The situation around the novel coronavirus (COVID-19) outbreaks continues to evolve at a rapid speed. This has seen drastic measures implemented by both federal and state governments in a bid to curb the spread of the virus. The latest of these measures is the Australian Government’s directive to shut down non-essential services – including hotels, clubs, gyms, restaurants, cinemas and places of worship – from midday on 23 March 2020, along with further restrictions or prohibitions on commercial activities including funerals, weddings and real estate auctions and property inspections.

With the measures set to be in place for a number of months and constantly evolving, the ability to stand down employees, either on their accrued leave or on unpaid leave, is increasingly being utilised.

What is stand down?

The stand down provision in section 524(1)(c) of the Fair Work Act 2009 (Cth) allows employers to stand down an employee without pay if the employee cannot usefully be employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible. However, employers who are subject to an enterprise agreement or contract of employment that contemplates stand down should also follow those processes.

It is also worth noting that a period of stand down is still considered a period of service under the Fair Work Act 2009 (Cth) (s 22(2)(b)(ii)) and therefore leave entitlements continue to accrue while an employee is stood down.

When can an employer utilise stand down provisions?

Historically, in order to be able to take advantage of the stand down provisions, employers will need to carefully consider the following factors:

• Can the employee no longer be usefully employed? An employee cannot be stood down where there are still jobs the employee can complete. It does not matter if the work available does not fall under the scope of their ordinary employment (Kidd v Savage River Mines (1984) FCR 398).
• Is the reason outside the reasonable control of the business? The Fair Work Ombudsman has highlighted that a decline in business is generally not sufficient to stand down employees. In contrast, mandatory closure by government directive or a lack of vital supply due to bans may be sufficient.
• Are there other opportunities for the employee to be usefully employed? Stand down should be considered a ‘last resort’ and the employer should make all attempts to explore other options. Flexible working arrangements such as allowing an employee to work from home or offering employees the opportunity to take accrued paid leave should therefore be considered before standing down any employee(s).

In the current unprecedented circumstances, many employers are increasingly using the stand down provisions in expanded circumstances, for example where social distancing stipulations impact ongoing operations. The stand down provisions are also being used to stand down a segment of a workforce, rather than the whole.

Consequences of breach

The consequences of standing a permanent employee down without lawful authority can be significant, as this may make the employer liable for constructive dismissal of employment. Where large workforces are stood down, the exposure could therefore be substantial.

Furthermore (and while some stand downs are currently being executed for an unspecified period), stand down is not a permanent solution and employees cannot be expected to continue indefinitely as employees without being entitled to either return to work or be made redundant (FWO v James Nelson Pty Ltd [2016] FCCA 531 at [78]).

While stand down orders are an increasingly relevant feature of the industrial landscape, employers should therefore obtain specific legal advice as to standing down all or a portion of their workforce in the context of COVID-19.

The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.