In this article, we answer some of your questions about the unpaid stand-down provisions of the Fair Work Act and detail recent changes to legislation and modern awards to deal with the employment implications of COVID-19.

Unpaid stand-down

The unpaid stand-down provisions of the Fair Work Act have attracted considerable attention in recent days as employers respond to the direct and indirect effects of COVID-19 on their business.  The provisions permit an employer to stand down an employee without pay where the employee cannot usefully be employed because of a stoppage of work. The stoppage may be for any reason provided that the employer cannot reasonably be held responsible for the stoppage.

We answer some common questions from clients which have arisen in connection with the standing down of their employees. Employers with enterprise agreements should consider the provisions of their agreements regarding the following questions.

1. Is annual leave available during a period of unpaid stand-down?

Yes, annual leave may be taken by an employee during a period of unpaid stand-down provided that the employer approves an employee’s application for leave.  Under the Fair Work Act, an employer must not unreasonably refuse an employee’s request for leave.

2. Is a period of unpaid stand-down continuous service?

Under the Fair Work Act, unpaid stand-down is regarded as continuous service for the purpose of service related entitlements. This means that annual leave and personal carer’s leave will continue to accrue during unpaid stand-down.  Unpaid stand-down will also count as service for the purpose of determining redundancy pay and notice of termination under the Fair Work Act and for when qualifying for unpaid parental leave.

3. Is personal/carer’s leave available during an unpaid stand-down?

The Federal Court has ruled that employees who are stood-down without pay under the Fair Work Act are unable to access paid personal-carer’s leave and compassionate leave (PCL). The ruling concerned the pre-JobKeeper stand-down provisions under the Fair Work Act in a challenge by several trade unions to a decision by Qantas not to provide PCL to employees.  

Central to the Court’s ruling was its characterisation of PCL as a form of income protection for workers when they’re unable to work due to for example, illness or injury.  An employee who’s stood-down without pay has no income to protect and has no requirement to work. Paying PCL to such an employee would be inconsistent with the purpose of the leave. 

During a period of unpaid stand-down, the Fair Work Act provides that an employee is not taken to be stood-down if the employee is:

• taking paid or unpaid leave that is authorised by the employer; or
• otherwise authorised to be absent from his or her employment.

The Court found neither of these two circumstances entitled a stood-down employee to PCL:  

• as PCL is an entitlement to not attend work, PCL is not leave authorised by the employer because the employee is not performing work in the first place; and 
• PCL is not an authorised absence from their employment.  This expression refers to specific entitlements under the Fair Work for an employee to be absent from their employment, such as jury service or for absences in respect of community service activities.

We’re yet to see whether the unions will appeal the Court’s decision. 

4. Are permanent employees entitled to paid public holidays during an unpaid stand-down?

The answer is “yes”. 

Under the Fair Work Act, an employee is entitled to be absent from work on public holidays and be paid for the ordinary hours they would have normally worked. 

During a period of unpaid stand-down, public holidays qualify as an authorised absence from employment and are deemed not to be unpaid stand-down. Accordingly, the normal payment provisions (above) will apply for employees not working on a public holiday.

5. Can an employee resign during unpaid stand-down?

The answer is “yes”.

The Fair Work Act provides that the effect of stand-down is to remove the employer’s obligation to pay the employee.  Case law similarly refers to stand-down as a unilateral right of the employer to withhold work and payment. The employment and the employment contract continue during the stand-down and other obligations of the parties are not suspended.  In our view, this means either the employee or employer may terminate the employment during a period of stand-down. 

Accordingly, an employee who is stood-down may provide notice of termination under their employment contract and their employment will terminate upon the expiry of their notice period.  If the employee remains stood-down for the duration of their notice period, they are not entitled to their normal salary or wages, nor any payment in lieu of notice upon termination.  Any untaken statutory entitlements would be payable as normal on termination.

Changes to NSW long service leave

The NSW Government has amended the Long Service Leave Act 1995 (NSW) through special COVID-19 provisions to make it easier for employees to take long service leave during the current crisis.  

The amendments to the legislation are:

• employees who don’t have an entitlement to take long service leave may now (by agreement with their employer) take long service leave in advance of less than one month.  The normal rule is that long service leave in advance must not be less than one month;
• for employees with an entitlement to long service leave, the employer may now (by agreement with the employee) give employees less than one month’s notice to take their long service leave. The normal rule is that employers must provide at least one month’s notice to employees to take leave.

From 25 March 2020, the above changes to the long service leave legislation will have effect for six months with a six-month extension available to the Government.

Modern award changes

The Fair Work Commission (FWC) has implemented changes to the Hospitality Industry (General) Award, the Clerks Private Sector Award and the Restaurant Industry Award in response to the impacts of the COVID-19 pandemic.

Hospitality Industry (General) Award

These following changes will operate until 30 June 2020, with the possibility of extension on application.

The key amendments to the modern award include:

• an employer may direct full-time employees to work an average of between 22.8 and 38 ordinary hours per week compared with the normal award provision for a full-time employee of an average of 38 hours per week.  Full-time employees working reduced hours will be paid on a pro-rata basis;
• an employer may direct part-time employees to work anywhere between 60-100% of their ordinary hours each week or during their roster cycle;
• the employer must comply with the consultation provisions of the modern award (relating to changes to hours of work) before issuing a direction to full-time or part-time employees to reduce their hours of work as above;
• a full-time or part-time employee who is directed to work less hours will continue to accrue and take annual and personal leave based on their ordinary hours of work prior to the commencement of these amendments to the modern award;
• an employer may, subject to considering an employee’s personal circumstances, give 24 hours’ notice to employees to take annual leave. Further, an employer and employee may agree that the employee will take twice as much annual leave at half the rate of pay for all or part of any period of annual leave; and
• employers may direct any employees to perform any duties within their skill and competency regardless of their classification under the modern award.  However, the higher duties allowance will still apply.

Link to the amendments: Hospitality Industry (General) Award 2020 

Clerks Private Sector Award

The changes below are effective from the first full pay period to commence on or after 28 March 2020 and cease to operate on 30 June 2020 unless extended by the FWC.

Key amendments to the modern award include:

• by agreement with 75% of full-time and part-time employees in a workplace or section of a workplace, ordinary hours of work may be reduced by up to 25% for both part-time and full-time employees. In such circumstances, an employee’s ordinary hourly rate will be maintained but the weekly wage will be reduced by the same proportion;
• during any period of reduced ordinary hours, all relevant accruals and all entitlements on termination will continue to be based on each employee’s weekly ordinary hours of work prior to the commencement of these changes;
• employers may agree with individual employees to take up to twice as much annual leave at a proportionately reduced rate for all or part of any agreed or directed period away from work;
• employers may require an employee to take annual leave as part of a close-down of its operations, or part of its operations, by giving one week’s notice. However, any period of unpaid leave will count as service for the purpose of the modern award and National Employment Standard entitlements;
• employers may roster part-time and casual employees working from home by agreement with their employer for a minimum of 2 hours, instead of the previous 3 hours;
• the spread of ordinary hours of work for full-time employees working from home by agreement with the employer are now between 6:00am and 11:00pm, Monday to Friday, and between 7:00am and 12:30pm on Saturday; and
• employers are provided with operational flexibility to direct employees to perform any duties within their skill and competency regardless of their classification under the modern award. However, an employer may not reduce an employee’s pay if directed to perform duties associated with a lower classification.

Link to the amendments: Clerks—Private Sector Award 2020

Restaurant Industry Award

The changes below are effective from the first full pay period to commence on or after 31 March 2020 and cease on 30 June 2020, unless extended on application.

Key amendments to the modern award include:

• employers may direct full-time employees to work an average of between 22.8 and 38 ordinary hours per week, and the employee will be paid on a pro-rata basis;
• employers may direct part-time employees to work an average of between 60% and 100% of their guaranteed hours per week, or an average of between 60% and 100% of the guaranteed hours per week over the roster cycle;
• the employer must comply with the consultation provisions of the modern award (relating to changes to hours of work) before issuing a direction to full-time or part-time employees to reduce their hours of work as above;
• any and all annual, personal and applicable accruals under the award continue based on the employee’s ordinary hours of work prior to the amendment;
• employers may, subject to considering an employee’s personal circumstances, direct employees to take annual leave with 24 hours’ notice. In such circumstances, both parties may agree to the employee taking twice as much annual leave at half the rate of pay for all or part of any period of annual leave;
• employers may require employees to take annual leave as part of a close-down of its operations, or part of its operations, by giving at least one week’s notice, or any shorter prior of notice that may be agreed;
• any period of unpaid leave in a close-down will count as ‘service’ for the purposes of accrual and NES entitlements; and
• employers may, where necessary, perform any duties within their skill and competency regardless of their classification under the modern award provided that the duties are safe and the employee is licenced and qualified to perform them. The higher duties allowance will still apply.

Link to the amendments: Restaurant Industry Award 2020

If you have any questions regarding the management of your workforce through this crisis, please do not hesitate to contact our Employment lawyers.