COVID -19 – To stand down or not to stand down?

ER Strategies has been fielding a lot of questions from clients that are being affected by the COVID-19 pandemic and wanting to impose ‘stand downs’, even though their industry or part of their industry has not been closed down by the Federal Government and/or state and territory governments.

Recently we have heard about further industry sector closures, including to the beauty therapy, tanning, waxing, nail salons and tattoo parlour sectors.  Click here for the latest information from the Federal Government.

STOP PRESS – the Fair Work Act has been varied to provide employers with more options to retain their business viability in the face of the COVID-19 Pandemic. Click here for our interactive summary of the new JobKeeper changes to the Fair Work Act.

Care needs to be taken, because the ability to stand down employees under the Fair Work Act is actually quite limited in scope, and if a company illegally stands down employees, it may be forced to pay the employees during the illegal stand down.  See our explanation below.

On the other hand, it may be a much better option to consult with your employees in relation to the situation being faced and agree changes to their hours of work or possibly getting their  agreement to taking leave without pay, or alternatively for your employees to take annual leave or long service leave – this is also the recommendation by the Fair Work Ombudsman (FWO).  Click here for information provided by the FWO.

The legal position

Under the Fair Work Act 2009, there are very specific circumstances where a stand down applies. Under s524(1), it is limited to where an employee cannot be usefully employed because of a “stoppage of work for a cause for which the employer cannot reasonably be held responsible”. [See above link to interactive summary to recent changes to the Fair Work Act, providing employers with more options to remain viable during the COVID-19 Pandemic]

The interpretation of this in relation to the COVID-19 pandemic is that it applies when an industry or part of an industry is shut down by a government directive and it only applies to those employees who cannot be usefully employed.  Also, it might apply in circumstances when there is lack of vital supply, such as where you supply electrical goods and China has ceased exporting such goods.

However, if your reductions in staffing arise just from a downturn in business and there is no specific stoppage of work, your reductions in hours of work or staffing levels require consultation with permanent (i.e. non casual) employees in order to gain their agreement to the reduction.

Alternatively, your situation may end up being treated as an illegal stand-down, or even as redundancy with consequential payouts of accrued annual leave entitlements and redundancy pay, at a time when cash-flow to make such payments may be severely limited.

Explanatory materials – For ER Strategies Clients

ER Strategies has also prepared a presentation that explains the difference in the process if a company has to ‘voluntarily’ shut down (i.e. due to a downturn in business), as opposed to ‘involuntarily’ shutting down for a period due to stoppage of work (a ‘stand down’).  Click here to login to Online HR, and follow the link ‘Useful Links’ to our COVID-19 specific resources.

Forgotten your login details? Contact our team on 1300 55 66 37.

ERS template stand down letter – Free Download

ER Strategies has developed a template COVID-19 template stand down letter.  This template can be used, provided the circumstances are clearly related to a closure of an industry or part of an industry, as directed by the Federal Government or a state or territory government.  However, by providing this template, ER Strategies is not warranting that your circumstances mean that you can legally use this letter.  Clients should consult with ER Strategies first, to establish that you can use it in your specific circumstances.

Click here to download the template COVID template stand down letter.
Note: Clients are not required to fill out the form, please access the letter via Online HR. 

There are also other options for greater employment flexibility being introduced. For example the NSW Government has reduced the restrictions under NSW long service leave legislation, so that employees can take shorter periods of long service leave.  Click here for information on this additional flexibility.

Please contact ER Strategies on 1300 55 66 37 during business hours to discuss your specific issues and to ensure you meet the stand down requirements of the legislation.

Up to date as of 14 April 2020

Free Download: Termination Letter Template

Need to let an employee go? Use our letter of termination template to ensure you are using the correct format. 

termination letter template