Many employers have sought to stand down parts of their workforce without pay in response to the changing environment created by COVID-19. Strict requirements apply to do so validly under the Fair Work Act 2009 (FW Act). The recent Peninsula Grammar School decision demonstrates the Fair Work Commission’s approach of invalidating stand downs based on a mere reduction in available work.
Section 524(1)(c) of the FW Act allows employers to stand down employees without pay if they “cannot be usefully employed” in circumstances where there is “a stoppage of work for any cause for which the employer cannot reasonably be held responsible.” The Peninsula Grammar School’s decision to stand down two classroom assistants and a library technician under section 524 during Melbourne’s Stage 4 lockdown was successfully challenged by the Independent Education Union of Australia.
The school, which continued to operate and deliver remote learning during the stand down period, argued that the “stoppage of work” requirement under section 524(1)(c) does not require work to stop altogether. Commissioner Bissett said that while this may be the case, there must be some defined aspect of business activity with respect to which the performance of work has stopped. Mere disruption to the way work was performed was found to be insufficient. To the extent the library work and classroom teaching could be classified as distinct parts of the school’s business activities, the Commissioner held that, despite the reduction in available work, there was no stoppage as contemplated by section 524(1)(c) of the FW Act. The employees were therefore not validly stood down.
The school also claimed that there was a lack of any “useful” work available for the three employees to perform when the school returned to remote learning. Although it was clear that some of the work of the library had ceased, the Commissioner held it could not be said that there was no useful work to be performed. The school’s desire that certain library work not be performed, such as updating and maintaining the catalogue and relabelling books (work that was not a “high priority” for the school), did not support a finding that there had been a stoppage of work reasonably beyond the control of the school.
Commissioner Bissett was also critical of the school’s submission that the presence of the classroom assistants would be a “distraction” to teachers delivering online classes. Not only did this fail to address the question of whether or not there had been a cessation of the business activity the classroom assistants were involved in, but it strongly suggested that the removal of the classroom assistants from their roles was “a decision of the school” and “a matter within the control of the school.”
The decision resulted in the employees who were improperly stood down returning to work, and also opened arguments for the employees to claim unpaid wages for the invalidated stand down period and to seek to recover penalties for the failure to pay during that period.
The decision to stand an employee down is not one to be taken lightly. The effects on employees are significant and the prerequisites to implement a valid stand down are significant.
Employers cannot institute stand downs under section 524 of the FW Act due to a mere decline in business or reduction in the amount of available work because of a disruption to how that work is performed, as this is not enough to constitute the requisite “stoppage in work”.
There is a fine line between what will be considered to be a genuine lack of useful employment on economic grounds versus a decision taken by an employer to avoid additional, unexceptional costs.
Ultimately, stand down is not an automatic safeguard for employers against economic loss and not a decision to be taken solely to resolve financial strain. The prerequisites to take this drastic action must be satisfied.
The full decision can be found here.
If you have any concerns about whether your business has validly implemented a stand down, or whether it could do so, please contact our team to discuss.
Authors: Benjamin Marshall & Ella Clements
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