According to this morning’s (24 March 2020) newspaper:

“A source who could not be named for commercial-in-confidence reasons said unemployment at that level would mean more than 2 million Australians out of work. It would be the highest jobless rate since 1932”.

My business has no business

Where there is no demand for your service or product, your business must go into “survival mode”. This may mean mass layoff of your employees, who may have been loyal to you for many years.

The good news is that you have accrued employees’ leave entitlements, such as annual or long service; so if you do temporarily close the doors of your business, at least your employees will have some income going forward. If your employees are casual or have no leave balance, then the scenario becomes one of “leave without pay.

Can I legally send home my employees without pay (or on leave)?

Yes you can.

Section 523 of the Fair Work Act 2009 provides the framework for the standing down of employees without pay in certain circumstances, including “a stoppage of work for any cause for which the employer cannot reasonably be held responsible”. This provision should also be a feature of your business’s contracts of employment.

What’s the process in standing down employees?

Remember: This should come as no surprise to your employees. They will see that they have no work.

My suggested process is:

  1. Talk to your employees either in a group meeting or individually, explaining the difficult (ie impossible) circumstances that you are faced with.
  2. Explain that they can take any leave accrued (not personal leave) – and have these details ready for them. This should already be on their payslips or you can have your payroll person print off a leave report.
  3. Confirm that you are standing them down in a letter. This will ensure that the employees are properly notified that they still have a job, but not just now…

Need help?

Greg Reiffel Consulting works exclusively for employers – acting as a powerful advocate in all areas of Workplace/Industrial Relations and Human Resources Management. You can contact Greg on 0438 906 050.

If you wish to receive Greg’s newsletter providing information on the latest employee relations news and trends click here and use the “contact us” tab.