Employee Stand Down Guide for Australian Businesses

Standing down employees is a complex decision with legal implications. This guide empowers Australian businesses to understand the legal framework, explore alternatives before resorting to stand downs, and communicate effectively with their employees.

Standing down employees: what it means for your business

Have you ever considered temporarily sending an employee home without pay? This process, known as "standing down," is outlined in the Fair Work Act 2009 (the Act) and can be a helpful option in specific situations. But it's important to understand the rules and implications before taking this step.

In simple terms, standing down allows you to temporarily relieve an employee of their duties without pay when there's no work available through no fault of your own. Think of it as a pause button you can press in specific circumstances. However, it's important to remember that standing down isn't just about a temporary slowdown in business. The Fair Work Act has strict guidelines, and misusing them could lead to legal repercussions.

Let's explore the key aspects of standing down employees in the next sections. We'll unpack the legal framework, when it's applicable, and alternative options you might consider before hitting the pause button on your employees.

When can you legally stand down employees? Navigating the Fair Work Act

The legal framework that covers standing down employees is outlined in the Fair Work Act 2009. Section 524 empowers employers to temporarily halt an employee's work without pay under certain strict conditions. You can only stand down an employee if there's no work available due to circumstances beyond your control. This means situations like:

  • Machinery or equipment breakdown where a critical piece of equipment malfunctions, and repairs take time. While the issue is out of your hands, it renders the employee's usual tasks impossible.
  • Industrial action when your business gets affected by strikes or disruptions outside your control, it might be impossible to provide work for specific employees.
  • Severe (or inclement) weather events make operating unsafe or unreasonable, standing down might be necessary to prioritise employee safety.

It is important to remember that standing down is not simply a tool for handling slow business periods. The Act has clear guidelines, and misusing them can lead to legal issues. Even during a stand down, the employee remains employed by your business. However, they won't receive their usual pay for that period. This differs from unpaid leave, which employees initiate for personal reasons.

When considering standing down employees. you should check enterprise agreements, awards, or employment contracts as they might have specific provisions related to stand down, like consultation requirements or notice periods. Always check these documents for additional guidelines.

Standing down is a significant step with legal implications. If you're considering this option, consulting with a qualified HR professional or legal expert is crucial to ensure you're following the Act's guidelines and protecting your business and employees.

Employee Stand Downs

Legally standing down employees

Standing down employees is a sensitive topic with significant legal implications. While it might seem like a simple solution during slow periods, the Fair Work Act (2009) imposes strict limitations on its use. Employers cannot stand down employees just because business is slow or they have less work available. Doing so unlawfully risks legal repercussions and the obligation to back-pay unpaid wages.

So, when can you legally stand down employees? Section 524 of the Act allows this only when there is a work stoppage due to circumstances beyond your control. There are three hurdles an employer must clear before standing down employees due to a work stoppage:

  1. The stoppage happened before the stand down. This ensures the stand down isn't simply a way to preemptively avoid upcoming disruption.
  2. No alternative work available. The employer must demonstrate that, due to the stoppage, the employees cannot be productively utilised in their usual roles or even alternative roles within the business.
  3. Beyond employer control. The cause of the work stoppage must be clearly unforeseeable and outside the employer's reasonable control. Examples include severe weather, unforeseen equipment breakdowns, or legally mandated closures.

Even during a stoppage, employers have a legal obligation to explore all reasonable alternative work arrangements. This means actively seeking opportunities to productively utilise employees, even if it involves:

  • Changing their duties. Can employees be assigned temporary tasks outside their usual roles, perhaps in different departments or on special projects?
  • Location flexibility. Is remote work or a temporary change in work location feasible to keep employees engaged?
  • Schedule adjustments: Can flexible hours or job sharing arrangements alleviate the need for stand down?

Remember, exhausting all possible alternatives demonstrates good faith and strengthens your legal position if stand down becomes the last resort.

Notice and payment during stand down

While the Fair Work Act doesn't mandate a specific timeframe, providing employees with as much notice as possible about an impending stand down is crucial. This allows them to adjust their financial planning and personal arrangements. Additionally, offering an estimated duration of the stand down period helps manage expectations and fosters transparency.

JobKeeper amendments introduced temporary provisions impacting notice requirements:

  • Qualifying employers were required to provide at least three days' written notice before the stand down directive.
  • Legacy employers were required to provide at least seven days' written notice and consultation with the employee (or their representative) before issuing a JobKeeper enabling stand down direction in writing.

These JobKeeper-specific provisions are no longer in effect. Therefore, for stand downs outside the JobKeeper context, the general best practice of providing as much notice as possible holds true. Remember, even though employees aren't paid during a stand down, they continue to accrue entitlements like annual leave and sick leave based on their ordinary working hours.

Exploring alternatives before standing down

Standing down employees is a significant decision with legal and financial implications. Before resorting to this measure, it's important for employers to exhaust all viable alternatives. This not only ensures responsible business practices but also fosters trust and understanding with your workforce.

Think creatively and explore different possibilities that could include working at a different location, considering flexible working arrangements and even job sharing to minimise the impact to employees. If applicable, encourage employees to use their accrued annual or long service leave to cover periods without work. This can provide financial support and minimise the need for stand down.

The legal requirements surrounding stand down can be complex. Consulting with a qualified HR professional or legal expert can ensure you're following proper procedures and protecting both your business and your employees.

If you need further advice on standing down employees, Employment Compass can provide assistance. Call our 24/7 Employer Assist Line at 1300 144 002 for more information.

Frequently asked questions

Can I stand down employees because I have less work for them?

No. The Fair Work Act only allows standing down under specific circumstances beyond your control, not simply for business downturns.

When can I legally stand down employees?

You can only stand down employees due to a work stoppage beyond your control, such as:

  • Equipment breakdowns
  • Unions-initiated industrial action
  • Severe weather making work unsafe
  • Government-mandated closures (e.g., pandemics)

Even during a stoppage, do I have other options before standing down?

Yes! You must explore all reasonable alternatives to employ affected employees elsewhere, like remote work, different locations, or even temporary reassignments.

What if I unlawfully stand down employees?

You may be liable to back pay them the unpaid wages and face legal penalties.

What's the burden of proof when standing down employees?

The onus is on you to prove:

  1. The stoppage happened before the stand-down.
  2. Affected employees cannot be usefully employed due to the stoppage.
  3. The stoppage is beyond your reasonable control.

Should I seek legal advice before standing down employees?

Absolutely! The Fair Work Act is complex, and legal guidance is crucial to ensure compliance and minimise risks.

How can I communicate effectively with employees during a stand-down?

Be transparent and keep them informed throughout the process. Provide as much notice as possible and clearly explain the reason for the stand-down.

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