Employment Law Update - March 2020

Standing Down Employees – some do’s and dont’s

The recent COVID-19 crisis has created economic turmoil throughout the world. It has also shone the spotlight onto the little used stand down provisions in the Fair Work Act, 2009 (Cth).

Section 524(1) states that an employer can stand down its employees for a period when they cannot usefully be employed, because of one of the following:

1. industrial action;

2. a breakdown of machinery or equipment for which the employer cannot reasonably be held responsible;

3. a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

It is the third option which is most relevant to the COVID-19 crisis. To assist employers, this article will briefly deal with some of the common questions we have been asked over recent weeks.

When can I stand down employees?

Employees can be stood down when the effects of the lock down/virus cause a stoppage of work. Technically, the stand down provision does not activate until the stoppage of work has occurred.

Do I have to provide notice of the stand down to the employees?

It is best practice, although not required, that you first consult with the employees and discuss the proposed course of action. You should then provide notice in writing to the employees individually of the intention to stand them down, the commencement date of the stand down and, if known, the likely end date.

What if there is an enterprise agreement or contract which has a different stand down provision?

Section 524(2) of the Act states that if there is a contractual term or a term of an enterprise agreement which sets out circumstances in which a stand down can be implemented then the contractual/EA term prevails.

Can the employees take annual leave during the period of the stand down?

Yes. Section 525 makes it clear that an employee can elect to take annual leave during the period of the stand down but the section does say it is subject to authorisation by the employer. The note at the end of s 525 says that the employee can take leave and makes no mention of the employer’s consent. Section 88(2) also states that an employer must not unreasonably refuse a request to take annual leave. To avoid a potential adverse action claim, refusing the request should be done in limited circumstances.

Note: when the employee is on authorised leave then the stand down ceases for that period.

Do leave entitlements accrue during the period of the stand down?

Yes. The employees, although stood down, remain employed for all relevant periods and it is treated differently to leave without pay which suspends the period of service.

Can employees take personal or carer’s leave during the period of the stand down?

Possibly no. This is a very interesting question. Unfortunately, because these provisions have been used sparingly in the past, we do not have much case law to provide guidance on the interpretation. The Full Court of the Federal Court was asked to consider the accrual rates of leave for shiftworkers in the decision of Mondelez v AMWU [2019] FCAFC 138 (see our September 2019 article for further details). The Full Court held (at [195]):

‘Since the basis of the entitlement is an inability to work because of illness, injury or unexpected emergency, the legislative intention must be to authorise employees to be absent, not only for their ordinary hours of work, but also any overtime hours they would otherwise have been required to work…In other words, the employee is authorised to be absent from work for the portion of a 24 hour period that would otherwise be allotted for work – irrespective of whether that work is ordinary time, or overtime.’

The inference from the judgment is that an employee is only entitled to take personal/carer’s leave for the period they are allotted to work. If an employee has been stood down, then he/she is not allotted for work and is therefore not entitled to access personal/carer’s leave irrespective of whether they are suffering a personal illness or injury.

It should also be borne in mind that special leave to appeal the Mondelez Decision to the High Court has been granted.

We trust this provides some clarity to employers in this incredibly uncertain and difficult time. Should you require any assistance then please do not hesitate to contact our office.