No one wants to lay their employees off. But your desire to do the right thing and keep workers employed could backfire on you.
Joe Murphy, Managing Director – Workplace at Australian Business Lawyers & Advisors, says many employers believe that standing down employees is an easier or ‘nicer’ option than redundancy. It preserves the person’s employment, continuity of service is maintained, and leave continues to accrue.
The problem, says Joe, is that businesses may not be properly assessing the circumstances that allow for a stand down.
“It really is a last resort,” he says.
“You need to be very careful that you even have the option of standing someone down. There needs to be a cause for a stoppage of work that an employer cannot be held responsible for. Unless there is a stoppage and no useful work, you cannot stand down someone down.”
Joe says some employers mistakenly believe they can stand down employees simply because work is drying up and profits are down.
“But you can’t stand down employees on that basis or because of what you anticipate is going to happen in the next few months,” he said.
“Only at the point at which a stoppage occurs can a stand down occur.
Consider these two scenarios
A scenario where a stoppage of work is legitimately likely is:
You run a pub. The NSW Government have issued a Public Health Order in line with the National Cabinet and Prime Minister’s restrictions, requiring all pubs to close and not be open to members of the public.
You would still turn your mind as to whether any of your employees could be usefully employed. However, with that unlikely. the circumstances of the Public Health Order have given rise to a stoppage of work and the pub could stand down its employees.
A scenario where a stoppage of work is not likely to be considered legitimate is:
You run a retail shop. Due to the pandemic and the directions in respect of social distancing, your business has suffered a decrease in business of 50% with a significant downturn in customers visiting the shop. With 50% of the work still available for employees to perform, there has been no stoppage of work.
You could not stand down the employees in this scenario. You would need to consider alternatives such as consulting with employees about taking leave, reducing hours of work (temporarily) or redundancies.