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Employee Stand Downs: When are they appropriate? What are the rules?

1st Apr 20

Employee Stand Downs: When are they appropriate? What are the rules?

Prior to Coronavirus, standing down employees has always been considered an action to be taken with great caution, and typically, as a last resort.

Despite huge economic uncertainty and mass unemployment, through this week’s JobKeeper Payment announcement, the Federal Government have made it publicly clear and financially sensible to keep as many staff on the books as possible.

What if there is nothing for them to do?

There are several strong resources available to you to answer this question. For clarity, this update is intended to outline general guidelines and examples, and contains information from the Fair Work Ombudsman, The Fair Work Act (part 3-5: 524 Circumstances Allowing Stand Down) and Workplace Assured.

The ADIA strongly recommends along with these resources you consult a dedicated employment solicitor for professional advice, specific to your situation, as it pertains to the current climate, as well as recent and imminent legislation.

When can I stand down staff?

According to the Fair Work Ombudsman, you can stand down staff when there is a work stoppage that is beyond your control, or when staff can no longer usefully be employed.

For example; a Government directive that requires you to close down your business, such as the one we saw affect cinemas, nightclubs and fitness centres in stage one restrictions.

Another example for work stoppage/lack of useful employment is lack of supply of essential equipment. We are starting to see this in the dental industry with the scarcity of personal protective equipment.

I can’t justify a total work stoppage, but my workload has reduced so much I don’t need all my staff. What are my options?

Importantly, a reduction in profits is generally not considered a reason to stand staff down. In normal circumstances, this would require redundancies. In the current climate, there are other options that could be considered, including requesting staff take unpaid leave, or negotiating a change/ reduction to contracted hours. This should be done with the assistance of a legal professional.

What is the difference between a stand down and unpaid leave?

Unpaid leave differs to a stand down in that a discussion with the individual employee is required and they must agree to take the leave. Standing down staff is generally a decision that affects an entire job function, like what we have seen in the aviation industry with cabin crew, or one that is issued company-wide– like what we have seen in the entertainment industry with cinemas and nightclubs closing their doors.

What are my obligations to my stood down employees?

While stood down, staff will continue to accrue leave entitlements – this is true for both annual leave and personal carers leave. Long service leave is a state-based concern and you should check the rules that apply to your state. Leave entitlements should be calculated into any business decisions you are making.

Once the JobKeeper Payment legislation passes, you will also be required to pay all full-time, part-time and casual employees (where casuals have been with you for at least 12 months) $1,500 per fortnight minimum salary before tax. Please note this payment is not covered by the superannuation guarantee levy.*

* If you have staff still working their normal hours, you are still required to pay their superannuation. If there is a gap between their regular earnings and the Job Keeper Payment (ie. they are earning more because of the payment), the difference does not require superannuation payment.

What paperwork is required for a stand down?

Best practice for standing down staff is a discussion at the outset. Explain the reasons for the work stoppage. Help your staff understand this is in no way performance related and is beyond your control. From here you should issue a letter outlining the situation. This should include the reasons for the work stoppage, the date the stand down period will begin and the minimum length of time the stoppage will last.

You can revisit the end date to the stand down should the situation continue, but it is important that staff are made aware of the earliest time they may be required to return to work.

The letter should also specifically state the stand down period will be unpaid, unless the employee chooses to use any annual or long service leave owing to them.

The employee has the right to exhaust any leave entitlements available to them prior to unpaid stand down.

Do staff need to take their entitlements (annual leave / long service leave) before they are stood down?

Staff are not required to exhaust their leave entitlements before entering an unpaid stand down period. However, it is a requirement that those entitlements are made available should the employee wish to use them.

I will need to reduce my workforce after the COVID-19 crisis. Can I stand down some staff and retrench others? Is it all one or the other?

Should you still choose to retrench some of your employees, the normal redundancy rules apply. You must be able to prove the role is no longer required. This means the role will not be required beyond any stand down period, not simply because of the work stoppage.

You must also ensure there is no discrimination present. For example, if you are making one person redundant that has the same role as another person who will remain employed, you must be able to provide a business reason for the person you kept employed. They may have more demonstrable relevant experience, higher qualifications, more time served in the business etc.

As always, this kind of action should be taken in consultation with a legal professional.

I have already negotiated reduced hours and pay with my staff in order to get by financially. What are my obligations now the JobKeeper Payment has been announced? Can I increase hours?

Any changes to contracted hours must be done in discussion with the employee in question.

The coming JobKeeper Payment may change some employers’ circumstances. The best place for advice around this is the Australian Taxation Office. As the legislation has not yet been passed, there is not a lot of information available at this time. It is likely there will be further published advice in the coming weeks. We will pass this information on as it becomes available.

Does the JobKeeper Payment mean I have to pay my staff to do nothing? Can I get them to do something outside their contract?

According to the Fair Work Ombudsman, the reason for stand downs are total work stoppage beyond the employer’s control, or when the employee is “unable to be usefully employed. This is not limited to the work an employee usually performs.”

If there is work you can provide, so long as it is safe, you can ask your staff to work outside their usual job function.

I made some tough decisions prior to the JobKeeper Payment announcement. How do I ‘reengage’ staff? Do they get back pay until 30 March?

You need to contact the staff member and offer them their position back. This can be in a stand down capacity. The aforementioned stand down letter will be required.

It is likely the Australian Taxation Office will publish some guidance on this once the legislation has passed, however in the Prime Minister’s announcement, any staff member who was actively employed on 1 March and is reengaged will be entitled to the JobKeeper Payment. The payment will be back dated until March 30 once legislation is passed.

I have already retrenched a large amount of staff. Can I ‘reengage’ some, or must it be all?

At the time you made the redundancies, you should have been able to demonstrate the role retrenched no longer exists and will not exist beyond COVID-19. The people you do reengage must be for a demonstrable reason – as above – more experience, qualifications etc. You should consult a legal professional before moving forward.

Can a staff member request to be stood down (ie, a parent with children at home)?

No. The only reasons for a stand down is a work stoppage that is beyond the employer’s control, a lack of vital equipment, or an employee no longer being able to be ‘usefully employed’.

An employee may be able to negotiate unpaid leave. It is unclear at this time how this would affect the Job Keeper payment. Contact the Australian Taxation Office for advice.

Am I able to call staff back one by one as work becomes available? What is the protocol?

If there is work that employees can perform and they are under contact, they are required to work.

If you plan to reengage some employees before others, you will need to be able to demonstrate objective criteria. Again, this could be experience or qualifications. It could also mean bringing back your permanent staff before casuals, or sharing the available hours across several employees in order to reengage them with the business, if that is an option that is available to you.

Visit the COVID-19 section of the ADIA website for more information.

ENDS.

Currency Of Information & Disclaimer —

This update was issued on 1 April 2020 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations. The statements, regulatory and technical information contained herein are believed to be accurate and are provided for information purposes only. Readers are responsible for assessing its relevance and verifying the accuracy of the content. To the fullest extent permitted by law, ADIA will not be liable for any loss, damage, cost or expense incurred in relation to or arising as a result of relying on the information presented here. 

 

This publication is available for your use under a Creative Commons Attribution 3.0 Australia licence, with the exception of the ADIA logo, other images and where otherwise stated. 

A.. A D I A . .S T R A T E G I C . .A L L I A N C E S

 

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