Further Updates on Stand Down Under the Fair Work Act and JobKeeper

Under the Fair Work Act 2009, (FW Act) there is specific criteria that needs to be met before an employer can stand down its employees. Further to our previous update on Standing Employees Down, below is further update on stand downs under s524 of the Fair Work Act 2009 (Cth) as well as JobKeeper enabling stand down directions.

Stand down pursuant to Section 524 of the Fair Work Act 2009 (Cth)

Section 524 of the Fair Work Act 2009 (Cth) (FW Act) provides as follows:

(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot be usefully 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 be held responsible.

(3) If an employer stands down an employee during a period under subsection (1) the employer is not required to make payments to the employee for that period.

In summary, an employee can only be stood down without pay if they cannot be usefully employed because of a stoppage of work (in the case of COVID-19) for any cause for which the employer cannot reasonably be held responsible for. It should be noted that employers cannot stand employees down pursuant to section 524 of the FW Act due to a lack of work or a deterioration of business conditions.

This stand down is unpaid however employers may allow employees, during a stand down period, to use accrued annual leave, RDO’s or long service leave entitlements (if applicable).

An employee that is stood down will continue to accrue leave entitlements as though these directions had not been given. Employees will also be entitled to be paid for public holidays that they usually would have worked as though the employee was not on stand down.

If an employee chooses to utilise annual leave (with the agreement of the employer) for part of the stand down, the employee would be on unpaid stand down for the remaining days and would continue to accrue entitlements as usual.

Please note that if an employee has not been stood down and takes unpaid leave for a period of time, for example, they agree to work four days in a week and take one day as unpaid leave, they would not accrue entitlements for the days they have taken as unpaid leave.

JobKeeper enabling stand down

The changes authorise an employer who qualifies for the JobKeeper subsidy to provide a JobKeeper enabling stand down direction to an employee because the employee cannot be usefully employed for their normal days or hours of work as a result of the COVID-19 pandemic or the Government’s initiatives to slow the transmission of COVID-19 (i.e. the closure of non-essential services).

A JobKeeper enabling stand down direction is a direction given by an employer to:

1. not work on a day or days that the employee would usually work;
2. work for a lesser period than what the employee would usually work; or
3. work a reduced number of hours compared to their ordinary work.

When the JobKeeper enabling stand down applies, the employer is still required to satisfy the wage condition, the minimum payment guarantee and the hourly rate of pay guarantee. This means an employee will need to be paid the JobKeeper amount of $1,500 per fortnight (at a minimum) and will be required to pay their employee any amounts in excess of the $1,500 per fortnight if they work or take leave that equates to more than $1,500 per fortnight.

An employee that is on a JobKeeper enabling stand down will continue to accrue leave entitlements as though these directions had not been given. Employees will also be entitled to public holidays as though these directions had not been given.

Stand down and redundancy

A redundancy may occur where an employee is subject to stand down under section 524 of the FW Act or a JobKeeper enabling stand down. For there to be a genuine redundancy, the following three steps must be undertaken/assessed:

1. the employer no longer requires the job done by the employee for genuine operational reasons;
2. the employer has consulted with the employee about the possible redundancy (in accordance with the relevant industrial instrument); and
3. it would not have been reasonable in all circumstances to redeploy the person with the employer or an associated employer. Such reasonableness would be subject to discussion between the employer and the employees.

If the employer follows the above steps, it should meet all of the requirements of a genuine redundancy. An employer would then be required to provide the employee with the relevant notice period applicable to that particular employee. The minimum notice of termination, as set out in the National Employment Standards, is as follows:

If your employee is over the age of 45 at the time of termination and has a period of continuous service of more than two years, that employee will be entitled to an additional weeks’ notice.

An employer can choose to pay their employee in lieu of notice, or alternatively the employee can work out the notice period. If your employee has been stood down because they cannot be usefully employed at the time of termination, then the employee may be on unpaid stand down during their notice period. If the employer and the employee is eligible for the JobKeeper subsidy during their notice period, the employee would continue to receive the minimum wage requirement of $1,500 per fortnight until the employee’s final termination date.

Further, your employee will be entitled to redundancy payments if they are made redundant and the following occurs:

1. your employee’s period of engagement is more than 12 months; and
2. your business engages 15 or more employees; and
3. your employee is not an apprentice.

Does a period of stand down count as working out the notice?

If an employee’s period of notice coincides with a stand down pursuant to section 524 of the FW Act, an employee may be on stand down during the notice period (as long as the employer satisfies section 524 of the FW Act). An employer will still be able to pay the employee in lieu of notice. If eligible, the employee must be paid the JobKeeper subsidy during this period.

When an employee is on a period of paid leave (annual or long service etc) or unpaid leave and they are made redundant, can they still work out their notice period?

If an employee is on paid leave (i.e. annual leave or long service leave) and they are made redundant during that period, such period may be deemed as part of their notice period. This would also be the position if the employee was on requested leave (under a JobKeeper enabling direction) or if the employee was directed to take the leave.

Disclaimer: This summary is a guide only and is not legal advice. For more information on legislative or contractual obligations, contact CTI Lawyers on 1300 361 099 or email [email protected].