Know the difference between Shut Down and Stand Down to better understand your obligations.

Employer Obligations During Periods of Shut Down and Stand Down

The lockdowns brought on by the COVID-19 restrictions introduced many employers and employees to the concept of shut downs and stand downs. In these situations, employers have certain rights and responsibilities they must meet to ensure the fair treatment of their employees and to remain compliant with labour laws. 

Shut down obligations

Employers may need to temporarily close down their businesses for a range of different reasons, this is considered a shut down. Shut downs may occur because of refurbishments or during slow periods of the year, such as Christmas and New Year.

Prior to a shut down period beginning, employers must abide by the requirements specified in the consultation clause of the industrial instrument covering employees.

The Fair Work Ombudsman website states, if the industrial instrument covering employees allows, an employer can direct their employees to take annual leave during a shut down. Where an employee has exhausted all of their annual leave, they can be directed to take unpaid leave.

If the industrial instrument covering employees does not allow the above, the employer can negotiate with employees to take paid or unpaid leave during the shut down. If employees do not agree, the employer will be obliged to pay permanent employees for the hours they would have ordinarily worked during the entire shut down period.

There is no obligation to guarantee casual employees work. As a result, they will not be paid during the shut down period.

Stand down obligations

If an employee’s industrial instrument or contract of employment does not contain a stand down provision, the provisions of the Fair Work Act 2009 operate. Section 524 of the Act outlines the certain circumstances whereby an employer may stand down their employees. Employers may stand down employees during a period in which employees cannot usefully be employed because of:

  • Industrial action.
  • A breakdown of machinery or equipment for which the employer cannot reasonably be held responsible for the breakdown.
  • A stoppage of work for any cause for which the employer cannot reasonably be held responsible.

For example, a natural disaster that impacts operations will result in an employer standing down their employees until operations resume.

Employers must abide by the requirements specified in the consultation clause of the industrial instrument covering their employees before a stand down period begins.

The Fair Work Ombudsman website states employers need to determine whether they will stand down their employees without pay or offer them the choice of taking accrued paid leave.

Need assistance?

Managing periods of shut down or stand down can be difficult for employers without considering the obligations they have to their employees. If you are struggling with managing your responsibilities or are trying to avoid risk in these shut down or stand down periods, ER Strategies would be happy to assist. Just give us a call on 1300 55 66 37, or fill out our contact us form by clicking here.

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

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