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Industrial Relations in Review – March 2019

Stage 1 Lockdown – What Does This Mean For Your Business?

With the announcement last night (22nd of March) that the following businesses will be shut down from midday 23rd of March, every business should now assess what it will mean for their business if a shutdown is imposed at a later stage.

  • Pubs and clubs
  • Casinos
  • Gyms
  • Cinemas
  • Places of worship
  • Restaurants and cafes (takeaway still allowed)
  • Indoor sporting venues

The below information has been developed to provide you with an overview of all of the options you have.

Option 1: Working from home

Many businesses (that were able to) have already moved to a working from home model. If you haven’t done this and are able to, you should consider if any of the roles your employees perform on-site can be performed remotely.

To support with this Liquid HR has a developed a working from home policy and a working from home online training module that can be rolled out to employees. This is available to all Liquid HR clients – please get in touch if you would like a copy.

Option 2: Taking accrued annual leave and long service leave

You may wish to provide your employees with the option to take their accrued annual leave and long service leave whilst the business is locked down and they are unable to perform their role.

Any direction to take any leave needs to be in accordance with the modern award that applies to the employee. If the employee is award free, then the default provisions of the Fair Work Act 2009 will apply, which state

An employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable.

Note:          A requirement to take paid annual leave may be reasonable if, for example:

(a)    the employee has accrued an excessive amount of paid annual leave; or

(b)    the employer‘s enterprise is being shut down for a period (for example, between Christmas and New Year).

Note: excessive is not defined in the Act, but most modern awards state 8 weeks.

Option 3: Standing down employees

There are situations (such as orders by the government to close all non-essential services) that may arise in the workplace that an employer cannot reasonably be held responsible for, and which may require a workplace, or part of a workplace to shut down its operations for a period of time.

The right to stand down employees must be in accordance with the terms of an employment contract and/or Enterprise Agreement (where applicable). If both of these items are silent on the matter, then employers must refer to the default provisions of the Fair Work Act 2009 (The Act) and any employer policy that refers to a stand down.

The Act provides the circumstances for which an employer can stand down employees. The effect of standing down an employee is that the employer is not required to make payment for ordinary hours of work to the employee for that period.

Section 524 of the Act states:

  1. An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
  2. industrial action (other than industrial action organised or engaged in by the employer);
  3. a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
  4. a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

Where any of the above circumstances apply, an employer may stand down an employee for a period. The relevant section here for the shutdown that has been announced for some businesses is section 524 (1) (c).

With respect to section 524(1)(c), a stand down may only apply where the employer cannot reasonably be held responsible for the stoppage of work. As such, if the business can continue to operate and the employee can still be usefully employed, then you are unable to apply the stand down provisions.

You cannot rely on the stand down provisions because the business is experiencing a downturn and requires less employees to attend work. This is because a stoppage of work has not occurred.

The stand down provisions at the moment are only applicable to businesses that have been forced to close due to government directions i.e. pubs, clubs, gyms etc referred to at the start of this article.

How do I stand down employees?

If you are comfortable that you meet the above requirements (an employee cannot be usefully employed due to a stoppage of work that you cannot reasonably be held responsible for), then you can stand down employees. To do this, you should advise the employees face to face. You should outline:

  • the reasons for the stand-down
  • what it means for them in terms of payment of wages (unpaid)
  • The date in which the stand-down will commence
  • The expected period (or at a minimum the date in which the organisation will review the stand down imposed)
  • The access employees may have to any annual leave/long service leave entitlements
  • Financial options to the employees whilst they are stood down

You should then notify the employees in writing of the stand down. Liquid HR has developed a template letter for clients to assist with this. Please get in touch to request a copy.

What are our obligations to employees whilst stood down?

During a period of stand down you are not required to pay an employee for the stand down period. If you are able to do so, you can choose to pay employees at your discretion. If you choose to do this, you should advise the employees of the amount of payment the business will be making whilst the employee is stood down. It is important to make employees aware that the payment is discretionary and not an entitlement.

Employees will also accrue annual leave and personal/carers leave whilst they are stood down. This is different to most other forms of unpaid absence under the Act.

If employees have a company car, you may wish to contact the insurance company to determine if the business insurance policy will cover the employee driving the vehicle whilst stood down.

Can I stand down employees who are already on leave?

Under section 525 of the Act (below) an employee may not be stood down when the employee is taking a period of paid or unpaid leave that is authorised by the employer or the employee is otherwise authorised to be absent from their employment.

Section 525 of the Act states:

An employee is not taken to be stood down under subsection 524(1) during a period when the employee:

(a) is taking paid or unpaid leave that is authorised by the employer; or

(b) is otherwise authorised to be absent from his or her employment.

Note: An employee may take paid or unpaid leave (for example, annual leave) during all or part of a period during which the employee would otherwise be stood down under subsection 524(1).

 What can happen if an employee believes we don’t have grounds to stand them down?

 The following individuals/organisations can make a claim to the Fair Work Commission to deal with a dispute regarding the stand down provisions

  • An employee who has been, or is going to be stood down under the Act;
  • An employee who has made a request to take leave to avoid being stood down and whose employer has authorised that leave;
  • A union that is entitled to represent the industrial interests of the employee’s described in the above two points;
  • A Fair Work Inspector.

How can I support my employees?

Delivering news of a stand down is difficult. This situation is likely to place a number of employees under both emotional and financial pressure.

When communicating with employees you should be transparent. Explain the reasons why and answer any of the questions.

Liquid HR has prepared an information sheet for employees providing them with information that can support them in applying for financial and or emotional support through this period. Please get in touch to request a copy. 

Option 4: Redundancy

This option should be considered carefully and as a last resort. No one can predict the future and we don’t know how long the financial impact may continue for your business. You may find yourself in a few months in a better position and needing to invest in recruiting new team members.

Engaging in a redundancy process would involve the following:

  • Identify the position/s no longer required within your business, that will not be required for the foreseeable future by anyone.
  • Confirm that the individual/s fulfilling the impacted role/s cannot be deployed anywhere within the business or within an associated entity of the business. Associated entities are businesses or other bodies that are connected to each other in some way.
  • If you can confirm that the role/s is/are no longer required to be fulfilled by anyone and that the individual/s cannot be redeployed in another area of the business or an associated entity, you are able to look at redundancy options and entitlements.
  • Generally speaking, redundancy is payable as per the provisions of the National Employment Standards (NES) which entitles the employee to redundancy pay based on their length of service. You should also check the employees’ contract of employment to see if it contains redundancy provisions. You are required to apply whichever is more beneficial to the employee. If you have less than 15 employees, there is no requirement to pay redundancy pay.
  • The redundancy process begins with consultation. Consultation involves inviting the employee to a meeting to discuss an organisational change which may have an impact upon their role. It is important to allow the employee 24 hours’ notice of your intention to meet and allow the opportunity for the employee to bring a support person to the meeting.
  • At the initial meeting, conduct the meeting ensuring you:
    – Discuss the applicable changes to the business
    – Discuss the impact these changes have upon the role the employee performs
    – Discuss measures and/or considerations taken into account when determining how to mitigate the impact of these changes on the employee
    – Provide the employee with an opportunity to discuss their thoughts and provide suggestions for alternatives that may not have been considered
    – Allow the employee the opportunity to take some time to think through information discussed, their options and propose any additional alternatives not previously considered
    – Schedule a follow-up meeting to discuss these considerations
  • Where a follow-up meeting has been scheduled, conduct a follow-up meeting to discuss the employee’s considerations/suggestions and invite the employee to discuss any additional items or factors they would like considered before proceeding with the redundancy
  • If the employee provides items for consideration you need genuinely consider these items. This may involve concluding the meeting to research, investigate and consider each item.
  • If the employee does not provide any items for consideration, you can proceed with the redundancy.
  • When proceeding with the redundancy, you can determine if you would like the employee to serve their notice period or if you would like to offer the employee payment in lieu of the notice period.
  • The details of the redundancy should be confirmed in writing to the employee.

If you are looking to make an employee redundant, please get in touch as we can support you through the process.

Further questions?

For more information on the topic, please contact us on 1300 887 458 and speak with one of our HR Consultants. If you are interested in learning more about our HR services, including HR Outsourcing, HR Consulting, HR Advisory Services, contact us at