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There has been much conjecture about the use of the Fair Work Act's "stand down" provisions (Section 524) in the event that the NSW Department of Health were to temporarily close an early childhood education and care service in relation to the Novel Coronavirus.

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As written (of which the following are an extract):

Section 524 - Employer may stand down employees in certain circumstances

(1) 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:

(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

(2) However, an employer may not stand down an employee under subsection (1) during a period in which the employee cannot usefully be employed because of a circumstance referred to in that subsection if:

(b) the agreement or contract provides for the employer to stand down the employee during that period if the employee cannot usefully be employed during that period because of that circumstance.

(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period.

According to legal advice received by the Australian Childcare Alliance (ACA) NSW on 12 March 2020:

  • If a service is instructed to temporarily close by the Public Health Unit in relation to the Novel Coronavirus, the employer can use Section 524 of the Fair Work Act to stand down staff and not pay staff.
  • Fair Work Act’s stand down provisions apply to all employees regardless of whether they are under a Modern Award or not.

But, is using Section 524 of the Fair Work Act to pay your staff when your service is temporarily closed the right decision? Consider the following:

  • To satisfy s524(1)(c)'s "... for which the employer cannot be reasonably be held responsible", is it possible for one or more of your the staff to be able to prove that their employer was in part responsible for the Novel Coronavirus impacting on the service due to the employer's negligence or human error?
  • To satisfy s524(2)(b)'s "... during a period in which the employee cannot usefully be employed", did the employer ensure that each and every staff member could not have done any other work as outlined in their position descriptions and employment contracts except that such work would now be done outside of the service?
  • By not paying your staff for a period, could your staff (mis-)interpret it as their employer abandoning them at their time of need for employment?

While financial viability and business continuity would be understandably front of mind for employers, employers must also consider whether their actions might attract potential staff applications to the Fair Work Ombudsman and/or negative public relations, and other unintended consequences.

Therefore, due to each early childhood education and care service being potentially different to another, ACA NSW strongly recommends that employers seek their own legal advice and carefully consider the merits of using Section 524 of the Fair Work Act.

PUBLISHED: 13 MARCH 2020