What do we know about the extent of stand downs, their legal basis, and challenging unlawful stand downs?
24th April, 2020
Anthony Forsyth, RMIT University and Labour Law Down Under Blog – an edited version of this post was published in today’s Sydney Morning Herald: Know your rights and stand up to unjustified staff stand downs. A link is provided below to a PDF document showing incidence of COVID-19 stand downs based on media reports (19 March-20 April 2020).
Over the last month, we have become all-too-familiar with a very old concept in employment law: stand downs.
Government restrictions to contain COVID-19 have had a devastating economic impact, leading to widespread business closures and changes to operations. Employers have been faced with very difficult decisions about what happens to their staff.
Stand downs – requiring employees not to attend or perform work for a period of time, and not paying them – have been a widespread business response to the crisis.
My preliminary analysis of media reports over the period 19 March to 20 April revealed that stand downs have been put in place by businesses across the economy, particularly in: aviation, tourism, resources, hospitality, sport, gaming, retail, the arts, entertainment, leisure, media, health care, local government and secondary education.
This analysis can be accessed here (the section on layoffs is not yet complete): Stand downs & redundancies – COVID-19, Australia (at 21 April 2020)
These media reports indicated that a total of 136,585 employees and a much larger unspecified number had been stood down. The true figure is hard to pin down, but it is likely to be in the hundreds of thousands. A recent ABS survey showed that 9% of businesses had stood staff down or put them on unpaid leave by early April. And the Grattan Institute has forecast that between 1.9 and 3.43 million could be forced out of work in the period ahead (with stood down workers forming part of that number).
There is no question that many of these stand downs have been part of a necessary business response to the pandemic. But in some cases, stand downs will not have met the requirements of the Fair Work Act: that employees cannot be usefully employed because of a stoppage of work for which the employer cannot reasonably be held responsible.
This test will clearly have been met, for example where a restaurant or café has had to close indefinitely in accordance with Stage 3 restrictions. On the other hand, what about an IT or engineering firm that has lost contracts, but still has work available for some staff on other projects? Or regional newspapers that have stood down staff after axing their print editions, but are still producing an online publication?
Very few stand downs are being contested. However through dispute proceedings in the Fair Work Commission, the Independent Education Union has obtained a back-down from Haileybury College in Melbourne on proposed stand downs of more than 30 music teachers. The union is still in dispute with Ivanhoe Grammar over the standing down of many non-teaching staff members. The IEU’s argument is that there is other valuable work these employees could be doing, and some employers are opportunistically using the crisis to balance their books through unnecessary stand downs.
Employer stand down powers have been bolstered through the legislation implementing the federal government’s JobKeeper wage subsidy scheme. A business that is receiving the $1500 JobKeeper payment for an employee can direct the employee not to work, or to work a reduced number of hours, if they cannot be usefully employed as normal. This situation must have arisen because of necessary business changes attributable to the pandemic or government initiatives to slow the transmission of COVID-19.
This is an easier test to satisfy than the one in the Fair Work Act, which includes the difficult to define concept of a ‘stoppage of work’ as a trigger for stand downs. Even so, a JobKeeper-related stand down direction must not be ‘unreasonable in all the circumstances’. This could provide a basis for challenging, for example, stand downs of certain employees in a workplace rather than others – where there is no legitimate business rationale for this decision.
Then there is the treatment of workers once stood down. Under the Fair Work Act, the effect of a stand down is that the employee is not paid but continues to accrue annual and personal leave. This is ameliorated to some extent by JobKeeper, which will ensure that those stood down receive at least $1500 per fortnight (where they and their employers are eligible for the scheme).
Some businesses have required staff to draw on their annual leave or long service leave entitlements while stood down. JobKeeper facilitates this, by enabling an employer to request that a JobKeeper recipient take paid annual leave – as long as the employee will still have at least a two-week leave balance – a request which the employee ‘must not unreasonably refuse’.
Another area of dispute has been sick leave. Unions have initiated FWC and Federal Court actions against Qantas over its refusal to allow its 20,000 stood-down staff to access their sick leave entitlements. This includes those with long-standing illnesses or injuries and those who have been exposed to coronavirus. The airline relies on a technical legal argument that employees cannot be unfit for work (and therefore on sick leave) when there is no work to be absent from (because of stand downs). But there is an equally plausible argument that if annual leave is available to stood down workers under the Fair Work Act, then so is sick leave (see this earlier post).
Some might say that the Qantas workers should consider themselves lucky to be in a job, given the plight now facing their counterparts at Virgin as it entered into administration this week. However the supposed ‘Team Australia’ moment created by this crisis should not be considered a green light for the mistreatment of workers, especially those who are most vulnerable.
Vigilance is needed to ensure that there is a proper legal basis for all stand downs, and in the application of the very wide new powers given to employers under the JobKeeper rules.