There may be times when your business cannot operate for various reasons, for example, a construction site that can’t operate due to heavy rain. Ordinarily, a full or part-time employee who is rostered to work is entitled to be paid for the day’s work, even if their employer tells them to go home or not come to work in advance.
However, under the Fair Work Act 2009 (the Act), an employer can stand down employees without pay if there is a stoppage of work that they cannot reasonably be held responsible for, such as severe weather or government lockdowns.
What is Standing Down?
Under section 524 of the Fair Work Act 2009 (the Act), an employer can stand an employee down without pay if the employer cannot usefully employ the employee for reasons beyond the employer’s control. The employee is still employed by the business but does not get paid for the time they are stood down.
Reasons Beyond the Employer’s Control
Employees can only be stood down if there is no useful work for them to do, due to reasons beyond the Employer’s control. The Act lists three scenarios as follows:
- Industrial action (other than industrial action organised or engaged in by the employer)
- A breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown
- A stoppage of work for any cause for which the employer cannot reasonably be held responsible
An enterprise agreement, award, or employment contract may have additional provisions that apply to standing employees down, such as consultation or notice requirements.
What Does ‘Usefully Employed’ Mean?
Before a decision is made to stand an employee down, they should be given the opportunity to perform any work that is available and are capable of doing, even if it falls outside their usual duties.
When Can You Legally Stand Down Employees?
Employers can stand down employees and send them home if they can show that one of the conditions of section 524 of the Act has been fulfilled. For industrial action or breakdowns of machinery, this is simple although, a “stoppage of work” is where things can get complicated.
It is important to note that an employer cannot implement the stand down provisions under the Act simply because there is a downturn of business, and they do not have enough work for the employee to do. To stand down an employee for a stoppage of work, an employer must experience all the following:
- There is a stoppage of work that occurred before the shutdown
- The employees to be stood down cannot be usefully employed in their usual or an alternative role, because of the stoppage
- The cause of the stoppage must be one for which the employer cannot be reasonably held responsible.
A stoppage of work can include cases where it is unsafe for an employee to work because of severe weather conditions or inclement weather such as, heavy rain and storms, flooding, bushfires, extreme heat or cold, hail or high winds.
Another example of a stoppage of work outside of the employer’s control was the COVID-19 pandemic. During the pandemic, the government issued public health orders and “lockdowns” requiring many businesses to cease operation. If there was no alternate work the employer could provide, or if working from home was impossible, then stand down provisions could be implemented.
How Much Notice is Required if Standing Down?
The Act does not specify a timeframe, but employees should be given as much notice as possible.
Pay During a Stand Down
Under the Act, during a stand down period, employees are not entitled to receive any pay. Be mindful that if an enterprise agreement, modern award, or employment contract applies to the employee, they may qualify for some form of payment.
Employees continue to accrue entitlements, e.g., annual leave and personal leave, while they are on stand down. For the purposes of long service leave accrual, a period of stand down does not constitute a break of continuous service. While on stand down, employees are entitled to use their annual leave, long service leave or other paid leave given to them by an award, enterprise agreement or contract.
If a public holiday falls during a period when an employee is stood down, then under the Act, that employee is still entitled to be paid for the holiday if that employee would normally have ordinary hours of work falling on that day.
Standing down should be treated with caution. Employers should explore all alternative options prior to standing the employees down without pay, such as, offering alternative duties or a different working location. Employers should also look at flexible working arrangements or job-sharing options, and allow employees to access their annual leave or long service leave (if applicable) to cover the days when they cannot be usefully employed.
What Are the Consequences of an Unlawful Stand Down?
If an employer unlawfully stands down an employee without pay, the employer may have to backpay the employee the unpaid wages. There may also be additional penalties imposed by a court for breaching the Act.
Do I need to pay my employee(s)? Unsure if your situation qualifies for a stand down? BrightHR can help, call us on 1300 029 198.