Standing down employees

Note: The information on this page relates to stand downs as a result of industrial action only.

To find out about your rights and obligations in relation to stand downs as a result of the COVID-19 situation, please go to the Fair Work Ombudsman's website:

• Coronavirus and Australian workplace laws (see Standing down employees & business closures)
• Pay during stand down

See Fair Work Act s.524–525

An employer may stand down an employee during a period in which the employee cannot usefully be employed because of a number of circumstances including:

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

Payments during a period of stand down

If an employer stands down an employee during a period in accordance with s.524 of the Fair Work Act then the employer is not required to make payments to the employee for that period.

Section 524 is intended to relieve an employer of the obligation to pay wages to employees who cannot be usefully employed in certain limited circumstances. The consequences of a stand down can be severe for an employee as the employee may be deprived of wages for a lengthy period. Whether a particular employee can be usefully employed is a question of fact to be determined having regard to the circumstances that face the employer.[1]

An employer may not stand down an employee under s.524 of the Fair Work Act if:

• an enterprise agreement, or a contract of employment, applies to the employer and the employee, and
• the agreement or contract provides for the employer to stand down the employee during the relevant period if the employee cannot usefully be employed during that period because of industrial action (other than industrial action organised by the employer), or a breakdown of machinery or stoppage of work for which the employer cannot reasonably be held responsible .

Note: An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).

If the terms of an enterprise agreement or contract of employment provide for the standing down of employees, then the employer will generally need to rely upon the terms of the enterprise agreement or contract of employment to effect a stand down of an employee.[2]

Stand down – Employees could be usefully employed

CEPU & Anor v FMP Group (Australia) Pty Ltd

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor v FMP Group (Australia) Pty Ltd [2013] FWC 2554 (Gostencnik DP, 26 April 2013).

Facts

The company stood down 31 maintenance employees after the unions representing the employees gave notice of an intention to take employee claim action in the form of: '[A]n indefinite ban on filling in paper work, excluding health and safety matters' (the Paper Work Ban).

Before the commencement of industrial action, the company advised its employees that anyone who participated in the Paper Work Ban would be stood down without pay.

The company submitted that it was entitled to stand down the employees because the Paper Work Ban amounted to a stoppage of work for any cause for which the employer could not reasonably be held responsible [s.524(1)(c)].

Outcome

The Commission held that the employer did not have a proper basis to stand down the employees, ordering that the stand down cease, and that the employees be paid the wages they would have earned had they been permitted to work.

The Commission found that the alleged absence of useful employment for the employees cannot be said to have been caused by industrial action, as no industrial action had taken place at the time the employees were stood down. The stoppage occurred because the employer would not permit maintenance employees to carry out maintenance work while the Paper Work Ban was in place, rather than because employees refused to perform work. It could not therefore be said to have been for a cause for which the employer could not reasonably be held responsible.

Relevance

In order for an employer to validly exercise its right under s.524(1)(a) of the Fair Work Act, the employee who is to be the subject of a stand down must, at the time of being stood down, be engaging in the industrial action (or have previously engaged in industrial action) which causes the unavailability of useful employment; or be unable to work because of others engaging in, or having engaged in industrial action which has a flow-on effect. The Commission also doubted whether reliance could be placed on s.524(1)(c) in circumstances where the stoppage of work would be industrial action and therefore caught by s.524(1)(a).

An employee is not taken to be stood down during a period when the employee:

• is taking paid or unpaid leave that is authorised by the employer, or
• is otherwise authorised to be absent from his or her employment.

Note: 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.[3]

See Fair Work Act s.526

The Commission may deal with a dispute in relation to stand downs on application by an employee, or an employee organisation that is entitled to represent the industrial interests of an employee:

• who has been, or is going to be, stood down or purportedly stood down, under s.524(1), or
• who has made a request to take leave to avoid being stood down, or purportedly stood down, under s.524(1), where the employee’s employer has authorised the leave.

A Fair Work Inspector can also make an application to deal with a stand down dispute.[4].

A former employee cannot make an application under s.526.[5].

The Commission may deal with the dispute by arbitration. The Commission may also deal with the dispute by mediation or conciliation, or by making a recommendation or expressing an opinion.

In dealing with the dispute, the Commission must take into account fairness between the parties concerned.[6].

Types of disputes

Applications to deal with stand down disputes must relate to the operation of the stand down provisions of the Fair Work Act. For example, a person may argue that a stand down contravenes s.524 of the Fair Work Act because the employee that has been stood down could be usefully employed.

The Commission has no power to order that an employer pay an employee wages during a period of stand down.[7].

The Commission is not a court. It cannot exercise judicial power, and as a result cannot make binding determinations as to whether an employer has acted lawfully in standing down an employee. The Commission cannot declare that an employer has failed to comply with s.524, or order that an employer pay wages due to an employee because of that failure. Only a court can make those sorts of orders.[8].