COVID-19 has had an unprecedented effect on businesses.

To cope with the impact, many employers have been faced with the difficult choice of standing down their employees.

But what does “stand down” mean? When can you stand down your employees? And what are the implications you should be thinking about?

Australia’s FairWork Commission has released guidelines on how you can decide whether your circumstances place you in a position to stand down an employee. 

In this article, we’ll walk you through these guidelines and set out when you can stand down your employees due to the impact of COVID-19.

What Does It Mean To Stand Down Employees?

Employee stand-down is different to redundancy or firing an employee.

You can stand down an employee if you no longer have useful work for them to complete. 

If you decide to stand down an employee, this means that employee will be temporarily out of work.

However, they’ll still be employed by you. Standing them down means that they won’t be able to work and will no longer be paid by you until there is meaningful work available again.

Unfortunately, the Fair Work Commission does not provide a specific description of what “useful” or “meaningful” work means. However, the courts have determined that if you’re an employer and you receive some benefit for the work provided to you by your employee, this can be considered as meaningful work.

When Can I Stand Down Employees?

A stand down can occur when your business is unable to provide useful work to your employees

There are three main scenarios in which an employee can be stood down:

  • Equipment breakdown for which the employer is not responsible
  • Industrial action not organised by the employer 
  • Stoppage of work for which the employer can’t be held responsible

The impact of the COVID-19 pandemic may be considered as a stoppage of work. As an employer, you generally can’t be held responsible for this. 

While it seems quite straightforward that COVID-19 would fall under this third category, meeting its requirements can be quite complex, so it’s best to speak with a lawyer if you’re unsure. 

What Is A Stoppage Of Work That I Can’t Be Held Responsible For?

Depending on how COVID-19 has impacted your business operations, it could be considered a stoppage for which you can’t be held responsible. 

If government restrictions have forced you to cease business operations, this may allow you to stand down employees. See the example below for more detail.

Example Of A Stand Down

Kat owns a small pub and, as a result of the lockdown and social distancing measures, she no longer has many visiting customers.

Kat also employed 3 casual staff members to work as bartenders but there is no longer enough work for them due to government restrictions
.

What can Kat do?

In this scenario, the stoppage of work has been caused by government restrictions and social distancing measures. This means it is a stoppage that Kat cannot be held responsible for.

Due to the restrictions, she no longer has meaningful work for her casual employees and is in a position to stand them down.

What Rights Do My Employees Have?

If you decide to stand down your employees, they still remain employees of your company.

This means that, except for their right to work or be paid, their usual employment entitlements under their contract continue to apply.

So, if you are “standing down” your employees on an unpaid basis, they do have options to use their leave entitlements to support them.

During a stand down period, your employees can continue to accrue leave entitlements. However, this depends on the type of leave. 

Long service leave and annual leave entitlements may not apply depending on what state your employees are based in. For example, in NSW, an employee stand down period is not considered to break the period of service your employee is providing to your business. This means your employee may be entitled to continue to accrue long service leave and annual leave during the period of time they have been stood down.

I Don’t Want To Stand Down My Employees. What Are My Options?

The process of standing down employees can be difficult, so it’s best to consider other options that may be available to you and your employees.

Some of these options include:

  • Mutually agreeing to reduced hours until the amount of work available for your employees picks up again 
  • Mutually agreeing to use accrued leave entitlements, meaning your employees could use their annual leave entitlements instead of being stood down without pay 
  • Redundancies. This may be an option if you believe there will no longer be meaningful work for your employees following the COVID-19 pandemic.

If you decide to pursue any of the above options, it’s important to make sure that these agreements are confirmed in writing.  

What To Take Away…

Standing down staff or making them redundant is not an easy decision to make. It’s important to make sure you have all the relevant information before you go ahead with any action regarding your employees.

If you have any questions about employee stand down or are unsure of what options are available to you, our experienced team can be contacted on 1800 730 or team@sprintlaw.com.au. We’re here to help!

About Sprintlaw

Sprintlaw is a new type of law firm that operates completely online and on a fixed-fee basis. We’re on a mission to make quality legal services faster, simpler and more affordable for small business owners and entrepreneurs.

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