The JobKeeper scheme is due to finish on 28 March 2021, bringing to an end not only the financial subsidy but the ability for an employer to issue a JobKeeper enabling stand down direction requiring that an employee work reduced hours, or no hours at all. For employers that have not fully recovered from the impact of COVID-19, they will instead be reliant on the stand down provisions of the Fair Work Act 2009 (Cth) (the Act), which set a high bar for employers to meet, if they wish to direct employees to stand down without pay.

In recent cases challenging the use of the stand down provisions under the Act by employers who did not qualify for the JobKeeper scheme, the Fair Work Commission has confirmed that employers may only stand down employees where there has been a complete stoppage of work. This must be more than a mere slowing or disruption of operations such as changed office hours, or less production. For employers forward planning the expiry of JobKeeper, they may need to consider other measures to manage their workforce given the narrow operation of the stand down provisions under the Act. This might include obtaining their employees’ consent to temporarily reducing their hours, or using their accrued annual or long service leave. In many cases, when all other avenues are exhausted, redundancies will unfortunately occur.

For employers that qualified for the JobKeeper scheme, JobKeeper enabling directions have provided significant flexibility allowing eligible employers to direct employees to not work on particular days, to work reduced hours, or to not work at all. With the JobKeeper scheme due to end on 29 March 2021, employers will instead need to rely upon the traditional stand down provisions of the Act if they wish to direct employees to remain stood down without pay.

The circumstances in which an employer may stand down an employee under the Act, however, are narrow, and provide much less flexibility than JobKeeper enabling stand down directions.

Under the Act, the stand down provisions in s524(1)(c) provide that an employer may stand down an employee without being required to pay them, if:

(a) “the employee cannot usefully be employed” and
(b) standing them down is “because of…a stoppage of work for any cause for which the employer cannot reasonably be held responsible.”

Comparable stand down provisions may also be set out in employment contracts or an applicable enterprise agreement.

Historically, the courts and tribunals have interpreted an employer’s right to stand down employees without pay as only applying in exceptional circumstances. The starting position is generally that employees who are ready, willing, and able to work are entitled to be paid by their employer when directed not to attend work where there is no work for them to do, unless the employer can show that the employees cannot be usefully be employed for a reason falling within s524 of the Act.

Additionally, stand downs have traditionally been considered to be ‘all or nothing’. Unlike under the JobKeeper enabling directions, it is not possible, for example, to have a two day a week stand down, and continue regular working arrangements on the remaining three days. A stand down under the Act is an entire exclusion of the employee from the workplace until conditions improve enough to reinstate the employee into their pre-stand down situation.

It may be, however, that employees who work within a distinct area or business activity within the company, may be able to be stood down because they cannot be usefully employed due to a stoppage of work within that defined business activity, whereas in other areas of the business employees cannot be stood down because there has not been a complete stoppage and they can still be usefully employed.

The difficulty that many employers will face in looking to the Act to enable the stand down employees post-JobKeeper is that other than during periods of lockdown or government restrictions completing mandating the stoppage of work, their core business activity has not come to a complete halt but rather has faced a significant downturn. Tourism businesses for example, may still be functioning in reliance on domestic tourism and the JobKeeper subsidy, however, they may have faced a significant downturn in trade given the absence of international travellers, and the restrictions on interstate visitors. JobKeeper enabling directions have enabled such tourism businesses to stand down some but not all employees, or uniformly reduce all employees’ hours. Under the Act however, it will not be possible to selectively stand down some employees but not others, or to unilaterally reduce hours where there is some level of the core business activity continuing.

For employers that were not eligible for the JobKeeper scheme, and instead relied upon the stand down provisions of the Act in response to COVID-19, a number of challenges were brought by stood down employees to Fair Work Commission. These cases generally confirmed the directions of the Fair Work Ombudsman that “employers generally can't stand down employees under the Fair Work Act stand down provisions simply because of a deterioration of business conditions”, rather the employer needs to show there has been a stoppage of work.

Where an employer cannot utilise the stand down provisions of the Act, but is unable to retain their full workforce post-JobKeeper, it will need to look for some alternative options to manage its workforce. Without the flexibility of JobKeeper enabling directions, the employer will need to request, rather than direct, that employees reduce their hours and salary, remain on a period of unpaid leave, or use their annual leave or long service leave where available. If employees do not agree to reduced hours and all other options have been exhausted, redundancies may be the remaining option to reduce the workforce in response to a deterioration in trade rather than a complete stoppage of work.