Download our Standing Down Employees Fact Sheet Here
Presently there is a great uncertainty in the economy and workplaces and the PeopleStart team are receiving a lot of queries in relation to potential future stand downs in the workplace.
We’ve outlined some key points for you:
- What is considered a genuine stand down
- When employees can be stood down without pay
- How to approach this with your staff
- Alternatives to stand down
Firstly, we would just like to point out that through any change, communication as early as possible is key in maintaining good relationships with your workforce. So is following a proper consultation process.
Importantly, communicating early will allow Employees to properly consider any changes, to prepare both emotionally and financially and to offer joint solutions.
Though it’s a tough conversation and for most businesses we don’t quite know what’s going to happen, talking about the possibilities, what will happen in certain situations and what you are doing for them will be essential in managing this all effectively in the long term.
Stand Down overview
A stand down is typically defined as a stoppage of work where staff cannot be usefully employed, for a reason which is outside of an employers’ control such as inclement weather or industrial action.
This has not previously covered pandemic but information and support is changing quickly here as we are in unprecedented times. Whether COVID-19 would count as a reason for stand down in your business is very fact dependent (read more below).
Stand down for COVID-19
For now, where a business has been impacted by the COVID-19 virus and there is no work or reduced work available to employees, employers must continue to pay full and part time employees who are ready, willing and able to work (unless they have a specific contract or award which specifies a different arrangement with stand downs).
Under the Fair Work Act, an employee can only be stood down without pay if they cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
Whether the option of standing down employees is available in circumstances relating to the coronavirus is very fact dependent as we’ve mentioned and you should exercise the option cautiously.
You would need to be able to demonstrate that:
- there is a stoppage of work (This is critical. All or part of the business must cease operations)
- the employee to be stood down cannot be usefully employed (which is not limited to the work an employee usually performs)
- the cause of the stoppage must also be one that the employer cannot reasonably be held responsible for.
If an employer unlawfully stands down employees without pay, the employees will likely be able to recover unpaid wages.
Employers cannot generally stand down employees simply because of a deterioration of business conditions (or decreased workload) or because an employee has coronavirus. Some examples of when employers may be able to stand down employees include:
- if there was an enforceable government direction requiring the business to close (which means there is no work at all for the employees to do, even from another location such as working from home)
- if a large proportion of the workforce was required to self-quarantine with the result that the remaining employees/workforce cannot usefully be employed
- if there was a stoppage of work due to lack of supply for which the employer could not be held responsible.
Employers can mistakenly believe they can stand down employees simply because work is drying up and profits are down, but you can’t stand down employees on that basis or because of what you anticipate is going to happen in the next few months. Only at the point at which a stoppage occurs can a stand down occur.
Stand downs should always be seen as the last resort.
Note: Employees on stand down are still considered employed and they will continue to accrue leave etc. If they are taking leave however, they are not considered to be in stand down. Also, following shutdown if you decide to terminate/redundancy then you’ll still have to pay all the regular entitlements.
Advice
If your business is already experiencing hardship or you’re worried that it might in the near future, we suggest you begin considering and discussing options alternative to stand down (at least initially).
These may include;
- seeking employees’ agreement to take paid (or unpaid) leave for a period
- in limited circumstances, directing employees to take paid annual leave
- in limited circumstances, negotiating with employees to change regular rosters or hours of work
- terminating the employment of the employees, in which case you may have to provide redundancy
Having these conversations early ensures employees are prepared and can participate in the process. This is part of a proper consultation process (if you need advice on how to properly follow a consultation based on your employee group/Award or agreement please contact us for advice).
Again, our advice is for Employers to initially (and where appropriate) to consider employees taking leave ie annual (if they can’t work from home) or, where there is financial hardship to the business but they can continue to work there are options of agreeing to reductions in hours/pay before issuing a stand down without pay.
Employers and employees will need to work together to find appropriate solutions that suit the needs of individual workplaces and staff.
Given the potential significant ramifications of getting a stand down order wrong such as breaching the FairWork Act, PeopleStart advise that all Employers exercise caution and seek expert advice.
Stand Down vs Redundancy
While redundancy is a more permanent solution than a stand down, because you terminate the employee’s employment, it is usually a simpler solution legally speaking.
Before making any decision, employers should consider:
- Can you keep people on?
- Looking ahead three months, what do you expect your workforce will look like?
- If a stand down isn’t an option (and for many businesses it isn’t) is redundancy the most appropriate way to reduce the workforce now, even if you need to turn around in three months and re-employ people?
Government support for employees on stand down
Recent developments on the stimulus package: The Government intends to expand access to certain income support payments (e.g., the Jobseeker Payment, the Youth Allowance Jobseeker and the Parenting Payment) for eligible individuals such as those affected by Coronavirus including permanent employees who are stood down or lose their employment casual workers and contract workers who meet the income tests. Additionally, asset testing for the JobSeeker Payment, the Youth Allowance Jobseeker and the Parenting Payment will be waived for the period of the Coronavirus supplement. Income testing will still apply to the person’s other payments, consistent with current arrangements.
Information in relation to stand downs and support for employers from the government is changing rapidly, so we will continue to update you on this over the coming weeks. We will also send through information of what the government may offer
We will provide further information on reducing pay or hours and redundancy in separate articles, so watch out for those coming soon or feel free to reach out for any advice.
You can contact our Director Dayna Edwards for free initial advice on 0438 927 019 or dayna@peoplestart.com.au
