Employers are sometimes faced with the difficult decision about what to do with employees when their business is forced to close temporarily or they are required to temporarily operate differently due to factors that are beyond their control.
Typically, this occurs when there are power disruptions or mechanical breakdowns – or due to broader economic or industrial impacts – and no alternative work is available for employees.
Often in these circumstances many employees seek to take annual leave and employers are usually willing to accommodate this.
In some circumstances, however, an employee has no or insufficient accrued annual leave to cover the period of the stand down or they want to keep their leave for future use.
This article provides an overview of the stand-down options available to employers.
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Is it lawful to stand down an employee?
Once an employment contract is formed, legal rights and obligations are imposed on the employer and employee.
As well as other obligations, employers have a legal duty to their employees to provide work and pay remuneration – these are known as common law duties.
Under these duties, an employer has no general right to stand down or suspend an employee without pay. This means that under their common law obligations an employer must continue to pay an employee notwithstanding that there is no work available for them and they do not actually perform their duties.
A right to stand down or suspend an employee, however, may be available in a specific provision of an employment contract, relevant statute, award or enterprise agreement (known as industrial instruments) that applies to the employee.
Stand down provisions contained in statutes
The main employment statutes that apply in Western Australia are:
- Fair Work Act 2009 (FW Act): Federal
- Industrial Relations Act 1979 (IR Act): State
- Minimum Conditions of Employment Act 1993 (MEC Act): State
As different provisions apply for stand downs in each respective system, it is critical that an employer establishes which system applies to their business before following any of the guidance material contained in this information sheet.
Federal system stand-down provisions
If there is a provision allowing for a stand down in the particular circumstance contained in a contract of employment or industrial instrument that stand down provision applies. If there is no such provision or the provision does not confer a right to stand down an employee in those circumstances, then the FW Act provisions apply.
These allow employers to stand down an employee and withhold payment for the period of the stand down when an employee cannot be usefully employed – for example:
- Industrial action (other than industrial action organised or engaged in by the employer)
- Breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown
- Stoppage of work for any cause for which the employer cannot reasonably be held responsible.
Before standing down an employee, an employer must:
- Establish that one of the above circumstances exists
- Demonstrate that the employee cannot be “usefully employed” elsewhere in the business, including alternative or different duties.
- If no other duties are available, the employer may stand down that section of the business and not make payments to the employee(s) for that period of time.
Before applying the stand down provisions in the FW Act, employers should check any applicable contract or industrial instrument for any specific stand down provisions that may amend the FW Act provisions.
It is important to note that a stoppage of work is “the act of stopping; cessation of activity” and not just a circumstance where a particular group of employees (eg. fly-in, fly-out) are unable to travel to the workplace due to a situation such as the fuel shortage when the work is continuing.
Employers should note that regardless of any specific contract or industrial instrument provisions, the employee’s continuity of service cannot be broken and the period of the stand down must be counted as service for all purposes.
In addition, an employee cannot be stood down when they are taking paid leave that was authorised by the employer.
State system stand-down provisions
There are no specific provisions contained in either the IR Act or the MCE Act that provide a right for an employer to stand down an employee.
Employers covered by the state system should refer to each contract of employment or legally binding industrial instrument to establish if a right to stand down exists.
In the absence of any relevant provision, standing down the employee could result in a breach of the contract and the employer could potentially be prosecuted for non-payment of wages.
Can employees be forced to take annual leave during a period of stand down?
Often employees are willing to take their accrued annual leave during a stand down period.
Awards or agreements may contain the ability for the employer to direct the taking of annual leave or unpaid leave.
How to communicate with employees about a potential stand down
Modern awards have a standard consultation provision. In most cases a stand down will be of short duration and not fall into the category of ‘significant effect’.
However, it is best practice to take steps to consult with employees if there they may be required to stand down.
In the absence of any specific provision in an industrial instrument, under the MEC Act, an employer must consult an employee where changes occur that are likely to have a significant effect on the employee.
Prior to standing down, the employee should be informed in writing of what is happening and to let them know steps you have taken to avoid this situation.
Employees can suggest alternatives, such as:
- An agreed minor reduction in weekly hours for all staff
- Employees working part-time and using part of their accrued annual leave entitlements to top up weekly wages
- Undertaking maintenance work or upgrades during the stand down period
- Utilising the period to undertake an essential training program.
CCIWA can provide more detailed information to assist you in interpreting your contracts and industrial instruments in conjunction with the relevant legislation.
For further assistance call our Employee Relations Helpline on 08 9365 7660 or email [email protected].
