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Lack of work justified COVID-19 stand-down

A cruise ship employee has lost his appeal against the stand-down.
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Lack of work justified COVID-19 stand-down

Lack of work justified COVID-19 stand-down

3 June 2020

By Mike Toten

A cruise ship employee who was among 50% of the employer’s workforce stood down because COVID-19 halted operations has lost his appeal against the stand-down.

The case is significant both because it is related to COVID-19-induced suspension of business, and because it clarifies the meaning of the rules applying to employee stand-downs.



Facts of case

The employee was one of more than 100 stood down when government-mandated COVID-19 restrictions halted cruise ship holidays and operations. The employer stood down more than half its workforce and allocated some of the worker's duties (marine superintendent) to other retained employees.

The employee claimed that there was still useful work that he could perform.

The Fair Work Commission (FWC) stated that, for a stand-down to comply with sec 524 of the Fair Work Act 2009, it must meet the following requirements:
 
  • The employee cannot be usefully employed because of a stoppage of work.
  • The employer cannot be held reasonably responsible for the stoppage. In this case the Australian government had ordered the industry to cease operations.
  • Any work that is performed must provide a net benefit to the employer.

Note that a mere reduction in the volume or type of work available does not meet the requirements.

The issue in contention here was that there was still some limited work that could be performed, even if the employer had ceased trading. “Work” in this case was the purpose for which the business traded, that is, conducting cruise holidays for customers. That work had ceased and therefore a stoppage had occurred. Administrative or “caretaker” tasks that still existed did not meet the definition, as they were not the “activities” of the business.

The FWC then said that whether an employee could usefully still be employed then determined whether the employee could be stood down, not whether a stoppage had occurred. If cessation of trade was not regarded as a stoppage of work, and incidental work functions still existed, employers would often not be able to stand down employees.

The FWC added that whether an employer acted fairly and in good faith when a stoppage occurred would influence the outcome of a dispute.

When there was not enough work left to share between all employees, it could not be said that the remaining employees could be provided with useful employment. Therefore, the way to resolve a dispute was firstly to assess the amount of work available and the number of employees required to perform it, then assess whether the employer’s decisions were made fairly and in good faith.

In this case, the employer had stood down half its workforce, so it could hardly be said that it had targeted the employee.


Decision

The role of this particular employee, which had been substantially reduced, could be performed by other employees. It was primarily a role of facilitating other work and assisting management. There was insufficient work remaining in the role to retain him, and therefore a cost disadvantage to the employer if it had done so.

The employer took many actions to protect its business and this one was a reasonable one to take. The employer made its decision in a difficult economic climate (in order to ensure self-preservation) after considering its options carefully and made it fairly and in good faith.

In these circumstances, it was unable to keep the employee in useful employment, so the FWC dismissed his claim.

The bottom line: If the legal conditions for standing down employees are met (see above), an employee can be stood down if there is not “useful” work remaining for him/her to perform. Once that is established, the employer then has to act fairly and in good faith.


Read the judgment

Marson v Coral Princess Cruises (NQ) Pty Ltd t/a Coral Expeditions [2020] FWC 2721, 25 May 2020

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