Working from home has become the predominant way businesses function given the recent effects of COVID-19 closing many workplaces. But what happens to the employees of a business where the essence of the work requires employee attendance and working from home is not feasible, for example in retail or hospitality? In this article, we explore what legal options employers have during this challenging time.

Standing Down

Normally, an employer can direct its employees to take annual leave during slow business seasons such as Christmas and New Year. What about in circumstances that are beyond the employer’s control and the business has to close?

Under the Fair Work Act 2009, an employer may ‘stand down’ an employee without pay during a period in certain circumstances if that employee cannot ‘usefully be employed’. An example of certain circumstances include industrial action, breakdown of machinery or a cause for which the employer cannot reasonably be held responsible.

A stand down happens when an employer sends employees home if there is no useful work for them to do due to the nature of the business and for reasons beyond an employer’s control. Whether an employee can be ‘usefully employed’ is a question to be determined on fact by having concern to the circumstances that warrant the stand down. For example, a retail company may stand down a worker due to a natural disaster as they are unable to be ‘usefully employed’ during this period of time.

Under this provision in the Act, an employer is not required to pay the employee during the stand down period. Full-time and part-time employees will still accrue annual and sick leave.

The repercussions of a stand down can be difficult for employees as they may be deprived of income for a long period of time. It is important that employers review provisions regarding stand down in modern awards, enterprise agreement or employment contracts to make sure that they comply with the relevant provisions.

What if you can still operate but are struggling with the cash flow?

Most employers would consider redundancy. However, you may consider agreeing with your employees to:

  • temporarily reduce their salary;
  • send employees on part paid leave; or
  • send employees on leave without pay
    so that employees can keep their jobs and businesses stay afloat.

Further information

It is important to be fully aware of your obligations and options as an employer during these difficult times. Likewise, employees should be fully briefed on their rights under their employment contracts when they face employment uncertainty. If you would like further information, please do not hesitate to contact one of our experienced employment law solicitors on 9963 9800 or via email at law@etheringtons.com.au.

More information about COVID-19 can be found here: www.health.gov.au