09 March 2022
‘Rain bombs’ along the east coast of Australia have devastated thousands of businesses, who now must rebuild sodden premises, replace stock, and cease trading temporarily.
For businesses that struggled to stay afloat throughout the pandemic, hoping for clearer skies in 2022, the unexpectedly severe weather is testing their resilience once again.
Among these challenges are the human resource issues of grappling with soggy work premises, a shortage of work, and stranded employees.
Below, we answer some common questions and assess what options may be available and appropriate for a flood-affected business in managing its workforce.
It may be the case that the business can still operate with some changes. For example:
It is important to remember that there are limitations on the changes an employer can unilaterally make to the location of an employee’s workplace.
Often a contract of employment will clearly give an employer permission to direct an employee to attend work at a different location to their usual place of work. In the absence of this, employers should seek agreement with employees for any temporary changes necessary to keep the business operational.
If it is financially viable to do so, employers can ask their employees if they would agree to take paid annual leave for the idle period.
Whether an employer can force an employee to take paid annual leave will largely depend on whether a modern award or enterprise agreement applies to the role.
Certain modern awards and enterprise agreements may contain ‘shutdown’ clauses, such as requiring an employee to take annual leave when an office is closed for Christmas. Where those clauses are available and applicable, an employer can require an employee to take annual leave in accordance with them.
Shutdown clauses may offer a practical alternative to a stand down that enables employees to be paid while simultaneously reducing the accrued annual leave on the employer’s books.
Where modern awards and enterprise agreements apply but lack shutdown clauses, an employer may not necessarily be able to direct an employee to take accrued annual leave.
Depending on the enterprise agreement, an employer may be able to incorporate and apply any available shutdown clauses from an underlying modern award. However, where the modern award is silent altogether, the only option is for an employee to agree to take annual leave.
For an award-free or agreement-free employee, section 94(5) of the Fair Work Act 2009 (FW Act) allows employers to require the employee to take annual leave if the requirement is reasonable. This reasonableness restriction applies when attempting to rely on a shutdown clause in a modern award or enterprise agreement (section 93(3) of the FW Act).
Whether or not a requirement to take leave is reasonable will involve consideration of the employee’s needs and employer’s business needs, any agreed arrangement with the employee, custom and practice in the business, as well as matters pertaining to the direction itself such as the timing of the direction, and the reasonableness of the notice given to the employee to take leave.
If the business cannot operate, it may be appropriate to consider having employees access paid annual leave or, as a last resort, standing down some or all employees.
Casual employees aside, where an employee is ready and willing to work, it is the employer’s responsibility to provide the work or pay wages if work cannot be provided.
If an employer decides to stand down an employee, they are not required to pay wages when work cannot be provided. However, an employer does not have an automatic right to stand down employees and must therefore rely on stand down enabling provisions contained in either:
Under section 524(1)(c) of the FW Act, an employer may stand down an employee without pay if there is nothing useful for an employee to do during the stand down, and the reason for that is a stoppage of work for which an employer cannot reasonably be held responsible.
While flooded premises may justify this, careful consideration should be given to how the work is affected.
A stoppage of work requires a complete cessation of activity. Therefore, a simple disruption to, or reduction of work, will not suffice.
Only the work needs to stop, not the business itself. Different operations within a business may be affected differently. But, where the business cannot trade at all (despite limited administrative work being able to be performed), a stand down may still be appropriate.
Under the FW Act, implementing a stand down is entirely an employer’s decision. While there are no requirements to consult with or notify employees of this decision, employers should be aware of any separate consultation obligations that may apply.
A modern award or enterprise agreement may have separate consultation clauses for major workplace changes. This may, for example, require an employer to engage in prescribed consultation processes for employees being stood down, or colleagues of those being stood down, if the stand down is likely to have a significant effect on their employment. Whether or not it is required, it may be best practice to consult employees about a decision to stand down to help reduce the risk of a dispute from an aggrieved employee.
Where an enterprise agreement or contract enables an employer to stand down employees in the same circumstances as the FW Act, an employer must rely on those clauses instead of the stand down provisions in the FW Act.
Employers should be aware of an employee’s entitlements to leave, including unique entitlements that may be available under an enterprise agreement or a workplace policy.
Under the National Employment Standards, an employee may also be able to access:
Where an employee has been stood down and seeks to access accrued leave, they may not be entitled to be paid for that leave unless it has been authorised by their employer.
Each business is unique and the best solutions for managing your workforce following a natural disaster will vary in both effectiveness and suitability for each business.
If employers can reach an agreement with their employees, this is always preferable to unilateral action by the employer, but the law does offer some lifelines for business if agreement can not be achieved.
In summary, if employers are unsure about their rights and obligations during a natural disaster, a consultation with their solicitor can make the difference between navigating their HR challenges relatively unscathed and entering stormy weather of a different type after the floodwaters have subsided.
If you or your business needs advice about managing your staff through to the other side of these latest challenges, please contact us or send us your enquiry here.
Authors: Edmund Burke & Aiyana O'Meara
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.