Under section 524(1) of the FW Act, an employer can only stand down an employee during a period in which they cannot be usefully employed because of:
- Industrial action (if not organised or engaged in by employer);
- A breakdown of machinery or equipment (which employer cannot reasonably be held responsible for); or
- Stoppage of work for any cause (which employer cannot reasonably be held responsible for).
It is this third limb which is most relevant for businesses who have suffered during the pandemic. Unfortunately, it is a test that has rarely been tested before this year and therefore there has been confusion as to:
- what constitutes a stoppage of work; and
- the causation test linking the employer to the stoppage.
In the case of Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 3), Justice Flick provided a useful summary of these tests.
Qantas and Jetstar had stood down their licensed aircraft engineers without pay as a result of the COVID-19 pandemic. Both Qantas and Jetstar had enterprise agreements but the stand down clauses contained within these agreements reflected section 524 of the FW Act.
It was determined that the purpose of stand down provisions is two-fold:
- To ensure the financial viability of the business where they could not provide work for the employees in circumstances out of their control; and
- To protect employees from termination given there was a stoppage of work.
A stoppage is determined solely in relation to the facts of the case. In this case, Justice Flick determined that the stoppage of work was the stoppage of domestic and international passenger flights except for the few restricted flights that occurred. Justice Flick rejected the Union’s contentions that this stoppage was caused by, or originated from, Qantas or Jetstar, finding instead it was due to:
- the global pandemic;
- progressive steps taken by the Federal Government to close international borders;
- progressive steps taken by the State and Territory Governments to close interstate borders; and
- quarantine restrictions for travelling.
Justice Flick found that the causation issue was to be determined by considering:
- Whether the employer caused or contributed to the stoppage, and
- Whether the employer could have prevented the stoppage, which required an analysis of the reasonableness of the steps taken, including considering what a reasonable person might do in the same circumstances.
An employer cannot engage in conduct simply to promote its financial wellbeing or to obtain financial gain. For example; implementing stand downs because it is uneconomic to engage employees would be unreasonable.
In this case, the employer’s actions were reasonable because:
- the airlines were not trying to maximise profits, but were trying to survive
- the airlines were trying to prevent having to take harsher measures like redundancy or termination; and
- Qantas Group had already undertaken every other possible cost saving measure including deferring rent, renegotiation of terms and stopping payments to suppliers.
Justice Flick distinguished the facts of the case and stated they “come nowhere close to a situation where other steps could reasonably have been pursued by Qantas or Jetstar.” On those basis, the stand down was deemed valid and lawful.
Written by Nina Hoang
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