An important judgment has been handed down by the Federal Court regarding the question of whether stood down employees can access paid personal leave (including sick leave). The Honourable Justice Flick, the judge presiding over the case, concluded that the question be answered in the negative.
The decision is significant for two main reasons:
First, there has been no appeal lodged against His Honour's decision, so consequently the decision is to be taken as the standing judicial authority on the issues raised by the case.
Second, His Honour's ruling provides a clear statement, with general application, as to the construction of s 525 of the Fair Work Act 2009 (Cth) (the Fair Work Act) regarding an employee's access to paid personal leave during a period of stand down. While the case arises in the context of employer responses to the extraordinary circumstances of the current Coronavirus pandemic, His Honour's decision cannot be regarded as one that is limited to those circumstances.
Background
The world has been dealing with a Coronavirus pandemic since early this year. From
The full text of s 524 is as follows:
Employer may stand down employees in certain circumstances
(1) An employer may, under this subsection, stand down an employee during a period in which the employee cannot usefully be employed because of one of the following circumstances:
(a) industrial action (other than industrial action organised or engaged in by the employer);
b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.
(2) However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:
(a) an enterprise agreement, or a contract of employment, applies to the employer and the employee;
(b) the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.
Note 1: If an employer may not stand down an employee under subsection (1), the employer may be able to stand down the employee in accordance with the enterprise agreement or the contract of employment.
Note 2: An enterprise agreement or a contract of employment may also include terms that impose additional requirements that an employer must meet before standing down an employee (for example requirements relating to consultation or notice).
(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.
Personal leave (i.e. sick leave and carer's leave) entitlements form part of the National Employment Standards in the Fair Work Act,1 and are also found in the subject enterprise agreements.
A number of unions, representing members who had been affected by the
The unions also drew attention to and placed special reliance on s 525 of the Fair Work Act, arguing that, by reason of that section, employees who take personal/carer's leave are "authorised" to be absent from work (i.e. not to be taken as having been stood down), and therefore
It is important to note that in these proceedings, no party sought to challenge the decision taken by
Reasons for the decision
One of the preconditions for lawfully standing down employees under the Fair Work Act is that there must be no work that the employees can usefully perform. In the event of a stand down, there is no work for employees to do, and thus no income to protect. Therefore, according to
The Court was not persuaded by the unions' interpretation of s 525 of the Fair Work Act, finding that the phrase in s 525 - "authorised to be absent from his or her employment" - is a reference to other circumstances in which the Fair Work Act provisions explicitly "authorise" or "entitle" an employee to be absent from work, e.g. jury service.4 That is to say, personal/carer's leave does not fall into this category of absences.
Take away
This case fills a significant gap in the law. Previously, there had been no authoritative cases on the issue of employees taking leave while being stood down. However, it should be noted that
Employers considering measures such as stand down or reduced working hours to alleviate the financial impact on their enterprise of Government imposed COVID-19 restrictions should seek specialist legal advice prior to taking any action. Employers must be careful to ensure that there is truly a "stoppage of work" that would enliven the entitlement to stand down without pay, not simply a significant reduction in the volume of work. They must also ensure that there is no other employment that the affected employees can usefully perform.
NOTE: His Honour's decision is confined to the interpretation of the relevant Fair Work Act provisions, and common stand down terms found in enterprise agreements. It does not assist with the interpretation of the stand down rights given to an employer who has the benefit of the special and temporary "JobKeeper" provisions in Part 6-4C of the Fair Work Act, particularly s 789GDC.
Footnotes
1 Fair Work Act 2009 (Cth), ss 95 - 97.
2
3 Ibid, [43].
4 Ibid, [42].
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Carroll & O'Dea
Level 18, St James Centre
2000
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