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The coronavirus (COVID-19) outbreak is having a ripple effect on the worldwide economy. As a result, employers are now scrambling to put flexible working plans in place to prepare for uncertain times ahead. If your workers are unable to work remotely, you may have to stand-down employees. This article provides practical guidance on how to manage these issues to help your business survive this difficult time. 

Employees and COVID-19

Can I Stand-Down My Employees?

As an employer, you do not have a general right to suspend your employees from performing their obligations. You ordinarily must provide work for your permanent employees.

However, the law does provide employers with the power to stand-down employees in accordance with:

  • the Fair Work Act, 
  • an enterprise agreement or
  • modern award

Generally, the right to stand-down your employees arises during a period in which:

  • the employee cannot usefully be employed; or
  • because of a stoppage of work for any cause for which you cannot be held responsible for.

However, meeting those thresholds is not simple. As an employer, you will not have the right to stand-down an employee if there is use­ful work avail­able. If the reason for the stoppage of work is an economic downturn, the stand-down provisions are not likely to apply. 

Stand-downs can sometimes be unlawful, and you should only use one as a last resort. As such, you should always seek legal advice before attempting to rely on stand-down provisions.

Will My Employees Still Receive Wages?

If you can rely on the stand-down provisions, you will not need to pay your employees during this period. This is because the right to stand-down employees intends relieve employers of their obligation to pay wages.

However, the consequences of a stand-down can be severe for your employees. This is because they may no receive wages for a prolonged period of time. As such, stand-downs may be challenged if you do not implement it in appropriate circumstances.

If you do not have the right to stand employees down, you may face back pay claims or potential penalties.

Can My Employees Take Paid Leave?

In circumstances where your employees have been stood down, they may request to access their paid leave entitlements over the stand-down period to mitigate any loss of income.

For example, your employees may wish to access their:

  • annual leave;
  • long service leave; or
  • carer’s leave.

If your employees do take leave during the stand-down period, your employees will continue to accrue entitlements for that period. This means that, technically, they have not been stood down.

Can I Shut Down My Business?

A shut down occurs when a business temporarily closes during slower periods of the year. If a modern award applies to your business, it may outline when you can rely on a shut down to direct employees to take annual leave. If an award or agreement does not cover your employees, you can only direct employees to take annual leave if this direction is reasonable.

Alternatively, you can always suggest that your employees take a period of accrued paid leave or any other leave. Your employees may well agree to take a period of paid leave to help safeguard the future of their job.

What About My Casual Employees?

Casual employees do not have paid leave entitlements. As such, they are only entitled to be paid for hours they work. However, there has been a lot of consideration recently as to what constitutes a genuine casual employee, so you should exercise caution if you have concerns about whether your casual employees are really casual.

For your genuine casual employees, if they require time off work because they have contracted coronavirus or are required to self-isolate, they have no entitlements to payment.

However, many employers around the country are choosing to implement policies which confer some kind of benefit to casuals given the current environment.

What If My Employees Are No Longer Required?

If you face a situation where your employees’ roles are no longer required due to the economic downturn, this will generally provide a valid reason to commence a redundancy process.

However, it is important to comply with your consultation obligations under any applicable modern awards or enterprise agreements. You should also explore any alternative options, such as a reduction in hours or pay, prior to confirming the redundancy. As such, you should seek legal advice before commencing any redundancy process to mitigate the risk of a claim for unfair dismissal.

Key Takeaways

As a general rule, you should aim to be as flexible as possible with your employees during this period of uncertainty. Where remote working is not possible, you may find yourself in a position where there is no useful work for your employees to perform. However, if you are considering relying on stand-down provisions or making your employees redundant, you should seek legal advice before making any decisions. If you have any questions about your employment options during the coronavirus, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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