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Non-JobKeeper stand downs during COVID: What constitutes a “stoppage of work”?

In August 2020 Peninsula Grammar School (the School) stood down two Library Technicians and a Classroom Assistant (the employees) without pay, as a direct result of the Victorian Government Direction to cease on-site activities and move to remote learning. The employees were stood down because their work could not be performed from home.  

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Upon application by the employees to the Fair Work Commission, Commissioner Bissett held there was no stoppage of work as the School continued to operate, albeit in a remote learning capacity. Commissioner Bissett ordered that the stand-down notices be withdrawn and the employees be permitted to return to work on their next scheduled working day. No orders were made regarding payment to the employees as the Fair Work Commission was unable to make retrospective orders (as this constituted a judicial power).

Employers (who are not able to access JobKeeper) are only able to stand down employees if they can prove one of the circumstances under section 524(1) of the Fair Work Act 2009 (Cth) (the Act):

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:

  1. industrial action (other than industrial action organised or engaged in by the employer);
  2. a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown; or
  3. a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

In February 2021 FCW Lawyers, on behalf of Peninsula Grammar, lodged an appeal to this decision, and argued that Commissioner Bissett had made several errors when considering her decision, as follows:

  1. A “stoppage of work” in s.524(1)(c) refers to all circumstances where the usual work or duties performed by employees cannot be performed.
  2. The Commissioner erred by focusing unduly upon the work of the employer, as opposed to the work of the employees.
  3. Whether there may be alternative duties or work other than their ordinary or usual duties has no bearing on the issue of “stoppage of work” but is rather a matter of whether an employee can be usefully employed.

The Full Bench accepted FCW Lawyer’s arguments and definitively established the following:

  • The correct application of s.524 of the Act, is to first consider whether there is useful employment for the employees before you determine that there has been a ‘stoppage of work’.
  • Determining ‘stoppage’ first was “highly problematic” as there would be “some logical difficulty involved in searching for the cause of a given event or circumstance, without first establishing that the event or circumstance has actually occurred.”
  • ‘Stoppage of work’ is defined as “cessation of working activity”.
  • ‘Stoppage of work’ does not need to arise in the employer’s business at all, provided some occurrence out of the employer’s control has resulted in the employees having no useful work. For example, similar to when a strike or breakdown of machinery of a supplier may result in an employer having no useful work for their employees.
  • ‘Stoppage’ in any part of the business (doesn’t need to be all of the business) constitutes a stoppage, so long as:
    • it is outside of the employer’s control; and
    • it results in no useful work for the stood down employees.
  • It is a stoppage of work if your business’ normal operations are stopped directly due to Government restrictions such as the imposition of the lockdown. In their words “we cannot see how the conclusion that there were stoppages of work for a cause for which the School cannot reasonably be held responsible can be avoided.”

The Full Bench unanimously concluded that Commissioner Bissett had incorrectly determined there was no stoppage as the School was still operating in some capacity. This was incorrect and is not how s.524 of the Act is supposed to be applied.

Ultimately the Full Bench decided against allowing the Appeal as there would be no practical effect as the affected employees had already returned to work. But this is a great win for every employer who is forced to close down all or part of their business due to COVID-19, this decision will help you get past the first hurdle to prove there was a ‘stoppage’ of work. Undoubtedly this will become more important as lockdowns continue to occur and the JobKeeper provisions disappear.

Key lessons for employers

  • ‘Stoppage’ of any part of a business is a stoppage if it results in no useful work, and is outside of the employer’s control.
  • Useful work should be determined before considering if there is a ‘stoppage’.
  • Government Directions due to COVID-19 are sufficient grounds to prove there is a ‘stoppage’.

Written by Nina Hoang

Have a question or need advice?

Our team are here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas or Kim McLagan.

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