Can employees access all their entitlements under the Fair Work Act if they have been stood down?

Regulations introduced by State and Federal governments during the COVID-19 health crisis have resulted in many businesses ceasing to trade. Consequently, employees have been stood down without pay by their employers if they cannot usefully be employed because of a stoppage of work for which the employer cannot be held responsible. Staff suddenly without income are looking to access Fair Work Act 2009 (Cth) entitlements such as personal or carer’s leave (s 96) or compassionate leave (s 105).

The ability to stand down employees without pay is a fairly recent statutory right (since 2006). There is no common law right to stand down an employee without pay. The purpose behind the statutory right to stand down an employee is to:

  • Give ‘financial relief’ to employers from paying wages in circumstances where, through no fault of its own, the employer has no work that the employees can usefully perform; and
  • Protect employees from what would otherwise flow from the termination of their employment.

In a recent case Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Qantas Airways Limited [2020] FCA 656 (18 May 2020), the court was asked to consider whether Qantas employees who have been properly stood down by their employer are still entitled to access compassionate or personal leave and carer’s leave in the period during which they have been stood down.

The Court said, no. In making its decision the Court looked at the object and purpose of conferring leave entitlements. It confirmed Fair Work Act leave entitlements are “a statutory form of income protection” for all national system employees, other than casual employees. However, such leave entitlements are “an entitlement on the part of an employee to take leave from otherwise performing the work they are required to perform.” Therefore, if there is no income producing work that the employee is required to perform for the employer, the employee cannot access the leave entitlements conferred by s 96 or s105.

Further, to force employers to pay leave entitlements after having lawfully invoked the power to stand down an employee would defeat one of the principal purposes of the ‘stand down’ power, namely, to protect the employer against such financial claims.

How we can help

The speed at which this dispute was resolved and the decision published shows how quickly the employment law landscape is responding to the challenge of managing the employment relationship in a COVID-19 world. It is hard to keep up!

If you are an employer uncertain about what your employees are entitled to under their contracts of employment, the Fair Work Act or the terms of the relevant Industrial Award, or an employee unsure of how best to protect your job or income, please call Sladjana Skoric on 0410 900 248.