Standing Down Employees Under Fair Work Australia: Employer’s Guide

Running a business comes with ups and downs. When there’s a sudden stoppage of work or events outside your control, you might need to pause work temporarily. In those moments, a key question is: can you lawfully stand down employees under the Fair Work Act, and what do you need to do to stay compliant?

Standing down staff is never easy. But with a clear process, the right documentation and transparent communication, you can protect your business and support your team. In this guide, we’ll explain when a stand down is permitted, what happens to pay and leave, how to implement a stand down step by step, practical alternatives to consider, and the risks to manage.

If you’re weighing up tough options, this breakdown will help you move confidently and compliantly.

What Does “Standing Down” Employees Mean Under Fair Work?

Under the Fair Work Act 2009 (Cth), “standing down” employees means you temporarily direct employees not to work (and not to attend work) for a period, while their employment continues.

It’s not redundancy or termination. Employment remains on foot, but the employee is not working and is generally not paid during the stand down, unless an industrial instrument or contract provides otherwise.

A stand down can apply to some or all employees, and-where genuinely appropriate-to part of their duties or hours for the period they cannot be usefully employed. The key test is whether the employee can be usefully employed in the circumstances (more on this below).

When Are You Allowed To Stand Down Employees?

You can only stand down employees if they cannot be usefully employed because of one of the limited situations set out in the Fair Work Act. In practice, this covers:

• Industrial action that isn’t organised by you (the employer).
• A breakdown of machinery or equipment where you’re not reasonably responsible.
• A stoppage of work for any cause for which you can’t reasonably be held responsible (for example, a natural disaster, mandated government shutdown, or external utility failure).

“Usefully employed” is a practical test. If there is useful work an employee could do-potentially different duties within their skillset-you should offer it before standing them down. If useful work exists (even at reduced levels), a stand down is unlikely to be lawful for that employee during that period.

Contracts or enterprise agreements can include their own stand down provisions that apply in addition to the Fair Work Act. They can’t undercut minimum standards, but they may set out extra grounds or processes. Always check the applicable modern award or enterprise agreement as well as any Employment Contract to ensure you follow the right pathway.

What’s Not A Valid Reason?

A general downturn in business or reduced customer demand-without a qualifying stoppage or breakdown-usually isn’t enough on its own. You should first consider whether there’s any useful work available (including temporary alternative duties) that keeps you within the law.

Pay, Leave And Entitlements During Stand Down

Here’s what typically happens to wages and entitlements when a lawful stand down is in place.

Is Stand Down Paid?

Generally, no. Stand down under the Fair Work Act is unpaid unless an applicable award, enterprise agreement, policy or contract says otherwise. If you operate under an instrument with a specific “stand down rate”, follow those terms carefully (never below minimum standards).

Can Employees Use Leave?

Employees can request to use paid leave (for example, annual leave, or long service leave where applicable) during a stand down. You can agree to this, and you shouldn’t pressure staff either way.

Do Leave Entitlements Accrue?

Yes. Employment continues during a lawful stand down, and leave entitlements like annual leave and personal/carer’s leave keep accruing in the ordinary way. These National Employment Standards (NES) entitlements can’t be reduced or excluded by an award, agreement or contract. Service generally continues to count towards long service leave, noting state and territory long service leave laws apply.

Is Superannuation Payable?

Superannuation is generally not payable on periods of unpaid stand down because there’s no ordinary time earnings. If an employee takes paid leave during stand down, treat super in the usual way for paid leave.

Other Entitlements

If work resumes part way through a pay period or you’re running a partial stand down, pay employees for hours actually worked and observe any relevant loadings and allowances required under the applicable award or agreement. Keep detailed records of how you calculated entitlements.

How To Implement A Lawful Stand Down (Step By Step)

If you believe a stand down may be necessary, move methodically. A clear, fair process is your best protection against disputes and back pay claims.

1) Confirm The Legal Ground

• Identify the exact reason preventing useful work (industrial action, breakdown, or stoppage outside your control).
• Check whether any useful work exists for each affected employee (including temporary alternative duties).
• Review modern awards, enterprise agreements and contracts for any stand down clauses and consultation requirements. If your team is covered by a modern award, ensure you’re across your award obligations.

2) Consider A Narrow, Targeted Approach

• Only stand down the employees (or part of their hours/duties) where useful work genuinely isn’t available.
• Keep the stand down as short as reasonably necessary and reassess regularly.

3) Consult And Communicate Clearly

• Consult where required by an award or agreement (many include consultation clauses for major workplace changes).
• Notify affected employees in writing. A stand down letter should explain the reason, who’s affected, timing, pay and leave options, and how you’ll keep them updated.
• Provide a contact point for questions and support. Keep the tone respectful and transparent.

4) Handle Pay And Leave Properly

• Confirm whether the stand down is unpaid or whether an instrument provides for pay during stand down.
• Allow employees to request paid leave; record approvals in writing. Accruals continue during a lawful stand down.
• Maintain accurate records for hours worked (if any), leave taken, and calculations applied.

5) Review Often And Document Everything

• Reassess the situation regularly: does the stoppage or breakdown still exist? Is useful work now available?
• Offer a return to work (even in altered duties) promptly when useful work becomes available.
• Keep a clear paper trail-reasons for stand down, consultation notes, stand down letters, and any subsequent changes.

6) Plan For Next Steps If The Situation Drags On

• If the stoppage is prolonged and ongoing work isn’t likely to resume, you may need to consider a restructure or genuine redundancy pathway, including checking redundancy pay and any required notice periods.
• Get advice early if you’re moving beyond a temporary stand down into permanent change.

Alternatives To Stand Down (And When To Use Them)

Standing down isn’t the only option. In some cases, another pathway will better fit your situation and reduce legal risk.

Reduce Hours Or Adjust Rosters

If the problem is reduced demand (not a stoppage of work), you may be able to vary hours by agreement, consult under the applicable award or enterprise agreement, or adjust rosters in line with minimums. Make sure any changes are compliant and documented. Our guide to reducing employee hours covers the key steps and risks.

Approve Leave Or Unpaid Time Off

Employees might request to take paid annual leave or, in some cases, unpaid leave to cover a temporary downturn. If you go down the unpaid leave route, ensure you understand the rules around unpaid leave, and document the arrangement in writing.

Temporary Suspension Pending Investigation

If your issue relates to potential misconduct (rather than a stoppage of work), consider a temporary suspension or stand down pending investigation. This is a different legal pathway with its own requirements-see our guide to suspending an employee pending investigation for process tips and fairness considerations.

Tighten Your Processes And Documents

Make sure your contracts and policies are set up to support lawful changes. Clear terms around duties, locations, consultation and flexibility can reduce disputes. If you need tailored documentation, Sprintlaw can assist with an Employment Contract and a practical staff handbook to guide consistent decision-making.

Key Risks, Disputes And Practical Tips

Back Pay And Compliance Risks

If a stand down is later found to be unlawful (for instance, useful work was available, or the reason didn’t meet the Act’s criteria), you could be liable for back pay of wages for the period, plus associated entitlements. This is why it’s vital to apply the test employee-by-employee and keep thorough records of your reasoning.

Dealing With Employee Disputes

Employees can challenge a stand down. The Fair Work Commission can deal with stand down disputes and may make orders, including to end or vary a stand down or require payment where appropriate. A calm, documented process-and prompt engagement with any dispute-goes a long way to resolving issues quickly.

Practical Tips

• Be targeted: only stand down roles that genuinely have no useful work.
• Consult early: many awards require consultation when significant changes affect employees.
• Communicate well: clear, timely updates build trust and reduce conflict.
• Keep it short: review frequently and return employees to work as soon as practicable.
• Think ahead: if it looks long term, plan for permanent options and seek advice early.

Key Takeaways

• A stand down is only lawful in limited situations-industrial action (not organised by you), breakdown of machinery/equipment not attributable to you, or a stoppage of work outside your control-and only where an employee cannot be usefully employed.
• Stand down is generally unpaid; employees may request to use paid leave. Leave accruals continue during a lawful stand down and can’t be reduced by awards, agreements or contracts.
• Follow a clear process: confirm the legal ground, consult as required, issue written notices, document pay/leave decisions, and review the situation regularly.
• Consider alternatives where appropriate, such as adjusting hours, approving leave, or using a different pathway like suspension pending investigation where misconduct is at issue.
• Unlawful stand downs create real risk of back pay and disputes-apply the test carefully and keep thorough records. Where permanent change is likely, check potential redundancy pay and lawful notice periods.
• Robust employment documents (like an Employment Contract and staff handbook) and compliance with modern awards make stand down decisions smoother and safer.

If you’d like a consultation on standing down employees under the Fair Work Act, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.