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Australia - Company successfully implements partial stand down of workforce due to COVID-19

18 June 2020

A cruise operator has been found to have acted lawfully when it stood down a marine superintendent and 106 other employees, after transferring some of their duties to the 50% of staff that were not stood down. 

The stood down superintendent claimed that there was still 'useful work' for him to do, his regular duties having been primarily supervisory, including crewing and personnel management, vessel maintenance and legislative compliance. 

Relevant legislation

Section 524 of the Fair Work Act 2009 (Cth) provides that:

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:

(a) industrial action (other than industrial action organised or engaged in by the employer);
(b) a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown;
(c) a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

Relevant test

FWC Deputy President Nicholas Lake identified three criteria which must be satisfied for a lawful stand down:

  1. One of the three sub-criteria [(a) to (c) above] must be present;
  2. The employee must be unable to be usefully employed; and
  3. The employee must be unable to be usefully employed because of the relevant sub-criteria. 

(1) Stoppage of work

The Commission accepted the worker's argument that the stand down provisions were not enlivened when there was a 'mere reduction' in work, as opposed to a 'stoppage' of work. However, Deputy President Lake espoused that there is a stoppage of work when there is a stoppage of trade, despite the fact that some employees may still be required to perform some or all of their duties. 

Consequently, Deputy President Lake held that the cruise company's continued need for the performance of administrative and caretaker duties did not constitute the activity of the business. Instead, the Government's suspension of the employer's trade (being the carriage of passengers on cruise ships) and its lack of a revenue stream constituted a stoppage of work. 

(2) Useful employment

The test for useful employment was broken into two stages: 

  1. An assessment of the work available: it must be determined if there is useful work and then the number of employees required to perform that useful work; and 
  2. An analysis of the conduct of the employer against notions of good faith and fairness: the economic consequences to the employer should be considered.

Even though some of the superintendent's duties remained necessary, Deputy President Lake found that the superintendent's continued active role could not be characterised as useful due to the considerable reduction in activities.

(3) Not useful because of relevant circumstance

As the superintendent was stood down along with half of the workforce, this helped ameliorate any concerns that the superintendent had been targeted for stand down. Deputy President Lake also noted that the particular tasks being performed by the superintendent had largely diminished in size due to COVID-19. 

Deputy President Lake ultimately found that the cruise company had reasonably allocated the useful work and that the numerous measures taken to preserve itself, including a widely implemented stand down, indicated that the action was not one targeted at the superintendent. 

Marson v Coral Princess Cruises (N.Q.) Pty Ltd T/A Coral Expeditions [2020] FWC 2721 (25 May 2020)

If you require further information or have any queries in relation to this legal update, please contact a member of our Employment team.