Lockdown 4.0 – Can employees be stood down in a lockdown?
Victorian businesses have taken another blow – the 7 day ‘circuit breaker’ has been extended. Many businesses were holding their breath and hoping that the circuit breaker would be short but now, in light of the recent extension to lockdown, business owners and employers are having to make really hard decisions. Do they temporarily close their business or do they try and keep going?
Businesses, for the most part, have been trying to look after their employees. But there is only so much financial burden an employer can bear. Now, employers are considering whether to stand down employees or make them redundant. Difficult decisions need to be made.
Employers can stand down employees when they cannot be usefully employed because of a stoppage of work for any cause that an employer cannot reasonably be held responsible. Normally, a downturn in trade is not a stoppage, but if employees are prevented from going into work or otherwise prevented from doing their work, a stoppage of work may have occurred.
The ability to stand down employees is limited and advice should always be sought before standing people down. Contracts of employment, awards and enterprise agreements should be reviewed to ensure that you are following the correct process to stand down employees.
Standing down employees means that your employees are taking unpaid leave. Whilst employees are not getting paid during a standdown (unless employees have elected to use up leave entitlements), employees are still accruing benefits such as annual leave, personal leave and public holiday leave.
Before standing down an employee, the following should be considered:
1. Are there any other alternatives to stand down? Can duties be changed or hours or rosters? Is working from home an option? Can the business afford to allow employees to use up any accrued holiday leave? (Note, an employee who is paid holiday leave is not stood down, but can be stood down without pay after annual leave is exhausted).
2. Can the employee be usefully employed elsewhere within the business? An employer must be able to evidence that they have taken reasonable steps to find useful employment for their employee(s).
3. Consult with your employees regarding the possibility of a stand down. Whilst this isn’t always possible, if you can consult, do.
4. If not standing down your entire workforce, establish an objective criterion for selecting those employees that are the subject of a stand down. It is important to ensure that the burden of the stand down is fairly distributed amongst your employees.
5. Seek legal advice before taking any steps to stand down your employees.
If a stand down is not possible for your business, you may need to make changes to the structure of your business. These changes may result in positions being made redundant. There are established processes for redundancy and advice should be sought before embarking down the redundancy process.
Millens is experienced in advising employers in relation to managing their workforce. If you would like to discuss any of the issues raised in this article, please contact Sally Lloyd on 0455 100 699.
Please note that given every workplace and business is unique, advice should always be taken in relation to your specific circumstances. The above information is generic advice only and should not be construed as being appropriate for your specific circumstances.