THE Victorian Automobile Chamber of Commerce (VACC) has revealed that it has been inundated with calls from some of its members about standing down staff because of the impact of the current coronavirus outbreak on their businesses.

In a bulletin to members, the VACC said “there is general confusion across industries regarding the ability of businesses to stand down staff” so it sought legal advice regarding issues relating to the issue.

Legal counsel was briefed to answer questions on the following:

• Temporary closure for mandated sanitising of the workplace. If the Victorian health department or Worksafe Victoria (or equivalent state department) orders the temporary closure of a business unit or the entire business because an employee (or employees) of a VACC member was diagnosed with the coronavirus and the business was ordered to sanitise their business, could the VACC member stand down their employees without pay or would the VACC member need to pay ordinary wages to the fit and work-ready employees who cannot be usefully employed?

Legal counsel response: Yes, an employer may stand down its employees without pay (in accordance with S.524(3) of the Fair Work Act) if they cannot usefully be employed because of a stoppage of work caused by the closure of business operations for a period to sanitise as required by an order of a relevant Victorian government agency (or other state government authority) for which the employer could not reasonably be held responsible.

• Question relating to stand down where a business is subject to an enforceable government direction to close down. If the state or federal government orders the ceasing of all work/trade activities in Victoria (and any other state) due to the spread of the coronavirus and VACC members would be compelled to close down their businesses, could a VACC member stand down its employees without pay when it closes its business?

Legal counsel response to question: Yes, an employer may stand down its employees without pay (in accordance with S.524(3) of the Fair Work Act) if they cannot usefully be employed because of a stoppage of work caused by the cessation of all work or trading activities in Victoria (or any other state) ordered by the state or federal government due to the spread of the coronavirus, for which the employer could not reasonably be held responsible.

• Question relating to implementing stand down – offer to take leave. Before standing down an employee without pay pursuant to subsections 524(1c) and 524(3) of the Fair Work Act at present (when Australia is experiencing the coronavirus pandemic), is an employer obliged to offer to an employee the opportunity to take the employee’s accrued annual leave or long service leave?

Legal counsel response: The better option is an employer is obliged to offer to an employee the opportunity to take some or all of the employee’s accrued annual leave or long service leave before standing down an employee without pay pursuant to subsections 524(1c) and 524(3) of the Fair Work Act. This is because it is only when that leave has been exhausted or declined to be used by the employee that it can accurately be said that the employee cannot be usefully employed because of a stoppage of work for a cause for which the employer cannot reasonably be held responsible. Fair Work Ombudsman advice is an employee that has been stood down under S.524(1) is entitled to be paid for a public holiday that occurs during the period that they are stood down. S.525b of the Fair Work Act provides that an employee is not taken to be stood down when they are otherwise authorised to be absent from work and a public holiday would fall into that category.

• Question relating to implementing stand down – refusal to grant leave entitlements. Can an employer refuse an employee’s request that their employer allow them to take their accrued annual leave or long service leave before the employer stands them down without pay pursuant to subsections 524(1c) and 524(3) of the Fair Work Act at present (when Australia is experiencing the coronavirus pandemic)?

Legal counsel response: The corollary of the question is that the better view is that an employer should not refuse an employee’s request that their employer allow them to take their accrued annual leave or long service leave before the employer stands them down without pay pursuant to subsections 524(1c) and 524(3).

The VACC also said that the onus is on the employer to prove whether employees could not have been usefully employed because of a stoppage of work for any cause for which the employer could not reasonably be held responsible.

Legal advice is that if there is work for the employee, despite the restrictions (eg, social distancing) imposed as a result of the coronavirus, then they should be permitted to do that work and should not be stood down.

• Question relating to end-of-employment (redundancy) situation where the business owners themselves decide to close down after experiencing a downturn in trade caused by the coronavirus-related changes in the marketplace and in consumer sentiments.

Legal counsel response: Yes, an employer would need to comply with S.119 Fair Work Act redundancy pay obligations if it retrenches an employee (terminates employment on the basis of redundancy) because they no longer want anyone to do the job the employee was doing (permanently) because it has closed part or all of its business permanently.

By Neil Dowling