Stand Downs & Forced Leave

During difficult times and events – like the recent bushfires or coronavirus pandemic – you may find it difficult to continue to employ your team, as external events force you to make tough decisions.

As I write this, Virgin Australia has just announced it is ‘standing down’ 8,000 workers. But what actually does this mean? When are you as an employer entitled to stand down your team, and what are your legal obligations?

As a mediator, specialising in employment law, I work with both employees and employers to resolve workplace issues and conflict. With the current global crisis that we are currently living in with the spread of COVID-19, many people and organisations all over the country are experiencing immense difficulty - our companies are at stake and our jobs are at risk.

We are here to help you navigate this tough time.

To help you understand Stand Downs & Forced Leave, I’ve pulled together this guide to help you with some of the key questions you may have on this topic.

Firstly, what is a stand down?

This, to me, is the worst case scenario for a business, and I’d advise employers to explore other options. It means a member of staff is told to no longer carry out their work, for no pay, when there is no longer a job for them. An employer must be able to demonstrate that there is a stoppage of work – in the case of Qantas and Virgin Australia, this is not in dispute because with virtually no planes flying, there is no need for a team.

Being stood down feels very much like unpaid leave (although it isn’t), since you remain employed, but without work or income.

The Fair Work Act 2009 allows employers to stand down employees without pay when the employee cannot be usefully employed because of a stoppage of work, which the employer cannot be reasonably held responsible for (such as natural disasters).

When can you stand down an employee under the Fair Work Act?

Only in the most extreme circumstances – you can’t simply tell your team to not turn up and not pay them if the company is going through a rough patch and you want to make some immediate cuts.

Under the Fair Work Act, any employee (whether full-time, part-time or casual) can be stood down without pay if they can't do useful work because of an "equipment breakdown, industrial action or a stoppage of work for which the employer can't reasonably be held responsible".

In the current situation, given organisations are following a government directive to stop their services (particularly in the travel and hospitality sectors), and an employer is effectively being forced to no longer deliver its core offering, it is able to stand its team down.

It must be proved that the employee can no longer be ‘usefully employed’ within the business, that is their skills can’t be transferred to another area of the business where there may be opportunities.

What defines when an employee is ‘usefully employed’?

The Fair Work Act, unfortunately does not define what is meant by the term, but it is widely assumed to be when that individual is able to obtain value from that individual’s role in the workplace.

The term will become relevant, if for example, the employer is taken to court by the staff member for unfair dismissal, and it is proved that there was a useful and valuable role that that individual could have undertaken within that workplace.

How stand down disputes are resolved

In the current situation, where big employers are clearly losing their revenue through external forces that stop them from providing their core service or product, it is unlikely any unfair dismissal disputes will be successful if pursued.

However, in the unlikely scenario that an employer uses this unprecedented situation as an excuse to stand down staff, they are in a valid position to pursue unfair dismissal.

In this instance, the individual can make an application to the Fair Work Commission to deal with it.

The FWC has conveyed that if an employer can obtain benefit or value for work from an employee then the employer cannot stand down the employee as they would still be classified as ‘usefully employed’. The employer must also demonstrate that all steps were taken to find useful employment before resorting to standing down an employee.

How to implement a stand down?

Firstly, ensure that you have done everything within your power to keep that person employed. Smaller companies, for example, could try and negotiate with their team to reduce their hours, encourage them to take unpaid annual leave or move them into another role before going down this path.

Before making a decision, I advise assessing the following to ensure you are well within your rights to stand down an employee.

Is there the existence of an employment contract that would override the provisions of a stand down? If this is the case, then the employer must comply with the enterprise agreement or employment contract.
There must be a causation established between the industrial action, breakdown of machinery or stoppage of work, in relationship to the reason the employee is being stood down and the absence of useful employment.
This should be a last resort, as the employer must demonstrate that they have exhausted all options in finding the employee useful employment within the workplace.
The employee can be stood down by written correspondence such as a letter clearly outlining the ‘stand down period’ and that this period will be without pay.

Whether your employees can work for another employer during the stand down period

When employees are ‘stood down’ they still remain ‘employees’ of the company during this period, with the intention being that they will be able to take up their previous role when the situation changes.

Qantas has informed its employees that they can seek alternative employment during this time stand down period if it is specified in their employment contract, there could be limitations as to who the employee can work for i.e direct competitors. However, it would be difficult for an employer to enforce a provision that an employee can’t work for another company when they are not providing work and pay.

How can you manage business interruptions without implementing a stand down?

Many organisations will currently be facing some tough choices and standing down employees is likely to be the least preferable option.

There are a number of steps you could take before it get to that:

Making supplementary staff redundant, and paying off their redundancy package
Cancelling any contract or casual staff that are not on the permanent payroll
Directing employees to take any annual leave immediately
Approaching staff members to have a grown up conversation about how you can work together – can that employee meet you halfway for example and go part time, in order to keep their job in the long run? Many staff members would prefer this to losing their job altogether, and may understand and appreciate that you are trying to support them – this can help with engagement in the future.
Upskill, cross-skill and retrain staff members so they can work in other areas of the business. You can’t force senior members of staff to do menial work, but in some circumstances they may be grateful to still be in employment.

Can an Employer Force Employees to Take Leave.

In short yes, to avoid a stand down and employee can be asked to take paid or unpaid leave during the period the employee would otherwise be stood down.

An employer can direct an employee to take a period of paid leave such as annual leave if it is requested by the employee and where they have an adequate leave balance. The employer should ensure they have met relevant provisions in their modern award or enterprise agreements when directing an employee to take leave. If there is no such provision, then the it is usually left with the discretion of the employer.

These are unprecedented times, and it’s likely in the future, we will see court cases relating to the pandemic. In the meantime, it’s advisable to keep abreast of where you stand legally, and consider how you can support your team morally, before defaulting to standing down your staff.

For more information read our previous update

To discuss how we can best support you and your business during this challenging time, please contact us directly for a consultation.

Kayte Lewis is Principal Lawyer and Mediator of Voice Lawyers

voice@voicelawyers.com

(02)9261 1954

www.voicelawyers.com

This article is general in nature and does not constitute legal advice. If you have an employment question you should get specific advice in relation to your specific situation.