“Unprecedented”, “uncharted waters” – these are the phrases of our time. Over the last 2 weeks, many businesses have closed their doors or faced a dramatic reduction in business and the law is struggling to catch up. Both the Hospitality Industry (General) Award and Clerks – Private Sector Award have been temporarily modified to allow greater workplace flexibility by, for example, allowing a wider span of ordinary hours, the carrying out of different duties, working from home, extended leave arrangements and reduced hours by agreement of the workforce. More awards will follow suit. Agreement to take leave is another option and the government’s new wage subsidy scheme is imminent. Will this be enough though? Many employers are turning to statutory stand downs or even redundancies.
When can employees be stood down? Enterprise agreements and contracts must be checked for specific stand down provisions, but otherwise there must be a stoppage for work for which the employer is not responsible and no other useful work to be done. So a direct government shut down of businesses by direction resulting in total or near total loss of business will likely qualify – think airlines, restaurants, amusement parks. Probably indirect government shut downs as well – like a lot of retailers. What about other businesses with only some reduction in work? What about employers setting up work from home arrangements? Not all employees are going to be able to work from home and parts of a business may be shut down whilst others continue. There is no straight forward or one size fits all answer.
Can an employer stand down employees without making any payment at all, including annual leave/personal leave/long service leave? The Fair Work Ombudsman’s position is that employees should be allowed to access their leave over a stand down period. However, some businesses may not be able to afford continued payments without cashflow. There is no specific legislative provision that we can find which forces an employer to give employees access to their leave entitlements before stand down. The Fair Work Act provides that employers are not required to make “payments” to an employee during a period of stand down. The term is unqualified and undefined. On the other hand, at least for award employees, the Act provides that an employer must not unreasonably refuse a request to take paid annual leave. Long service leave arrangements also vary between the states (although the NSW Government has made it easier to access in the last week). A period of authorised absence is not a stand down. Some large employers are allowing employees to access all or a proportion of their annual leave/long service leave over the stand down period. Entitlements continue to accrue over the period of leave and public holidays don’t form part of the stand down period so employees need to be paid for public holidays.
How long can a stand down last? Again, the answer is not clear. Case guidance on this topic suggests a couple of months but what then? Redundancy may be a last resort alternative, particularly for small business, but this results in the payout of all entitlements on termination.
Beware though! There is a broad ability to challenge stand downs in the Fair Work Commission and we are sure to see disputes arising over the coming weeks and perhaps months. Other more standard avenues (such as unfair dismissal and general protections and discrimination claims) also still exist. PS. Is now a good time to mention all those ABN sole traders out there who are arguably employees, and the casuals who are arguably part timers?
Our colleagues at MJSP Consulting can assist businesses in managing these difficult times – call Mark Smith, Mike Swartz or Jon Matthias on 07 3839 1233, http://www.mjsp.com.au
The situation will continue to evolve. Please contact us if you would like any further information or help. This information is general in nature and should not be relied on as a substitute for legal advice on a particular situation.