Is it lawful for my employer to stand me down without pay?

Is it lawful for my employer to stand me down without pay?

Under section 524 of the Fair Work Act (FWA), your employer may only stand you down without pay during a period where you cannot be “usefully employed” because of:

  • Industrial action that has not been organised by your employer;
  • A breakdown of machinery or equipment (if the breakdown is not the employer’s fault); or
  • There is a stoppage of work which was not caused by the employer (i.e. a global pandemic or natural disaster).  

These scenarios are subject to any applicable enterprise agreement which may make express provisions for the situation.

If you have been stood down for any of the above reasons, your employer is not required to pay you for the period of your stand down, but some may choose to. You cannot be stood down because there simply is not enough work or work has reduced. 

Usefully employed

Whether you can be usefully employed is determined by considering a range of factors. There is generally very limited scope for your employer to say that you cannot be usefully employed unless they have been forced to close by a government directive or other reasons beyond their control. Similarly, there is often a high threshold required to establish that there has been a stoppage of work. 

If the business has merely experienced a downturn, that is no reason for standing employees down. Your employer should consult with you and attempt to find other work that you can do. This may include working on something different from your usual tasks. You may also be asked to work shorter hours instead or to make suggestions as to what work you can do during that time. In general, if you can add value to benefit your employer at work, then it is likely your employer cannot stand you down lawfully.

Leave 

You cannot be stood down if you are on a period of paid or unpaid leave that has been authorised by your employer, or you are otherwise absent with your employer’s authorisation. 

Notwithstanding, the Federal Court of Australia recently handed down a decision on 18 May 2020 confirming that if you have been stood down under the FWA, you cannot take paid personal leave, carer’s leave or compassionate leave.[1] This decision is currently on appeal and will be determined by the Full Federal Court of Australia.

What if I’m covered by an EBA or employment contract?

If you are covered by an enterprise agreement or employment contract, you should review it carefully as there may be additional requirements that your employer must meet before standing you down. For instance, your employer may have to consult with you or provide you with written notice. If your employer stands you down, they generally must rely on the procedure outlined in any applicable enterprise agreement or contract to do so. 

The same applies to modern awards which may provide additional requirements that an employer must meet before standing you down.

Overall, there is generally limited scope for your employer to stand you down, with even large downturns in business not satisfying the criteria set out in the FWA. However, if you are lawfully stood down without pay, your employer does not need to pay you for the period of the stand down. 

  [1] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656 at [31]

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