Standing down employees: What you need to know

Standing down employees: What you need to know

These are uncertain times for all of us and real estate employers are rightfully concerned about what lies ahead for their businesses.

The REEF Helpline has been inundated with phone calls from members looking for advice regarding employment issues during this Coronavirus crisis. The most common question we're being asked relates to standing down employees:

"If things get bad, can I stand down employees for a time and not pay them?"

As an employer, you may go through periods where there's simply no work for your employees to perform. Where employees cannot be usefully employed, you may be in a position to stand them down and send them home without pay.

Your ability to stand down employees without pay is regulated by the Fair Work Act.

The Fair Work Act provides that where an employee or group of employees cannot be usefully employed for a period because of a stoppage of work for which the employer cannot reasonably be held responsible, then you may "stand down" that employee or group of employees for that period without pay. 

To apply the stand down provisions under the Fair Work Act there must be a STOPPAGE OF WORK, not simply a downturn or slowing of work.

With this in mind, even if your agency closes its doors to the public, it's likely you will continue trading by remote means. This will probably entail utilising working from home arrangements, where this is a practical solution to managing the restrictions imposed by COVID-19. Such circumstances may not necessarily fit under the definition of a stoppage of work and utilising the stand down provisions under the Fair Work Act may be risky. 

Notwithstanding this, it's possible there could be legitimate circumstances where you may be lawfully permitted to stand down an employee, or a number of employees, without pay. This should be seen however as a last resort. Remember, as with many other COVID-19 related decisions, you should consider balancing affordability, culture and engagement with the law before deciding what to do. 

In summary, where you are considering standing down staff without pay until we get through this COVID-19 crisis, you need to ask yourself three critically important questions:

  • Is there a stoppage of work? (not simply a downturn in the amount of work)
  • Is it for a reason reasonably outside your control? (i.e. COVID-19 related)
  • Can the affected employees be employed to perform useful work?

If the answer to the first question is “NO”, you should avoid standing down the employee, but rather consider any other alternatives that may be available to you to manage your business concerns.

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About REEF

The Real Estate Employers' Federation is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has more than 1600 members and subscribers across Australia.

Each year, REEF receives more than 18,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.

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