When you can stand down an employee without pay or when you may direct an employee to take annual leave can sometimes be confusing. Here are some of the basics to help you navigate what you can and can’t do.
The Fair Work Act (the Act) allows employers to stand down their employees with no pay in limited circumstances as below:
- If there is a stoppage of work for any cause for which the employer cannot reasonably be held responsible (e.g., natural disasters such as floods);
- If there is a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown; or
- If there is industrial action (i.e. employees go on strike).
It should be noted that the stand down provisions within the Act are different to when you ‘stand down’ your employees to investigate a matter such as misconduct. In these circumstances you must pay your employee their ordinary pay while they are being ‘stood down’. You should note that the Act does not permit you to stand down an employee without pay due to shortage of work.
Generally, an employer may not direct an employee to take annual leave. However, under the Vehicle Manufacturing, Repair, Services and Retail Award and the Clerks Private Sector Award it is permitted when:
- An employee has ‘excessive leave’ (i.e. eight weeks or more); and
- As a part of the business annual shut down (i.e. over Christmas break)
If an employee has accrued ‘excessive leave’ an employer may direct them to take no more than a quarter of their accrued leave. For example, an employee has eight weeks annual leave accrued their employer can direct them to take no more than two weeks annual leave.
When a business is closing down for Christmas an employee can be directed to take annual leave. If an employee has no leave accrued they can be directed to take unpaid annual leave for that period.
At least four weeks’ written notice to take leave is required when directing an employee to take annual leave. This applies for either excessive accrued leave or as a part of an annual Christmas shut down.
Michelle Chadburn (LLB)