What happens if my employer closes the business as a result of COVID-19?

What happens if my employer closes the business as a result of COVID-19?

The COVID-19 pandemic is affecting businesses across Australia and the course of the pandemic remains very uncertain. It is foreseeable that if the virus continues to spread, it will further impact businesses that may result in some shutting down temporarily or permanently.

Your employer has some options in deciding how to handle the fallout from COVID-19, including a temporary stand down.

What is a stand down?

A stand down occurs when an employee cannot usefully be employed by an employer because of, among other things, a stoppage of work for any cause for which the employer cannot reasonably be held responsible. This may include, for example, a government directed shut down or quarantine period.

A stand down is not the same as a dismissal or a redundancy.

When can my employer stand me down?

Under the Fair Work Act 2009 (Cth) employers have the right to stand down employees without pay if there is a stoppage of work beyond the employer’s control. It is an essential part of stand downs that the decision is a unilateral one of an employer to withhold work and payment, regardless if the employee is still willing to work.

Stand downs do not extend to the situations where the business is quiet or there is not enough work. Employees can be stood down for the period of time while the business is dealing with the issue and the employee cannot be usefully employed elsewhere within the organisation or associated entities.

There is no right to stand down an employee if there is work that the employee can do that is within the terms of the employee’s contract of employment. If there are other activities that can still be done without breaching the employee’s contract, then an employer may not have the right to stand down an employee. The work does not need to be work that the employee will usually carry out however; it cannot be beyond the scope of their employment agreement.

As an employer, you should ensure that stand downs are correctly implemented as they are likely to be closely scrutinised.

What are my rights if I am stood down?

Subject to the provisions of any applicable employment contract or enterprise agreement, if an employer decides to stand down an employee, they are not required to pay the employee for that period, even if an employee wishes to continue working. The employer may allow you to access your annual leave during that period but they are under no obligation to do so. This may be harder on casual employees as they have no annual leave entitlements.

In the event that your employer mandates a valid stand down, your period of service is not broken.

If you have been stood down then you should contact Centrelink as you may have entitlements under the coronavirus supplement payments being instituted by the Department of Health.


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