Standing down employees without pay

March 23, 2020

Stand down under the Fair Work Act

An employer may stand down an employee without pay during a period in which the employee cannot usefully be employed because of one of the following circumstances:

  1. Industrial action (other than industrial action organised or engaged in by the employer).
  2. A breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown.
  3. A stoppage of work for any cause for which the employer cannot reasonably be held responsible.

An employee will not be taken to be stood down when taking paid or unpaid leave authorised by the employer or is otherwise authorised to be absent from his or her employment. (An employee may take paid or unpaid leave (for example, annual leave) during all or part of a period during which the employee would otherwise be stood down.)

Stand down under enterprise agreement or contract of employment

Where an enterprise agreement or employment contract provides for the employer to stand down the employer because of one of the above circumstances, then the employer may only stand down the employee by complying with the requirements set out in that enterprise agreement or employment contract. The enterprise agreement or employment contract may also contain additional requirements, such as consultation, notice or pay.

What is useful employment?

The onus is on the employer to establish that the employee could not be usefully employed. An employee will not have been able to be usefully employed if the employee would have been idle had the employer not stood down that employee at that time. Where work is scheduled before an employee is stood down, then the employer will have to establish that because of circumstances that arose after the work was first scheduled to be done, the employee could not be usefully employed. (See AMWU v McCain Foods (Aust) Pty Ltd [2011] FWA 6810.)

Stand down and employee entitlements

An employee will continue to accrue annual leave, personal / carer’s leave and public holiday pay (if applicable) during a period of stand down, as that period will count towards an employee’s period of “service” under section 22 of Fair Work Act 2009 (Cth).

Stand down vs. redundancy

Redundancy is where an employee is terminated due to changes in the operational requirements of the employer’s enterprise (for example, a downturn in business) and it is not reasonable to redeploy the employee. Redundancy pay ranges from 4 – 16 weeks. An employer will not have to pay an employee redundancy pay if the employee has not achieved at least one year of continuous service or if the employer is a small business employer.

The key difference is that, with stand down, the employment relationship continues during the stand down period and the employer will be required to redeploy the employee once the employee can be usefully employed.

See our Employment Law—The Ultimate Guide for further information
on redundancy.

Resources

  1. Fair Work Act 2009 (Cth), section 22
  2. Fair Work Act 2009 (Cth), section 524
  3. Fair Work Act 2009 (Cth), section 525
  4. AMWU v McCain Foods (Aust) Pty Ltd [2011] FWA 6810