Reduced hours. Forced business closures. What does this mean for your staff?

Wednesday April 8, 2020

The coronavirus pandemic is causing havoc across the world and leaving employers with confronting issues around continuity of business and employee management. For some businesses, forced closure has had a massive impact on their ability to survive. For others, changing business circumstances, such as significant supply chain issues or social distancing measures, are making it impossible to run their business.

These issues bring forward the concept of standing down employees. We’ve seen some large companies stand down employees over the last week – Qantas, Flight Centre, Myer and more. Why, how and when is this the right action to take?

What is a stand down?

A stand down means the employee does not perform work and remains unpaid during the stand down period; however, the employee remains employed. The stand down period will also count as a period of service under the Fair Work Act. In other words, employees are entitled to continue accruing service-based leave during the stand down period.

The employment contract or other industrial instrument such as an enterprise agreement or award may contain stand down provisions. If this is not the case, then section 524 of the Fair Work Act can be used for guidance.

Standing down employees may be a better option than termination through redundancies.

When can you stand down an employee?

The bar for standing down employees based on the Fair Work Act criteria is high and each case should be considered carefully on its own merits. You could potentially stand down employees during the coronavirus outbreak if:

● the business has closed due to a government directive (and the employees cannot be usefully employed in another manner)
● there is a stoppage of work for which the employer is not responsible, such as having a lack of supply or a large proportion of the workforce is in self-quarantine, and the remaining workers cannot be usefully employed.

An economic downturn that leads to a reduction of work is generally not reason enough to stand down an employee.

Don’t take the decision to stand down employees lightly, because if the stand down is deemed unlawful, employees may be able to claim unpaid wages. A direct causal link needs to exist between the stand down and the reason for the stand down.

What are the alternatives?

It’s best practice to identify alternatives to standing down employees on a case-by-case basis. In some instances, you may be required by the relevant industrial instrument to consult with the employees who are impacted – and we would advise you to do so as its good management practice.

Alternatives may include:

● flexible work arrangements such as reducing work hours, remote working or an altered roster
● split rosters or job share
● taking accrued paid leave or unpaid leave for a period of time
● redeploying employees to other areas of the business if appropriate

Keep it legal

You will need to carefully consider, on a case-by-case basis, if you have a stoppage of work that genuinely affects your ability to keep employees. The HR Dept is here to support you during this challenging time. Contact us if you have any questions or concerns regarding your ability to continue the gainful employment of your staff.

Preventing People Problems

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