Q. We have just been advised that it will be necessary to shut down an important piece of machinery on our production line for some urgent repairs, which will mean the majority of our production workers will be idle for one whole day. Management is now considering what options are available to the company in dealing with this issue. At present we are considering asking employees to take a day’s annual leave. My concern is that employees cannot be forced to take annual leave, although our enterprise agreement is silent on this point. It would seem the only option is to stand down employees without pay for the duration of the maintenance. Is annual leave an option in this circumstance and, if not, is standing down employees permissible in this circumstance? 
A. When an unexpected machinery breakdown prevents employees from performing their normal duties, employers should carefully consider their obligations before directing employees to take leave or implementing a stand down.

 

Annual leave

Under the National Employment Standards, annual leave may be taken for a period agreed to between an employee and their employer. The employer cannot direct an employee covered by a modern award or enterprise agreement to take annual leave, this being subject to the terms of the applicable instrument. The Standard provides that paid annual leave may be taken for a period agreed between the employee and the employer. This suggests an employee may agree to take annual leave in this circumstance, but cannot be pressured or directed to do so.  

An employer may require an award/agreement free employee to take a period of annual leave but only if the request is reasonable. It is doubtful a direction by the employer for an employee to take annual leave in this circumstance would be considered reasonable. 

It would appear the company can offer affected employees the opportunity to apply for annual leave on that day, but cannot direct employees to take annual leave. 

 

Stand down 

Stand down without pay may be an option available to the employer in this circumstance, provided the repairs are not a consequence of poor maintenance of the machinery on the part of the company’s management.  

Under the Fair Work Act (s.524), an employer may stand down an employee during a period in which the employee cannot be usefully employed because of one of the following circumstances: 

  • industrial action (other than industrial action organised or engaged in by the employer, e.g. a lockout by the employer); 

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

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

 
No modern award provides for stand down, although an enterprise agreement or contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee, such as requirements relating to consultation or notice. 

A period of stand down does count as service for the purposes of the Fair Work Act. This means that although the employee is on ‘authorised unpaid leave’ during a stand down period, there is no interruption to the contract of employment and continuity of service is maintained.  

 

What does “usefully employed” mean? 

The stand down provision in the Fair Work Act does not provide a definition of the term ‘usefully employed’, however, the Explanatory Memorandum to the Fair Work Bill 2008 states that if the employer is able to obtain some benefit or value for the work that could be performed by an employee then the employer would not be able to stand down the employee. The meaning of this term is critical in determining whether an employer is justified in applying the stand down provision to a particular circumstance. The onus would be on the employer to establish that the employees concerned cannot be usefully employed.  

An employee’s duties can be performed at home, or performed at other work premises; the employee could not be stood down without pay under such circumstances.  

 

Meaning of ‘breakdown of machinery or equipment’ 

For the purposes of the Fair Work Act (s.524(1)(b)), 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 broad application to cover traditional industrial machinery such as a drill rig and also modern equipment such as computers and other electronic equipment. If the employer was responsible for the breakdown in machinery because of poor maintenance it may be held that stand down was not permissible. 

For example, the Fair Work Commission ruled that an employer who stopped certain operations for a temporary period because of scheduled maintenance could not legally stand down the employees affected because the maintenance work was sufficiently within the control of the employer. The critical element in justifying a stand-down is the existence of circumstances beyond the employer’s control, therefore allowing the employer to close operations temporarily and not pay the employees who are prevented from working.  

 

Bottom line 

Employees may agree to take annual leave during a machinery shutdown, but they generally cannot be required to do so unless an applicable industrial instrument specifically permits such a direction. A stand down without pay may be available where employees cannot be usefully employed because of a genuine machinery breakdown or other circumstance beyond the employer’s control. Before implementing a stand down, employers should review any applicable enterprise agreement, employment contracts and consultation obligations, and consider whether alternative productive work is available for affected employees