Being ‘stood down’ is not being sacked

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Accountants are fielding lots of questions in the COVID-19 shutdown. One of the most confusing is about standing down staff.

IN BRIEF –
  • While being ‘stood down’ sounds like a retrenchment or redundancy, it is not the same.
  • Standing down measures are being used to try to save companies from going under and, ultimately, retain workers’ jobs.
  • A stand down is a temporary measure; there must be an intent to reopen the business.

On 19 March 2020, after the Australian government warned people to stop travelling overseas, Qantas announced it would stand down 20,000 workers in a measure to “preserve as many jobs as possible”. Gym chains, fashion retailers and casinos have also stood down employees during the pandemic, and many more organisations may do the same in months to come.

While being ‘stood down’ sounds much like a retrenchment or redundancy, it actually refers to something else entirely. It is one of many measures being used by organisations to try to save companies from going under and, ultimately, keep as many jobs as possible after the crisis. In their position on the front line of COVID-19 recovery, accountants are fielding questions from all directions about what employers should do.

“Any [questions about] standing down measures are really best suited to an employment lawyer, so I have referred clients to one where they were contemplating this,” says Kylie Parker CA, director of Lotus Accountants in Sydney.

“My clients are reducing pay and seeking to obtain the JobKeeper payments, where eligible, to ensure they can remain ready to go back to ‘business as usual’ post lockdown,” she adds.

Natalie Lennon CA, founder and director of Two Sides accounting practice, says she is also referring clients to employment lawyers. “It is a minefield,” she says.

So what are employment lawyers saying?

When an employee is stood down, they keep their job. Stand downs under Section 524 of the Fair Work Act are traditionally for reasons outside the employer’s control: “[Things like] earthquakes, bushfires, ‘act-of-god’ type circumstances where, say, a plant is flooded and no one can come in,” explains industrial lawyer Andrew Bland, principal at BlandsLaw in Sydney. Now, under temporary amendments to the Act, an employer can give employees a ‘JobKeeper enabling stand down direction’ if the employee can’t be usefully employed for their usual days or hours because of changes to the business due to the coronavirus crisis or because of government initiatives to slow its transmission.

If turnover has fallen or is likely to fall by more than 30 per cent (or 50 per cent if turnover is more than $1 billion), an employer can direct an employee to work at a different, suitable workplace, for fewer days or hours or no hours at all. Employers can request staff members take some annual leave or change their days or time of work, and the staff cannot unreasonably refuse.

Stood-down employees are still regarded as being on the books, so continue to accrue their leave entitlements.

Usefully employed

“[Coronavirus] affects large and different sections of the community but not all parts of the workforce,” says Bland. “Those in a white-collar area who can work from home won’t be as affected as, for example, pilots who are grounded because the government mandates planes can’t fly.”

‘Usefully employed’ doesn’t mean any job. “It has to be applicable to the expertise,” says Anthony Blaney, principal consultant at Pitcher Partners Melbourne, whose 15 years in the field include senior HR roles with WorkSafe Victoria and Qantas. JobKeeper gives flexibility for changing job roles. An employer can direct an employee to perform any duties they’re qualified to do, providing those tasks are reasonably within the scope of the business’s operations.

A temporary fix

A stand down also needs to be temporary; it’s not a way to delay the inevitable.

“I’ve had clients who’ve decided it’s time to shut. The virus is the final nail,” says Bland, who’s been in practice for 25 years. “Where there’s no intention to reopen, that will be a redundancy [not a stand down].”

Stood down staff are eligible for JobKeeper payments, can work elsewhere or access superannuation, but Bland says stand downs should be viewed as “a second-last resort, the last being redundancy”.

He has watched employers get creative with leave at half-pay, reducing hours or salary.

“I’ve seen organisations act swiftly to offer compassionate leave for people without leave balances,” says Blaney. “This is not something all companies can do, but they’re doing their best to protect jobs.”

Blaney urges employers to keep up communication at this time. “People will remember empathy in the time of crisis, flexibility and thinking outside the square,” he says. “This is about survival but you also have to plan ahead for post-coronavirus, because there will come a day, we all hope, when we return to normality.”

Michael Croker CA, CA ANZ’s Australian tax leader, says employees will have a lot of questions; in some situations, employers will need to deliver bad news to those excluded from the JobKeeper allowance.

“Employees who’ve already been stood down may now ask their former boss about the possibility of re-hiring arrangements. Eligible employees will want to know how their employment arrangements will be changed: their hours, adjusted salary and entitlements,” he says.

“Depending on the business’s circumstances, ‘JobKeeper enabling stand down’ arrangements and ‘JobKeeper enabling directions’ may need to be designed and communicated to employees.

“To cope with all these questions, accountants and employers will need to develop a working understanding of the temporary changes which the legislation makes to the Fair Work Act.”

‘JobKeeper enabling stand down’ allows for a qualifying employer to direct an employee to work fewer hours or days (including no hours) if they can’t be usefully employed due to the COVID-19 pandemic or government-directed lockdown.

‘JobKeeper enabling directions’ permits a qualifying employer to change an employee’s usual duties and location of work, and to make agreements with employees to change their days and times of work and take annual leave in certain circumstances.

Source: https://www.acuitymag.com/ Article by Alison Boleyn.