By Ida Nursoo and Nadia Gubbay-Nemes, Inner City Legal Centre

It is useful for employees to understand the effects of COVID-19 on an employer’s ability to stand you down. For employees that hold a visa with restrictive work conditions that only allow you to work for your particular employer, you are likely to be left without the ability to earn money for the duration of the stand down. Therefore, it is important to be aware of the law regarding stand downs and to get legal advice to find out more about your rights.

For employees not entitled to JobKeeper payments due to their visa status, employers can lawfully stand them down if the provisions contained in the Fair Work Act 2009 (Cth) (‘the Act’) are met.

This article relates to section 524 of the Fair Work Act 2009, not section 789GDC that allows employers to stand down employees in receipt of the JobKeeper payment. If you have a JobKeeper stand down matter, contact MELS for more advice.

What the Fair Work Act 2009 (Cth) Says About Stand Downs

Under section 524(1) of the Act, an employer may stand down an employee during a period in which the employee cannot be usefully employed because of the following circumstances:

  1. industrial action;
  2. a breakdown of machinery or equipment, if the employer cannot be reasonably held responsible for the breakdown;
  3. a stoppage of work, for which the employer cannot reasonable held responsible.

In order for a stand down to be valid, the following must be established:

  1. the circumstances under section 524(1); and
  2. the ‘no useful work’ requirement; and
  3. that the employee cannot be usefully employed because of the circumstances.

During a stand down, in accordance with section 524, an employer is not obligated to pay their employees. Employees are stood down for a period of time, with the prospect of them returning to work after the stand down period. They can still access their paid leave entitlements during stand down.

With a number of businesses not operating as usual due to COVID-19 restrictions, a number of questions arise in relation to the application of section 524 of the Fair Work Act and the meaning of ‘usefully employed’ and a ‘stoppage of work’. The Fair Work Commission has recently considered some of these questions.

Usefully Employed

Whether an employee can be usefully employed is a question of fact dependant on the circumstances of each case, where regard can be had to the economic consequences of the employer.  The Fair Work Commission considered useful work within the context of the COVID-19 pandemic in Michael Marson v Coral Princess Cruises (N.Q.) Pty Ltd.[1]

Deputy President Lake held that, in the assessment of ‘useful work’, consideration will be given to the amount of useful work that is available at the time of the stand down and the number of employees required to perform the useful work. Following this, an assessment as to whether the employer’s decision reflects notions of good faith and fairness will be made.

Stoppage of Work

What exactly constitutes a stoppage of work has been of interest during the pandemic due to its effects on the economy. COVID-19 may be responsible for a stoppage of work, but a mere reduction in the work available is not the same as a stoppage of work.[2] Furthermore, a mere downturn in business does not amount to a stoppage of work for the purposes of the Act.[3]

During COVID-19, several businesses ceased normal business operations, but limited work for limited employees remained. Whether this amounted to business stoppage was clarified by Deputy President Lakethat a stoppage of work does not require a stoppage of all business activities, but that the core work or activity of the employee has ceased.[4]

Can a Stand Down be of an Indefinite Nature?

Stand downs are for prescribed terms and can be extended.While an initial stand down can be fair, a continual extension and the indefinite nature of a stand down with no prospect that the stand down will be brought to an end is unfair.[5] An employer cannot simply extend an employee’s stand down to avoid paying a redundancy, if one is offered in the terms of the employment engagement or applicable under the Act. 

Fairness Assessment

The Fair Work Commission will make an assessment as to the fairness of the stand down. Before an employer stands down their employee, they should explore alternative solutions.  A recent case emphasised the importance of the employer to stand down an employee in a fair manner. Deputy President Anderson deemed it unfair to stand down one employee, when alternatively several employees could share the burden and have had a reduction of hours.[6]

Process for Making an Application to the Fair Work Commission to Deal with a Stand Down Dispute

Following section 526 of the Act,an employee (or inspector) can fill out Form 13 to make an application for the Fair Work Commission to deal with a stand down dispute.

The Fair Work Commission can only deal with an application where the applicant is:

  1. an employee that has been, or is going to be, stood down under s 524(1) (or purportedly under s 524(1));
  2. an employee that has made a request to take leave to avoid being stood down under s 524(1) (or purportedly under s 524(1)) and the employer has authorised the leave;
  3. an employee organisation that is entitled to represent the employee
  4. an inspector.[7]

The dispute can be dealt with by the Fair Work Commission via mediation, arbitration, conciliation, making a recommendation or expressing an opinion.

To understand your employment rights, it is important to understand when an employer can stand you down, as a result of a stoppage of work or a purported stoppage. You can contact MELS for further advice.

Further information

If you would like more information on Coronavirus and Australian workplace laws please visit the Fair Work Ombudsman website.

FAQ’s about COVID-19 & Employment Law

Check out MELS Stand Down comic strip.  

The information provided in this article is for information only. It must not be relied on as legal advice. You should seek legal advice about your own situation.

21 December 2020

[1] Michael Marson v Coral Princess Cruises (N.Q.) Pty Ltd [2020] FWC 2721.

[2] Independent Education Union of Australia v The Peninsula School T/A Peninsula Grammar School [2020] FWC 5180 following Bristow Helicopters v Australian Federation of Air Pilots [2017] FWCFB 487.

[3] Mr Ryan La Plume v Thomas Foods International Pty Limited T/A Thomas Foods International [2020] FWC 3690.

[4] Michael Marson v Coral Princess Cruises (N.Q.) Pty Ltd [2020] FWC 2721.

[5] Mr Stephen Ball v Thomas Foods international Murray Bridge Pty Ltd [2018] FWC 2483.

[6] Mr Ryan La Plume v Thomas Foods International Pty Limited T/A Thomas Foods International [2020] FWC 3690.

[7] Section 526, Fair Work Act 2009 (Cth).

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: