Employer rights to stand down employees

At common law, unless the contract of employment between an employer and employee provides otherwise, an employer has no right to stand down an employee without pay.

Under sec 524 of the Fair Work Act, it is lawful for an employer to stand down an employer or employees without pay if the employee or employees cannot be usefully 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.

In Kidd v Savage River Mines (1984) FCR 398 it was held that an employee can be usefully employed if there is work available which might not commonly be undertaken by the employee unless his or her contract of employment provides otherwise.

The right of an employer to invoke sec 534 however yields to any contract of employment or enterprise agreement.

Circumstances (a) and (b) are reasonably self explanatory, but what does (c) mean? Does it include running out of work for example?

United Voice v Philip Cleaning Service Pty Ltd [2017] FCA 392 delivered 21 April 2017 is a case which arose from a decision by a cleaning services company not to roster part time employees  for work during school  holidays when the employer’s work dropped off.

Jagot J of the Federal Court held that

” ………. The submissions for the applicants… were in these terms:
71. A permanent employee is entitled to be paid the amount due in respect of ordinary hours each week. Unlike casual employees, the employer was not entitled to pay them only for hours actually worked. Setting aside cases of properly authorised stand downs, an employee is entitled to wages for attending work even if no work is available: Coal & Allied Mining Services Pty Ltd v MacPherson [2010] FCAFC 83; 185 FCR 383 at [15]; Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust) Pty Ltd (1966) 8 FLR 70 at 74-75. That is the privilege of permanent workers and is part of the quid pro quo for lower wages associated with permanent work.

72.To the extent that an employer relies on an exception to the general obligation to pay wages—by reason of stand down or otherwise—it bears the onus of proof that the exception applies: Townsend v General Motors Holden (1983) 4 IR 358. That is a particular manifestation of the general principle that a person seeking to rely on an exception to a general obligation bears the onus of proving that the exception applies.

I accept these submissions. PCS did not establish any exception to its obligation to pay its employees during school holiday periods for their ordinary hours of work.

It is useful to refer to the sections of judgments on which the applicants relied.

Paragraph 15 of Coal & Allied Mining Services Pty Ltd v MacPherson [2010] FCAFC 83 is in the following terms:

“Properly understood, a stand down…. encompasses a large range of situations where, for various reasons, an employer is unable to provide useful work for its employees, for a particular period of time, for circumstances beyond its control. The employer may be temporarily deprived of electricity to run its operation. It may not have sufficient component supplies to manufacture its goods, due to industrial disputation by the employees of its suppliers. The employer’s factory may have been flooded. Numerous examples readily come to mind. The need for clauses in industrial instruments dealing with stand downs of this type has long been recognised because, in the absence of such a provision, an employee is prima facie entitled to wages for attending work even if no work is available: see Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust) Pty Ltd (1966) 8 FLR 70 at 74-75. (our emphasis)

Paragraphs 74-75 of the Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust) Pty Ltd (1966) 8 FLR 70 (which concerned a stand down provision in an award similar to that contained in the Fair Work Act 2009) states as follows:

“The award provides for engagement by the week, and in the absence of any express provision an employee is entitled to a week’s wages for each week of his employment even if there is no work for him to do. Clause 7(b). of the award provides, however, that the employer’s right ‘to deduct payment for any day the employee cannot be usefully employed because of any strike or through any breakdown in machinery or any stoppage of work by any cause for which the employer cannot be held responsible’ is not affected by the provision for weekly employment.

We start, therefore, from the position that an employee who is on a weekly engagement is prima facie entitled to a week’s wages. If, being ready and willing to work, he is told by his employer that he need not report for work the next day as there is no work for him to do, he is nevertheless entitled to be paid for that day, unless the employer can show that the employee cannot be usefully employed on that day for a reason falling within the clause above quoted.”

The judge thus concluded  that the employer did not have the right to withhold remuneration on the basis of a lawful stand down.