Pub­li­ca­tions

COVID-19 | The Fair­ness Prin­ci­ple in Stand­ing Down Employees

In the recent mat­ter of Mr Ryan La Plume v Thomas Foods Inter­na­tion­al Pty Lim­it­ed T/A Thomas Foods Inter­na­tion­al [2020] FWC 3690, the Fair Work Com­mis­sion (FWC) con­sid­ered an appli­ca­tion to deal with a stand down dis­pute aris­ing in the con­text of the COVID-19 pan­dem­ic. This mat­ter demon­strates the impor­tance of employ­ers tak­ing prin­ci­ples of fair­ness into con­sid­er­a­tion when mak­ing deci­sions regard­ing stand­ing down employees.

This case was decid­ed in accor­dance with the gen­er­al stand down pro­vi­sions, as opposed to the recent­ly intro­duced COVID-19 spe­cif­ic pro­vi­sions relat­ing to the more flex­i­ble Job­Keep­er enabling stand down direc­tion; that direc­tion only applies in cir­cum­stances where the employ­er and affect­ed employ­ees are in receipt of Job­Keep­er pay­ments. As can­vassed fur­ther below, that was not the posi­tion here. 

The Facts

In 2015 Ryan La Plume, the Appli­cant, was employed as a full-time export doc­u­men­ta­tion clerk by Thomas Foods Inter­na­tion­al Pty Ltd (Thomas Foods Inter­na­tion­al), a cor­po­rate enti­ty with­in the mul­ti bil­lion-dol­lar Thomas Foods group. 

The dis­rup­tive effect of the COVID-19 pan­dem­ic on glob­al eco­nom­ic activ­i­ty has been well doc­u­ment­ed. Although Thomas Foods Inter­na­tion­al did not cease oper­a­tions, the pan­dem­ic had a mate­r­i­al impact on the busi­ness due to a fall in demand and restrict­ed export mar­kets. In response to the pan­dem­ic, Thomas Foods Inter­na­tion­al under­took a num­ber of ini­tia­tives to pro­tect its com­mer­cial inter­ests, includ­ing stand­ing down approx­i­mate­ly 300 employ­ees and not ros­ter­ing some casuals.

On 4 May 2020, the Appli­cant, who was based in the head office depart­ment, was stood down from his employ­ment for an indef­i­nite peri­od. Notably, activ­i­ty in the head office of Thomas Foods Inter­na­tion­al was impact­ed to a less­er degree by the pan­dem­ic than oth­er areas of the Thomas Foods group busi­ness, and as a result the employ­er of head office staff, Thomas Foods Inter­na­tion­al, was inel­i­gi­ble to claim Job­Keep­er wage sub­si­dies from the Fed­er­al Government. 

Ulti­mate­ly, the Appli­cant was one of five employ­ees stood down from the head office and was the only per­son in the export doc­u­men­ta­tion team to be stood down. The Appli­can­t’s work was dis­trib­uted among the remain­ing mem­bers of his team. 

Dur­ing the Appli­can­t’s peri­od of stand down, he became increas­ing­ly con­cerned and made enquiries regard­ing rede­ploy­ment options and the Job­Keep­er wage sub­sidy. Even­tu­al­ly, the Appli­cant expressed his desire to be made redun­dant. This request was reject­ed by Thomas Foods International. 

The Dis­pute

The dis­pute between the Appli­cant and Thomas Foods Inter­na­tion­al was first referred to pri­vate con­fer­ence before the FWC where the par­ties ulti­mate­ly agreed that the Appli­can­t’s posi­tion would be made redun­dant effec­tive 25 June 2020. A dis­pute regard­ing the legit­i­ma­cy of the stand down, how­ev­er, was not resolved. As such, that dis­pute pro­ceed­ed to arbi­tra­tion before the FWC

The Appli­cant chal­lenged the stand down on two grounds:

  • that it was not autho­rised by sec­tion 524 of the Fair Work Act 2009 (Cth) (FW Act) which pro­vides that an employ­er may stand down an employ­ee dur­ing a peri­od in which the employ­ee can­not use­ful­ly be employed because of […] a stop­page of work for any cause for which the employ­er can­not rea­son­ably be held respon­si­ble”; and
  • that the terms of the stand down were unfair. Notably, in rela­tion to stand down dis­putes, sec­tion 526(4) of the FW Act pro­vides that in deal­ing with the dis­pute, the FWC must take into account fair­ness between the par­ties con­cerned”.

To sup­port these con­tentions, the Appli­cant submitted:

  • he was giv­en too lit­tle time from being told he was going to be stood down (28 April 2020) to when it took effect (4 May 2020);
  • pri­or to being stood down, he had a full work­load and there was no rel­e­vant stop­page of work due to COVID-19 or for any oth­er reason;
  • that inad­e­quate com­mu­ni­ca­tion from Thomas Foods Inter­na­tion­al made him feel iso­lat­ed and frustrated;
  • his low annu­al leave bal­ance should have been a fac­tor weigh­ing against stand­ing him down; and
  • it would have been fair­er to him if all mem­bers of the export doc­u­men­ta­tion team worked reduced hours, rather than him alone bear­ing the heavy bur­den of being stood down.

In response, Thomas Foods Inter­na­tion­al contended:

  • that it only made stand downs to the head office depart­ment when absolute­ly nec­es­sary, and stand downs had occurred to oth­er busi­ness units beforehand; 
  • the Appli­cant was one of five head office employ­ees who had been stood down and as a result, was not sin­gled out; 
  • the stand down mit­i­gat­ed or delayed the need for redun­dan­cies, and was there­fore a fair response in the circumstances;
  • that COVID-19 was hav­ing a mate­r­i­al impact on Thomas Foods Inter­na­tion­al’s export activ­i­ties and the work of the export doc­u­men­ta­tion team;
  • rede­ploy­ment and oth­er alter­na­tives to stand down were con­sid­ered and dis­cussed with the Appli­cant, but no viable options exist­ed; and
  • that Thomas Foods Inter­na­tion­al engaged in reg­u­lar com­mu­ni­ca­tion with the Applicant.

The Deci­sion

In con­sid­er­ing the ques­tion of whether there was a stop­page of work” such as to prop­er­ly enliv­en sec­tion 524 of the FW Act, Deputy Pres­i­dent Ander­son stat­ed that (at [49]):

[…] what con­sti­tutes a stop­page of work” in sec­tion 524 should not be so broad­ly con­strued as to include a mere down­turn in busi­ness activ­i­ty nor be so nar­row­ly applied as to require the entire ces­sa­tion of busi­ness activ­i­ty. The statu­to­ry phrase is a stop­page of work, not a stop­page of the busi­ness. For there to be a stop­page of work some defined busi­ness activ­i­ty with respect to which work is per­formed needs to cease, but not the ces­sa­tion of busi­ness activ­i­ty entire­ly. Whilst in cer­tain cir­cum­stances both may apply (for exam­ple, the fire at Thomas Foods Mur­ray Bridge in Jan­u­ary 2018 result­ing mass stand downs and rede­ploy­ments) a busi­ness might still be oper­at­ing notwith­stand­ing an exter­nal event caus­ing dis­tinct areas of work to be suf­fi­cient­ly impaired so as to war­rant stand downs.”

In the present mat­ter, Deputy Pres­i­dent Ander­son did not con­sid­er that the cir­cum­stances con­sti­tut­ed a stop­page of work” for the pur­pos­es of sec­tion 524

It was not­ed that although the export doc­u­men­ta­tion team did expe­ri­ence a down­turn in work due to COVID-19, the work of that team con­tin­ued and there was no stop­page per se. While the down­turn in work may have war­rant­ed a reduc­tion in hours, Deputy Pres­i­dent Ander­son not­ed that the Appli­cant could have been employed to do some of the work which did continue. 

Fur­ther­more, in con­sid­er­ing Deputy Pres­i­dent Ander­son took into account prin­ci­ples of fair­ness, as required by sec­tion 526(4) of the FW Act. He stat­ed (at [57] to [59]):

It was fair for Thomas Foods to reduce work­ing hours in the export doc­u­men­ta­tion team. A cir­cum­stance beyond its con­trol had impact­ed demand, and whilst the rel­e­vant busi­ness activ­i­ty did not stop the employ­er need­ed to make con­se­quen­tial reduc­tions in labour. It was also rea­son­able for Thomas Foods to, at least ini­tial­ly, main­tain employ­ment rela­tion­ships and use options short of redun­dan­cy. I am also sat­is­fied that Thomas Foods gen­uine­ly con­sid­ered rede­ploy­ment oppor­tu­ni­ties, which nei­ther the employ­er nor Mr La Plume could identify.
Yet the employ­er chose to impose the whole bur­den of reduc­tion in hours on one full time employ­ee, Mr La Plume whilst retain­ing full time employ­ment amongst oth­er mem­bers of the busi­ness unit. That was unfair.
[…]
A fair approach would have been for Thomas Foods to apply some appor­tion­ment to the reduc­tion to com­pa­ra­ble employ­ees in the export doc­u­men­ta­tion team, not sin­gu­lar­ly to Mr La Plume.”

As a result, it was held that the stand down was not con­sis­tent with the FW Act. Thomas Foods Inter­na­tion­al was ordered to pay the Appli­cant an amount equiv­a­lent to the Appli­can­t’s stand down peri­od, less an amount rep­re­sen­ta­tive of what have been a fair reduc­tion in the Appli­can­t’s hours dur­ing the stand down period. 

Final Obser­va­tions

The deci­sion in this case con­firms that stand­ing down employ­ees pur­suant to the gen­er­al pro­vi­sions in the FW Act is a mea­sure of last resort. An employ­er must not only estab­lish the req­ui­site stop­page of work but also that the imple­men­ta­tion of the stand down does not lead to unfair­ness to affect­ed employ­ees. Some employ­ers, par­tic­u­lar­ly in the ear­ly stages of the COVID-19 pan­dem­ic, adopt­ed a des­per­ate times, des­per­ate mea­sures” approach that assumed there was a broad right to stand down employ­ees in times of dif­fi­cul­ty, over­look­ing the strict require­ments of sec­tion 524 of the FW Act. This deci­sion is unlike­ly to be the last of its kind. 

The case also high­lights the ben­e­fits for employ­ers in tak­ing advan­tage, where pos­si­ble, of the flex­i­bil­i­ty con­ferred by the var­i­ous Job­Keep­er direc­tions and requests. The Job­Keep­er enabling stand down direc­tion is, by design, broad­er than the gen­er­al right of stand down pur­suant to sec­tion 524 of the FW Act, pur­suant to which this case was deter­mined. While much of the com­men­tary on Job­Keep­er focus­es on the $1500 per fort­night pay­ment, the flex­i­bil­i­ty con­ferred by the scheme should be top of mind for eli­gi­ble employ­ers need­ing to adapt dur­ing the ongo­ing COVID-19 crisis.