COVID-19 is an unprecedented event that is likely to significantly disrupt businesses and the economy-at-large for the foreseeable future. The situation is extremely fluid and fast-moving.

This disruption and the associated reduction of revenue will result in employers needing to make very difficult decisions about their workforces in the coming weeks and months ahead.

Qantas’ move to stand-down 20,000 employees is just one high-profile example of difficult decisions being made.

With the Governments’ overnight decree to effectively mandate the shuttering of all hospitality and leisure businesses, many more difficult decision will need to be made. Many other sectors, such as the travel industry, are also affected. Others will likely follow.

As an employer, what are your options?

Can I Stand-down employees on unpaid leave

Depending on the circumstances, yes.

If an employer must shut down part or all its operations for a period of time and its employees cannot be usefully employed, the employer may be able to rely on the ‘stand down’ provisions contained in the Fair Work Act 2009 (Cth).

Section 524 of the Act provides that an employer may stand down an employee without pay when:

  • there is a stoppage of work for any cause for which the employer cannot reasonably be held responsible; and
  • the employee cannot be usefully employed.

It is a requirement that there actually be a stoppage of work within the employer’s business outside the employer’s control and not merely just a slowdown in patronage of the business.

Enterprise Agreements and contracts of employment can also govern whether or not you can stand-down employees.

Note that an employee will generally continue to accrue entitlements to annual leave and personal/carer’s leave under the National Employment Standards during the period of stand-down.

Use of annual leave / long service leave rather than standing-down

If an employer is not permitted to stand down their employees, the employer can invite their employees to take paid leave such as annual leave or long service leave. Alternatively invite them to a period of leave without pay and which may be an alternative to having to make the employee’s position redundant immediately.

In some cases, an employer may direct an employee to take paid leave, but there are limitations that need to be considered.

How can we assist?

We recognise that many businesses are currently experiencing the most difficult period in their history and boards & management are having to make urgent decisions to try to ensure the survival or ongoing viability of the business.

We are currently advising numerous clients on these issues. If you are considering making difficult decisions around your workforce, you are certainly not alone.

Before you take any action, we strongly recommend that you obtain specific advice on your particular circumstances to determine what options are legally available.

The Pointon Partners employment law team is here to provide rapid advice and assistance to help you navigate through this extremely challenging time.

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