What Aussie employers need to know about the shut-down of non-essential services

Ed Mallett, Employsure's Managing Director
Ed Mallett, Employsure's Managing Director

The shut-down of non-essential services across parts of Australia may trigger conditions in the Fair Work Act that will allow employers to stand staff down without pay, according to Employsure, Australia’s leading workplace relations company.

In a Government imposed closure of a workplace, employers may be in a position to stand staff down without pay if those employees can’t be usefully deployed in other parts of the business.

Ed Mallett, Employsure’s Managing Director, said employers are grappling with the entitlements that apply since the COVID-19 outbreak. Since Sunday’s announcement of shut downs alone, calls to Employsure’s Advice Line have more than doubled.

What does the shut-down mean for employers?

Addressing shut downs specifically, Mr Mallett said the Government announcement may allow employers to access little known conditions in the Fair Work Act.

“If you are ordered by the Government to fully shut down, and your employees can’t reasonably work elsewhere, you may be in a position to stand them down without pay,” Mallett said.

“The employer needs to be able to show that it is a legitimate stoppage of work, and not just a downturn. This certainly appears to be a legitimate stoppage for many businesses, meaning that unpaid stand down provisions in the Fair Work Act may well apply given the circumstances.

“The requirements under the Fair Work Act mean that unpaid stand downs apply when an employee cannot usefully be employed. However, an employer must show that all steps were taken to find useful employment for the affected employees.

“This doesn’t mean an employer is bound to place employees in positions that are drastically different to their contracted position or significantly change the way they operate the business.

“However, prior to standing down an employee, you should consider any consultation and notice requirements.

“If you’re an employer and you’re struggling to get the right advice through traditional channels, please reach out to us. We can support you. We’ve also built a free online resource hub for employers to help them understand and apply their fundamental obligations during this incredibly confusing time.”

Mallett said there has been a sense of confusion and anxiety in the business community and employers are scrambling to understand various entitlements to employees.

“The conversation has evolved so drastically in the past few weeks and business owners are finding it hard to keep up. We’ve gone from talking self-isolation and remote working to complete workplace shut downs. And the entitlements that apply in all of those scenarios are incredibly vast and complex.

“Employers are doing their best to meet an unprecedented challenge. There’s a huge amount of pressure on their business, but they’ve also got employees to think about and legal obligations they must fulfill.”

Stand-downs: 5 questions employers must ask

  • Are there stand down provisions in the Modern Award, Enterprise Agreement or Contract of Employment?
  • Can you establish causation? Is the Coronavirus (COVID-19) the real reason for the stoppage of work?
  • Has there actually been a stoppage of work? By definition, this must be more than a downturn.
  • Are there other opportunities for the employee to be usefully employed?
  • Is the Employee on a period of authorised leave (paid or unpaid)? If so, they are not taken to be stood down.

If an employer cannot satisfy these requirements, the decision to stand down employees may be challenged by way of Application to the Fair Work Commission. The onus of proof falls on an employer to show that the unpaid stand down was legitimate and they fulfilled each of the steps outlined above.