Standing Down Employees

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To continue to provide all our small business clients timely advice during these unprecedented times, we have obtained some information from HR consultants for you, in relation to standing down employees. 

When can employees be stood down without pay?

Employers and employees are encouraged to work together to find appropriate solutions that suit the needs of individual workplaces and staff.

Under the Fair Work Act, an employee can only be stood down without pay if they cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

Whether the option of standing down employees is available is very fact dependent and an employer should exercise the option cautiously. The employer must be able to demonstrate that:

·         there is a stoppage of work

·         the employees to be stood down cannot be usefully employed (which is not limited to the work an employee usually performs)

·         the cause of the stoppage must also be one that the employer cannot reasonably be held responsible for.

 

If an employer unlawfully stands down employees without pay, the employees will likely be able to recover unpaid wages.

Employers cannot generally stand down employees simply because of a deterioration of business conditions or because an employee has coronavirus.

Some examples of when employers may be able to stand down employees include:

·          If there was an enforceable government order or direction requiring the business to close (which means there is no work at all for the employees to do, even from another location)

·         if a large proportion of the workforce was required to self-quarantine with the result that no useful work was able to be performed in the business by the remaining employees/workforce

·         if there was a stoppage of work due to lack of supply for which the employer could not be held responsible.

This is not an exhaustive list.

Enterprise agreements and employment contracts can have different or extra rules about when an employer can stand down an employee without pay, for example, a requirement to notify or consult. Employers should consider whether their obligations are impacted by any applicable enterprise agreement, award, employees’ employment contracts or workplace policies.

 

Employers are not required to make payments to employees for the period of a stand down but may choose to pay their employees. Employees accrue leave as normal.

An employee is not taken to be stood down during a period when the employee is taking paid or unpaid leave that is authorised by the employer or the employee is otherwise authorised to be absent.

Other options that an employer may consider instead of stand down include:

·         seeking employees’ agreement to take paid (or unpaid) leave for a period

·         in limited circumstances, directing employees to take paid annual leave

·         in limited circumstances, negotiating with employees to change regular rosters or hours of work

·         terminating the employment of the employees, in which case the employer may have to provide redundancy pay.

 

THE HR PEOPLE RECOMMENDATION AND NOTE:

You can only stand down without pay where there has been a Government Directive to do so.

If you stand down unlawfully and do not pay your staff, they could make a claim against you for unpaid wages

Leave entitlements continue to accrue during the period of the stand down as though they had worked and they can take paid leave in the  Stand Down Period.

When you do comply, as noted above, please issue your staff with correspondence confirming the duration of the stand down - we would  recommend 1 month at a time and re-view and re-issue the letters each month.

(Please note the above information is general in nature. Should you require advice specific to your circumstances please contact our office and we can put you in contact with an expert on these matters)

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MILROY ACCOUNTING PROFESSIONALS

Milroy Accounting Professionals has served the Macarthur for over 20 years, including Camden, Narellan, Campbelltown, Liverpool and more recently Smeaton Grange, Gregory Hills and Oran Park. We deliver professional accountancy and compliance, bookkeeping and business advisory services to retail, commercial, industrial and trades firms, whether large or small.

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