Q. The local area where our company operates was affected by electricity blackouts during the last summer period. Fortunately, these blackouts occurred when the company had already closed down for maintenance. There is some concern blackouts may occur this summer due to infrastructure concerns. Management has been brain-storming scenarios to assess measures that could be taken if the company cannot operate machinery due to a power failure. The Fair Work Act refers to industrial action and breakdown of machinery as reasons justifying standing down employees without pay, or a reason for which the employer cannot be held responsible. 

As the machines cannot operate without electricity, would this circumstance justify standing down employees when the machines cannot operate because of a power blackout? Also, the applicable modern award seems silent on this point? 

 

A. If the employees cannot be usefully employed by the employer, there is a statutory right to stand down an employee without pay under the Fair Work Act (ss.524-525), provided the employer cannot reasonably be held responsible. No modern award contains a stand down provision although an enterprise agreement or contract of employment may include stand down terms that impose additional requirements that must be met by an employer before standing down an employee. 

Under the Fair Work Act, an employer may stand down an employee during a period in which the employees cannot be usefully employed because of one of the following circumstances: 

  • industrial action (other than industrial action organised or engaged in by the employer locking employees out) 

  • a breakdown of machinery or equipment, if the employer cannot reasonably held responsible for the breakdown 

  • a stoppage of work for any cause for which the employer cannot reasonably be held responsible. 

 

Power failure 

This is probably the most common reason for employees being stood down without pay by an employer. Provided the power failure (electricity or gas) to the employer’s premises was not because of the employer’s failure to pay an electricity or gas bill, such a circumstance would be a cause for which the employer cannot reasonably be held responsible. Consequently, employees can be stood down without pay for the duration of the power blackout, provided they cannot be usefully employed. 
 

Breakdown of machinery 

Another common reason for standing down employees is due to a mechanical breakdown. As with a power failure, such a circumstance is beyond the employer’s control, unless the employer was responsible for the breakdown in machinery because of poor maintenance. For the purpose of the stand down provisions under the Fair Work Act, machinery or equipment is not confined to the employer’s machinery but also includes a third party’s machinery. The term machinery or equipment is intended to have a broad application to cover traditional industrial machinery and also other equipment such as computers and other electronic equipment. 

 

What does “usefully employed” mean?

The concept of being "usefully employed" is critical to any decision to stand down employees. Even where a blackout prevents employees from performing their normal duties, a stand down may not be lawful if there is alternative work available that provides value or benefit to the employer. 

Before implementing a stand down, employers should consider whether employees could:

  • work remotely;

  • perform administrative duties;

  • undertake training;

  • complete maintenance or housekeeping tasks;

  • assist with planning, inventory or compliance activities; or

  • be temporarily redeployed to other work. 

For example, office-based employees may be able to work from home during a localised outage, whereas production employees who rely on electrically powered machinery may have no useful work available.

The employer bears the responsibility of establishing that employees could not be usefully employed during the relevant period.

 

Alternatives to stand down 

Where a stand down occurs, employers often discuss voluntary leave arrangements with affected employees. Depending on the applicable award, enterprise agreement or employment contract, employees may choose to access accrued annual leave or other forms of leave during the period. Employers should review the relevant industrial instrument before directing employees to take leave.

 

Effect on employee entitlements 

The Fair Work Act (s.524) recognises a period of stand down as ‘service’, meaning the employees will continue to accrue entitlements such as annual leave and personal/carer’s leave under the National Employment Standards, as well as an entitlement to a public holiday that falls on a day the employee has ordinary hours of work. 

 

Bottom line 

An employer can stand down employees without pay if they cannot be usefully employed due to any cause beyond the employer’s control. A power failure to the company premises would be a circumstance over which the employer has no control therefore affected employees could be stood down without pay where they cannot be usefully employed.