Even two weeks ago, the thought of an employer standing down their workforce was unimaginable. Now, it is a heartbreaking reality for many business owners since they are forced to shut down their businesses. So what does 'Standing Down' mean?
Stand down is an alternative to redundancy, it is saying to your employees 'we are shutting down our business because we have to, but we will be back and when we are, we want you to be around".
However, the JobKeeper Allowance may override standing down your team, but in the instance you decide to make alternative decisions for your business.
What is the JobKeeper Allowance?
The JobKeeper Payment helps employers significantly impacted by the Coronavirus cover the costs of their employees’ wages, so more Australians can retain their jobs and continue to earn an income. Under the JobKeeper Payment, businesses impacted by the Coronavirus will be able to access a subsidy from the Government to continue paying their employees. The JobKeeper scheme starts on 30 March 2020 and ends on 27 September 2020.
Related: JobKeeper Payment: Eligibility Rules have been released! Who is Eligible?, published April 15, 2020
Below we outline some of the key questions we are getting from employers about 'standing down' their team:
1. What is a stand down?
A stand down occurs when an employee cannot be usefully employed as a result of a situation that the employer can’t be held responsible for. In this case, it’s the global pandemic, COVID-19.
2. Does an employer have the right to stand down employees without pay?
If your business has been required to close because of the current Government requirements and there is no useful work for your employees to do, you are able to stand down your employees.
Below are 5 questions an employer must ask first before proceeding ahead with a stand down:
- Are there stand down provisions in the Modern Award, Enterprise Agreement or Contract of Employment?
- Can you establish causation? Is the Coronavirus (COVID-19) the real reason for the stoppage of work?
- Has there actually been a stoppage of work? By definition, this must be more than a downturn.
- Are there other opportunities for the employee to be usefully employed?
- Is the Employee on a period of authorised leave (paid or unpaid)? If so, they are not taken to be stood down.
3. What is the effect of a stand down?
Quite simply, employees will not need to come to work and perform their duties and as a result, employers will not need to pay their employees. The employees however will remain employed for the period of the stand down and will continue to accrue entitlements such as annual leave. The benefit of a stand down is to allow employers to effectively preserve an employee’s role.
4. Do I have to give notice of a stand down?
There is no official requirement to give notice of a stand down, however it is encouraged to discuss the matter prior to doing so where possible. It’s a good idea to also check the requirements outlined in your applicable award or enterprise agreement before having the conversation with your employees. These discussions are a useful way to check in on your employees and offer any advice or recommendations.
5. What if my employee wants to access their paid leave entitlements?
It is a perfectly fine for employees to ask to access their accrued entitlements at this time and is a practical way to assist employees during this difficult time. It is important to note however that technically whilst an employee is on leave, they are not deemed as being stood down. A good way of tackling this would be to allow employees to start off by using up their accrued leave and if the shutdown of the business goes ahead, they can then apply for government benefits.
It is also important to note however that an employer is not required to agree to a request to take accrued leave where they have reasonable grounds to do so. For example, where cash flow is an issue and employers cannot afford to pay staff to be on accrued leave while there is a stoppage of work, an employer may decline a request to take annual leave or consider reaching agreement with employees to take leave at half pay.
6. Can I force my employees to take leave?
In certain limited circumstances, employers can require employees to take accrued leave. This is all dependent of course on the specific terms of the applicable award, enterprise agreement, employment contract and your leave policies. Employers and employees are encouraged to explore the options of taking their accrued leave entitlements during the Coronavirus outbreak. Taking unpaid leave is also an option, if it is mutually agreed by both parties.
7. Can I cut my Employee Hours?
If an employer asks an employee to work fewer hours or take a pay cut, this is a change to their contract of employment. Any change to a contract of employment must be agreed upon by both the employer and employee. If the employee does not agree to the reduction, redundancy could then be a good option in this instance.
8. Where does redundancy fit into all of this?
Redundancy is different to stand down. Stand down is temporary which means employees remain on the books and can return back to work once conditions / situations change. Redundancy however is a decision that is made when the employee’s position is considered no longer required and this then results in the termination of an employee’s employment.
9. What happens with eligible employers who have already STOOD DOWN their employees before the JobKeeper scheme was released?
Eligible employers who have stood down their employees before the commencement of the JobKeeper scheme will be able to participate. Employees that are re-engaged by a business that was their employer on 1 March 2020 will be eligible.
We understand that this is a challenging and confusing time for business. Get in touch if you want to discuss how to navigate your business through these uncharted waters. Azure Group team are committed to working smarter and faster in helping you take advantage of the Stimulus and financial assistance you need to keep operating as best you can. If you have any specific questions about these measures please contact our centres of excellence via email: firstname.lastname@example.org
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Have you noticed our #FridayExpertTips... here's one that relates to #StimulusPackage
"Effective immediately and from the latest Economic Stimulus package: Until June 2020 the Instant Asset write off has been increased to $150,000 and the cap on business turnover has increased from $50 million to $500 million."
This information is accurate on the day it’s published and is subject to change as the situation around Coronavirus (COVID-19) evolves. Our conclusions may not be valid if there is any change in those facts, circumstances and assumptions. Accordingly, neither Azure Group Pty Ltd nor any member or employee of Azure Group, undertakes responsibility arising in any way whatsoever to any persons in respect of this alert or any error or omissions herein, arising through negligence or otherwise howsoever caused.