Is it legal to be stood down without pay?

By Grace Ormsby

March 23 2020
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With government-issued business closures becoming increasingly the norm, a huge number of Australian employees are facing an uncertain future.

In an update from Madgwicks Lawyers’ special counsel, Tim Greenall, the employment lawyer has explained that the situation that saw the standing down last week of 20,000 Qantas staff – indefinitely and without pay – is legal.

And for many businesses who are now finding themselves under financial strain, Mr Greenall flagged that the COVID-19 virus “has and will continue to throw up many unexpected and difficult employment law issues for employers to manage in what is a fast-changing and fluid situation”.

So, can an employer stand down its employees without paying them?

According to the special counsel, the answer is yes.

This is provided for by section 524 of the Fair Work Act 2009.

There are three ways in which an employer may “stand down on an unpaid basis an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances”:

Of relevance at this time, is subsection (c): A stoppage of work for any cause for which the employer cannot reasonably be held responsible.

The Fair Work Ombudsman has also provided guidance at this time, which Mr Greenall made reference to.

“Coronavirus and Australian workplace laws” confirms employers have that right to stand down employers without pay where they can’t reasonably be held responsible.

“It is becoming increasingly clear the impact of coronavirus may cause a stoppage of work for which the employer cannot reasonably be held responsible – e.g. the ban on international travel imposed on the airline industry or other government-issued directives for closure not at the discretion of the business,” he flagged.

Despite this, nestegg would encourage anyone to seek legal advice regarding their individual situation.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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