We can no longer operate our business under Stage 4 restrictions. What do we do with our employees now?

Posted by on Aug 6, 2020

Some businesses in Victoria have been operating for many months now with their employees working from home. For other businesses, due to the nature of their activities, this has simply not been possible. The latest restrictions for business, which came into operation last night, may mean that your business has to close its on-site operations for the next 6 weeks. What will this mean for your employees? In many cases, it will mean a stand down without pay. There are many individual factors that an employer and its advisers must consider when the employer is deciding whether, or how, to stand down employees, and advice about your specific circumstances is critical. However, in general terms, three key considerations for employers will be the following:

1. Are there any alternatives to stand down without pay?

You may have been operating from your work site to date, which may no longer be possible, but are you now able to change how you work? For example, if your business can no longer make sales from its work site, could you move to an on-line or telephone sales model? Could your employees assist with that work? Are there other duties that could be explored? Consider whether there are any alternatives which would enable your employees to keep working to some extent during the restrictions, from home, rather than from the usual workplace.

You should also consider leave balances, and whether employees could be requested or directed to take their accrued leave during the Stage 4 restrictions. For some employers, the applicable award or enterprise agreement, or the employment contract with your employee, may affect what you can do in terms of directing (as opposed to requesting) that employees take leave. But if the choice is between being stood down completely without pay, and taking their accrued leave, most employees will agree to the latter.

2. What type of stand down powers do you have? 

There are at least two types of stand down powers, however these may not be applicable to you as an employer. The first type, being the Jobkeeper enabling stand down direction under Part 6-4C of the Fair Work Act (FWA), applies only to those employers who have qualified for the Jobkeeper scheme. Jobkeeper enabling stand down directions allow an eligible employer to stand down an employee either in full, or in part, provided certain requirements are met. For example, in some instances, an eligible employer could stand down a full-time employee four days per week, and not five, if the employee can still be usefully employed one day per week during the restrictions. If the employee cannot be usefully employed at all, then they could be stood down entirely.

The second type of stand down, being a stand down under Part 3-5 of the FWA, is different and is not limited only to employers who have qualified for Jobkeeper. If you are an employer who has not become eligible for Jobkeeper, then in order to stand employees down under this Part you need to ensure you comply with all the requirements. For example, to stand down an employee under this Part you must be able to demonstrate that the employee cannot be usefully employed because of a stoppage of work for which you cannot reasonably be held responsible. Government restrictions requiring you to close your work site may result in such a stoppage. However, you must first consider whether there are alternative duties that your employees could perform from home before you make any decision to stand them down.  

If government restrictions have not caused a closure of your entire worksite, but a partial closure or a required reduction in output, you will need to seek further advice about the options available to you.  

3. Do you have to pay your employees whilst they are stood down?

Ordinarily when an employee is stood down this means they are stood down without pay.  They do not work and they are not paid. There are however some exceptions to this. 

For example, employees can access some types of paid leave entitlements, such as annual leave, after being stood down. If they take leave, then they are not technically stood down, and so need to be paid for that leave.

Another instance in which employees will need to be paid whilst stood down is where they are eligible for Jobkeeper.  Employers already in receipt of Jobkeeper payments will be aware how the scheme works. Where an employee is stood down in full, the employer must first pay the employee $1,500 per fortnight and then be reimbursed by the Commonwealth. Other rules and amounts may apply where an employee is stood down in part (under a job keeper enabling stand down direction) but payment must always be made to the employee first, and then the employer is reimbursed $1,500 per fortnight.

Employers who have not qualified for Jobkeeper to date, but who expect to become eligible for the Jobkeeper scheme this month as a result of Stage 4 restrictions, need to ensure they understand how the Jobkeeper scheme works. Paying employees first, including those employees stood down “without pay”, and then obtaining reimbursement afterwards, can pose a challenge for some employers but is a feature of the scheme.

As with many aspects of the pandemic, the current restrictions are unprecedented and navigating your legal obligations can be incredibly challenging. If you have any questions about managing your workforce through this period, please contact the team at Justitia on (03)8621 4500 or info@justitia.com.au