Commission throws lifeline to help employers keep struggling businesses afloat
Employers finally have more clarity regarding the circumstances in which they can lawfully "stand down" employees under the pre-existing provisions of the Fair Work Act 2009 (Cth) (the Act), after a significant ruling by the Fair Work Commission (the Commission).
In particular, the Commission has given much anticipated guidance on the legislative criteria of "useful employment" and "stoppage of work", set out in the pre-existing stand down provisions of the Act, in the context of the COVID-19 crisis.
This decision considers the pre-existing stand down provisions of the Act available to those employers who do not qualify for the JobKeeper Scheme.
Key takeaways from the decision:
A mere reduction in available work will generally not amount to a "stoppage of work".
An employee's role may be considered useful, but not the individual employee. It is the employee's role, and not the individual employee, that is relevant to the assessment of "useful employment".
An employee may be stood down notwithstanding that some of the ordinary duties of that employee's role are temporarily re-allocated to other employees.
A decision to stand down an employee is not necessarily unfair simply because an employer acts out of self-preservation in order to limit any economic consequences.
On 25 May 2020, in Michael Marson v Coral Princess Cruises (N.Q.) Pty Ltd T/A Coral Expeditions [2020] FWC 2721, the Commission ruled against an employee, who argued that his employer, Coral Expeditions, was not justified in standing him down because there was work available for him to do, and his employer had transferred some of his ordinary duties to other employees.
Coral Expeditions, a pandemic-affected cruise operator, had stood down half its workforce as a result of the government-mandated suspension of its business.
In reaching its decision, the Commission examined the employer's right to stand down employees, being the right to effectively freeze the employment of an employee without pay, under section 524(1) of the Act, including the principles of "useful employment" and "stoppage of work".
With regard to "useful employment", the Commission held that a role can be considered useful, but not a particular individual, meaning that an employer can reallocate to another employee the tasks of a worker who has minimal useful work available.
The Commission added that where an employer is acting out of self-preservation, it is difficult to contemplate how their actions would be outside the realms of good faith or fairness.
Turning to the question of "stoppage of work", the Commission rejected the notion that a "mere reduction" in work satisfies the requirement, holding that a stoppage of work occurs when a business' activity or primary function ceases as a consequence of factors outside its control.
In this case, the relevant "activity" of Coral Expeditions, the carriage of passengers on cruise holidays, had entirely halted. On that basis, the Commission found that there had been a genuine stoppage of work regardless of whether some administrative functions continued to be required, as those administrative functions did not represent the "activity" of the business.
As we continue to sail through the unchartered waters of the COVID-19 pandemic, this decision marks another relief for employers attempting to salvage their business operations in an effort to stay afloat.
For more information about the operation of the stand down provisions, as well as the recently introduced JobKeeper legislation, Brown Wright Stein's employment team is hosting free webinars for employers.
Please contact our employment team for more information.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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