have severe economic consequences for an employee who may be deprived of a wage for an unspecified amount of time or may be required to exhaust any accrued annual leave to ensure they can maintain an income during the stand down period.

The standing down of an employee can be a serious matter. It is important to look to the legislation, contract, relevant award or agreement because there are limited circumstances where an employee may be stood down. 

"Standing down" under the Fair Work Act 2009 (Cth)

The Act provides that an employee may be stood down under sections 524 and 525. 1 The Act stipulates that an employer may stand down an employee if the employee cannot be usefully employed due to:

  • 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 commonly fall within this category.

It is also important to consider whether an employee can be stood down under the terms of their employment contract, 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, in addition to the limited circumstances under the legislation. However, the contract or agreement may also provide that an employee is entitled to a specified period of notice or a consultation prior to being stood down, though this is not a requirement under the Act.

Both employer and employee should always consider the reasons for the stand down because there may be times where the employer has acted outside the scope of the legislation, contract or enterprise agreement in making the decision. Whether the employee could have been “usefully employed” by the employer is also a key question which can determine whether the stand down was lawful or unlawful.

Can an employee be “usefully employed”?

This is a question that is particularly important to consider, whether in the context of the COVID-19 pandemic or otherwise. 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 redundancy. The legislation provides that an employer can stand down an employee for a stoppage of work for any cause which the employer cannot be reasonably held responsible, this does not provide the employer with the opportunity to simply stand down employees due to a downturn in business or change in the market. A stand down due to the pandemic may still be deemed wrongful if the employer has failed to consider all available options to ensure the continued employment of their employees.

Such options can include, but are not limited to:

  • implementing a work-from-home arrangement;
  • reaching an agreement with an employee regarding a change in duties or a change in work hours;
  • allowing the employee to access paid or unpaid leave; or
  • accessing a government support scheme.

The question as to whether or not an employee may be usefully employed by their employer is considered on a case-by-case basis. If an employee can be usefully employed, this would mean they have been wrongfully stood down. Conversely, if they cannot be usefully employed, this would constitute a lawful standing down of an employee. Whether an employee may be “usefully employed’ involves a consideration of many factors such as the employee’s role and skills, or the nature of the employer’s enterprise which may justify redeployment to another department. One factor that many businesses have faced and continue to face 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 can provide stronger grounds for an employer to legally stand down an employee.

What is a “stoppage of work”?

The law is clear that a stand down may occur only in the limited circumstances under section 524(1) of the Act, or in accordance with the terms of an employment contract, award or enterprise agreement. 2 The Fair Work Commission (FWC) recognises a difference between a downturn in trade and a stoppage of work, the latter enabling an employee to legally stand down an employee. An employer is not ordinarily entitled to stand down an employee because business slows. If this were the case, then employers could stand down employees depending on changes in the market.

In the case of CEPU & Anor v FMP Group (Australia) Pty Ltd3 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, only that they cease completing paperwork as part of their duties (except workplace health and safety paperwork). It was held by the FWC 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 they had only expressed an intention to take such action. As a result, the FWC  found that the employer did not have a proper basis for the stand down and ordered that the employer pay its employees for lost wages which they would have earned during the period that they were stood down.

Standing down during periods of authorised leave of 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 days that are public holidays may be entitled to payment on such days, even during a period of stand down.

That said, a recent decision of the Full Federal Court in the case of CEPU & Ors v Qantas Airways Ltd  4 provided that during a period of stand down, an employee cannot take sick leave or compassionate or carer’s leave. 5

Stand downs due to inclement weather

Inclement weather refers to conditions where work is unsafe or unreasonable due to severe weather. Employees who are normally affected by inclement weather generally work outdoors. An employer can legally stand down an employee due to inclement weather. However, as stated above, it is important to look to the Act or an employment contract, award or enterprise agreement, even when a stand down occurs due to inclement weather. The terms of the employment contract, award or agreement may provide that an employee is entitled to be paid during a stand down for inclement weather.

Standing down main elements

In the 2020 decision in Marson v Coral Princess Cruises 6, the FWC considered three main elements of lawfully standing down an employee in accordance with the Act. These are:

  1. the employee was stood down during the time that they could not be usefully employed; and
  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.

If the above three elements are satisfied then it follows that the employer likely stood down the employee lawfully.

Standing down damages

The FWC has the power to hear matters relating to stand downs. Under Section 526 of the Act, you are able to apply to the FWC if you have been stood down or have requested to take leave instead of being stood down without pay. The FWC 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 FWC 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 in which the employee cannot usefully be employed. This means you can only legally be stood down if you “cannot be usefully employed”.

This is usually considered to be a temporary measure and occurs when companies want their employees to return to work eventually.

An employee can legally be stood down only if they “cannot be usefully employed”. An employee is generally considered to be “usefully employed” if the employer is gaining some form of benefit or value from the employment. This means that even when an employee’s specific role may no longer be useful to the employer, the employee could still be “usefully employed” in  another department of the business. 

Stand down is commonly confused with a redundancy. However, they are significantly different. Stand down is temporary and employees still remain employed. However, redundancy is an employer’s decision that the employee’s position is no longer required, resulting in the permanent termination of their employment. This means that the employer no longer requires an employee’s job to be done by anyone.

You can stand down your employees if they could not be usefully employed, there was a stoppage of work which you could not be held responsible, or the employee could not be usefully employed because of the stoppage of work. For example, the business is required to close because of government requirements (including COVID-19 requirements), and there is no useful work for your employees to do. You are required to examine your employees’ employment contract and any applicable award or enterprise agreements to see whether there are any special rules that need to be adhered to.

To satisfy this, there must be a “stoppage of work”, where the employer cannot be reasonable held responsible. A downturn does not usually constitute a stoppage. However, if further shutdown restrictions arise, employees may satisfy the requirements for a stoppage.

If you believe that you can continue to be useful employed in some capacity in your employment, you may be able to dispute the decision, because your employer would not be adhering to the requirements of the Act. Furthermore, you may be entitled to backpay because you have been wrongfully stood down.

Under section 526 of the Act, an employee can dispute the stand down by applying to the FWC to deal with the dispute. If this occurs, the FWC must take into account fairness between the parties concerned.

An employer is not required to give a notice of stand down under the Act. However, the contract or agreement may provide that an employee is entitled to a specified period of notice or a consultation prior to being stood down.

Employees continue to accrue entitlements as per the ordinary hours they would have worked had they not been stood down. However, it is important to note that 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 you can be stood down without pay. Therefore, an employee may be accruing only benefits during a stand down period.

Contact Gibbs Wright Litigation Lawyers

At Gibbs Wright Litigation Lawyers, we act for employees and employers alike in 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 about 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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