Blog

Illegal stand downs and compensation

29/10/2020

When the COVID pandemic came to Australia and state and territory governments introduced restrictions businesses were forced to stop or limit trading. This has a flow on effect to employees who faced the prospect of reduced hours or redundancy.

In response, the Commonwealth Government introduced the Jobkeeper scheme with the stated aim of keeping employees employed during a time when employers often had severely reduced revenue. The trade-off was that any employee who qualified for Jobkeeper was subject to directions which would normally be illegal, such as directions to stand down or reduce hours or move jobs.

However, employees who did not qualify for Jobkeeer were still subject to the general law and therefore was not a general right to stand the employee down or reduce hours.

The general position, both according to the Fair Work Act 2009 (Cth) and most employment contracts, is that if an employee is able to work the employer must provide them with work and pay them. Section 524(c) of Fair Work Act 2009 (Cth) allows a stand down in the event of ‘a stoppage of work for any cause for which the employer cannot reasonably be held responsible’ however this has limited application.

A stoppage means just that – it is a stoppage but not a reduction. For example, if an employee works at a gym as a personal trainer which cannot open due to government restrictions there is a stoppage, however if a barista works at a café which has its output reduced to 20% of normal, there is no stoppage but simply a reduction.

If there is a reduction in the need for employees then a business must proceed with redundancies or pay the employees – there is no right to stand an employee down.

Accordingly, if an employee not receiving Jobkepper was stood down, or if a stand down operated outside of the application of the Jobkeeper scheme, it is likely the employee can claim compensation for lost income.

Of course, this would not apply if an employee genuinely agreed to reduced hours, which could occur if a workforce was seeking to reduce the risk of redundancies, and if it did occur an employee does not need to seek compensation (they may just happy to have a job) but in the most serious cases there may be months of back pay owed.

Given the complexity around the interplay between the Jobkeeper scheme and the Fair Work Act 2009 (Cth) and practical considerations such as the current job market any employee in this situation is encouraged to seek legal advice before taking action.