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Insights

On 25 May 2020 the Fair work Commission handed down in one of the first post COVID-19 decisions on an employer’s decision to stand down employees. It held that the employer was justified in standing down an employee under section 524 of the Fair Work Act. Section 524 is designed to relieve employers of the obligation to pay wages to employees who cannot be usefully employed in certain circumstances, such as a stoppage of work.

The Facts

Coral Princess cruises ran a cruise line taking guests to remote regions of Australia and Pacific and Indian Islands. Government Regulation designed to prevent the spread of the virus prevents it from operating. Its revenue fell to zero. Mr Michael Marson (the marine superintendent) was stood down on 26 March 2020.

The Decision

Deputy President Lake held that the requirements of section 524 of the Act had been satisfied in that there had been:

  • a Stoppage of work (rather than a mere reductions) outside the control of the employer; and
  • no useful work could be provided to Mr Marson.

Turning to the question of “stoppage of work”, the Commission rejected the notion that a “mere reduction” in work satisfies the requirement, holding that a stoppage of work occurs when a business’ activity or primary function ceases as a consequence of factors outside its control.

Comment

Another alternative now available to employers is to issue a Jobkeeper Direction. It is also important to remember that each case will depend on its own circumstances. Here is a link to the case.

As we continue to sail through the unchartered waters of the COVID-19 pandemic, this decision marks another relief for employers attempting to salvage their business operations in an effort to stay afloat. For more information about the operation of the stand down provisions, as well as the recently introduced JobKeeper legislation, contact our experienced and friendly employment team.

 

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