Thinking | 24 March 2020

COVID-19 update for employers: can employees of organisations providing ‘non-essential services’ be stood down?

By David Catanese and Fay Calderone

The indefinite suspension of ‘non-essential’ services and gatherings in response to the COVID-19 crisis has given rise to many legal questions for employers. One key question is:

If my business cannot operate, can staff be stood down?

(In short: yes)

Can employees of organisations providing ‘non-essential services’ be stood down?

At midday, 23 March 2020, ‘non-essential’ services and gatherings were shut down to increase adherence to social distancing requirements and reduce the risk of transmission of COVID-19.

Employers operating the following services are affected by the shut down requirements and are collectively referred to in this article as ‘affected employers’:

  • pubs, registered and licensed clubs (excluding bottle shops attached to these venues) and hotels (excluding accommodation);
  • gyms and indoor sporting venues;
  • cinemas, entertainment venues, casinos and night clubs;
  • restaurants and cafes (except for takeaway and home delivery); and
  • religious gatherings, places of worship or funerals (in enclosed spaces and other than very small groups and where the 1 person per 4 square metre rule applies).

Under section 524 of the Fair Work Act, an employer may stand down employees without pay in certain circumstances, including where there is a stoppage of work for which the employer cannot be held responsible and where an employee cannot be usefully employed. Alternate or similar stand down provisions may also be set out in contracts of employment or an applicable enterprise agreement, which should also be reviewed for specific nuances that may apply in the circumstances.

Employers that are partially affected by the shut down requirements are also able to stand down employees that cannot be usefully employed because their usual functions have ceased. For example, a restaurant business that cannot provide table service but continues to prepare meals for take away or home delivery can stand down wait staff that cannot be usefully employed.

The Fair Work Ombudsman has more generally warned employers that ‘employees can't be stood down just because there is not enough work. That is, a stand down cannot be utilised for a mere economic impact, but rather the actual shut down of all or a substantial part of a business. Accordingly, businesses that supply goods and services to affected employers may not be able to lawfully stand down their employees and need to consider other cost saving measures as identified in our earlier article.

Because employees stood down by affected employers are stood down without pay, this provides some minor cash flow relief for businesses. It is, however, important to note the following employee entitlements continue where employees are stood down in accordance with the provisions of the Fair Work Act (which is not necessarily the case during other periods of unpaid leave):

  • annual leave, personal leave and long service continue to accrue;
  • employees can access personal and carer’s leave (provided they comply with notice and evidence requirements); and
  • employees must be paid for public holidays where it would ordinarily fall on a day they have been stood down.

Employees may also request annual leave during a stand down period, although, for cash flow reasons, it may be reasonable for an employer to refuse to provide paid leave in the circumstances. It is unlikely that an employer could reasonably refuse or cancel paid leave during the stand down period that had already been approved.

It may also be a relief for affected employers that welfare payments will be available for eligible permanent and casual staff during periods of stand down. When standing down employees, we recommend that you direct them to the Service Australia website for information on this link:

https://www.servicesaustralia.gov.au/individuals/subjects/affected-coronavirus-covid-19

Employers should also provide them with a letter confirming their employment, hours of work and ordinary salary/wage rate, plus confirmation that they have been stood down without pay.

Employee assistance programs should also continue to be available to employees during these difficult times.

Contact

Alison has more than 20 years’ experience in a wide-ranging employment and privacy practice.

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A highly regarded employment lawyer, Fay advises on proactive compliance, discrimination and performance management.

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Aaron has extensive employment and industrial relations law experience working with clients across a range of industries.

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Mark is an employment lawyer experienced in litigious and non-litigious applications of employment and industrial relations law.

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Employment lawyer Karl Rozenbergs advises clients in adverse action claims, on negotiating enterprise agreements and much more.

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David is an expert employment lawyer acting for private enterprises, State & Commonwealth Governments, and pro bono clients.

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