What's happened?

Cases of the virus have now been detected in those with no known connection to travel, marking the beginning of the transmission of the infection through person to person contact in the community. Official health advice is that the virus is highly contagious and that collective action needs to be taken to protect those that are vulnerable within the community.

With this in mind, many organisations are considering whether they need to cease operations altogether, or at least limit any activities that are client facing, in order to make preparations for a collective effort to ‘flatten the curve’. You should ensure your organisation has a pragmatic strategy in place to handle this ‘social distancing’ effectively, support your employees appropriately, and, where possible, limit the disruption to your business operations.

Stand down

This begs the question, can employers “stand down” and not pay their employees because of COVID-19?

The answer is ‘yes, in certain circumstances, this is possible under the stand down provisions in the Fair Work Act 2009 (Cth) ’. But doing so might expose you to proceedings in the Fair Work Commission if you stand employees down without considering the key requirements imposed under the Act. We cover some of these in our Stand Down Questions, below.

Standing down – general

The term to ‘stand down’ in this context is not to be confused with the action commonly taken by employers when, say, a relatively serious, but contained issue arises in the workplace, causing an investigation to take place whilst the particular person/s involved are ‘stood down’ with pay (or, effectively, asked not to come to work or suspended but still paid their regular wage).

Standing someone down under the Act is different. The Stand Down Provisions in section 524(1)(c) of the Act provide that an employer may stand down an employee without being required to pay them, if ‘the employee cannot usefully be employed’ and standing them down is ‘because of…a stoppage of work for any cause for which the employer cannot reasonably be held responsible.’ However, National Employment Standard (NES) entitlements do accrue during a period of stand down. (Correction: The original version of this article said NES entitlements do not accrue. This was an error.)

Stand down questions

To invoke the Stand Down Provisions, employers will need to ask themselves the following questions to ensure they satisfy all its elements:

• are there stand down provisions in an applicable contract of employment or enterprise agreement that cover the situation? If so, they must be complied with (including any specific requirements e.g. consultation) instead of utilising the Stand Down Provisions.
• can causation be established? As in, is the reason for the stoppage of work (coronavirus infection/potential infection/the pandemic more broadly/government advice or direction) the real reason employees are being stood down? Or, could the existence of another issue (say, an employee grievance) be alleged by the employee to be the real reason the employer stood them down? General protections claims carry a reverse onus of proof, so the employer has to prove what were the real reasons for any action that is “adverse” to the employee.
• has there actually been a stoppage of work? It is not sufficient that there be merely a downturn or a building is inaccessible. For example, a project may be mothballed due to disrupted supply lines, or a building closes so that cleaners are no longer required. That is a stoppage of work. If the project continues but at a slower pace, or if there are fewer cleaning shifts required, or there is work available that can be done from another location, that is not a stoppage and the Stand Down Provisions will not be available.
• are there other opportunities for the employee to be usefully employed? The provision requires all prospects of useful employment elsewhere in the business to be exhausted before it is enlivened. Employers will therefore need to exhaust all other options such as working from home, working in some other way (such as directing them to an alternative role) and/or redeployment opportunities before they turn to the stand down provisions.
• is it actually ‘fair’? The stand down should be implemented as fairly as possible. For example, giving staff as much notice as possible so that they do not incur costs or inconvenience related to attending for work only to be stood down.

We note that the FWO has put out advice that is consistent with the above. The Fair Work Ombardsman (FWO) has specifically highlighted that standing down employees without pay is not generally available due to a deterioration of business conditions or because an employee has coronavirus. Employers should ensure that they understand when a stand down under the Act may be triggered so that they may respond to any employee questions and/or misconceptions.

If employers cannot satisfy the elements above, they may be exposed to a dispute application under s 526 of the Act which would be dealt with by the Fair Work Commission most commonly by arbitration (but mediation, conciliation or provision of a recommendation where appropriate are also within the Commission’s powers).

In addition, stand down is a drastic step for any workforce, as it deprives workers of an income for an indeterminate period. Inviting employees to access their accrued annual or long service leave as an alternative has two great benefits: it gives employees the option of maintaining an income, and it reduces the employer’s leave liabilities. Most recently we have seen Qantas reportedly allowing staff early access to long service leave entitlements and granting workers with low leave balances an advance of four weeks’ pay which they are able to take at half pay.

Stand down should be an option of last resort. Employers, when standing down, should also consider whether employees could be given an ex gratia payment or a form of “subsistence pay”, although there is no legal obligation to do so when employees have been stood down. If so, take care to make clear that this is the nature of the payment, rather than a payment of “wages”.

Maddocks has produced guides to a range of legal issues raised by the coronavirus (COVID-19). You can access these guides here.