Stand Down Notice (Fair Work s524)

Section 524 of the Fair Work Act 2009 provides the legal framework for standing down an employee without pay. This rule applies when you cannot usefully employ an employee because of factors outside your control. You are not required to pay the employee for the time they are stood down, provided you follow the law correctly.

The legislation specifies three acceptable reasons for a stand down. You can issue this notice when you stop work because of industrial action, or when a breakdown of machinery or equipment occurs. The third reason applies when a stoppage of work happens for any cause that the employer cannot reasonably be held responsible for.

For tradespeople and small business owners, this usually covers major equipment failure or natural disasters. For example, if a storm damages your workshop roof and makes it unsafe to work, you can stand down staff. If your main excavator breaks down and you cannot hire a replacement, you may stand down the operator. However, you cannot stand down staff just because cash flow is low or you have no orders. The cause must be external and stop you from providing useful work.

Modern Awards and Enterprise Agreements play a critical role in this process. While the Fair Work Act sets the baseline rules, specific awards often contain detailed clauses about stand downs. These clauses modify how and when you can use the Section 524 provisions.

Some Modern Awards require you to try and find other duties for the employee before standing them down. Others may set out specific rules regarding notice periods or what happens if the stand down continues for a long time. For instance, the Building and Construction General On-site Award contains specific dispute resolution procedures for stand downs. An Enterprise Agreement specific to your business might also include extra restrictions or obligations that override the standard Act.

Before you stand anyone down, you must check the relevant Modern Award or your registered Enterprise Agreement. You must follow the terms most favourable to the employee. Failing to check these documents can lead to a breach of industrial laws, resulting in back-pay claims or penalties.

Valid Reasons for Stand Down

You can stand down employees without pay when they cannot usefully be employed because of specific circumstances outside your control. These circumstances must stop the work from happening. Section 524 of the Fair Work Act 2009 sets out the rules for this.

Stoppage of Work A stoppage of work is the most common reason for a stand down. This happens when an external event brings your business activities to a halt.

• Natural Disasters and Severe Weather: If a severe storm, flood, or bushfire damages your workshop or makes the work site unsafe, you can stand down staff. This also applies if local authorities close roads or cut off power, meaning work cannot physically proceed. The stoppage must be the direct cause of the inability to work.
• Equipment Failure: If a vital piece of machinery breaks down and you cannot obtain a replacement or repair it immediately, you may stand down employees who usually operate that machinery. It must be equipment essential to the business, not a minor tool like a drill.
• Supplier or Third Party Failure: If a key supplier fails to deliver materials essential to a job, and you have no alternative supply, you can stand down workers. For example, if a concrete truck fails to arrive and you cannot pour the slab, the concreters cannot work.

Safety Shutdowns and Industrial Action

• Safety Shutdowns: If an inspector from Work Health and Safety (WHS) or Safe Work Australia issues a prohibition notice, you must stop work immediately. You can stand down employees for the duration of the shutdown or until the safety issue is rectified.
• Industrial Action: If a strike by other employees, such as the union representing transport drivers, prevents your staff from accessing materials or the site, you can stand down your employees. This applies even if your own staff are not on strike.

Invalid Reasons for Stand Down

You cannot stand down employees simply to save money or because business is slow. The trigger must be an external event that stops work.

• Low Cash Flow: If you have money in the bank to pay wages but choose not to, you cannot stand down staff. Financial difficulty alone is not a valid reason under the Fair Work Act.
• Lack of Bookings: A quiet week or a dip in customer orders is a business risk you must manage. You cannot stand down workers just because there is no work lined up. In this situation, you might need to consider annual leave or redundancies instead.
• Poor Planning: If you run out of materials because you forgot to order them, this is considered your fault. It is not a valid stand down reason. The failure must be outside your control.

Under the Fair Work Act 2009 (Cth), specifically section 524, you cannot stand down an employee simply because work is quiet. You must prove the employee cannot be usefully employed for their ordinary days or hours of work. This is a legal test, not just a business decision.

The Act states that you may stand down staff if a stoppage of work occurs for any cause you cannot reasonably be held responsible for. This includes equipment breakdown, industrial action, or a lack of supplies. However, the 'usefully employed' test requires you to look for alternative work before you stop paying them. If there is useful work available, the stand down is not lawful.

You must ask yourself a practical question. Is there any productive task the employee can perform that fits within their skill level and the nature of their business? The work does not need to be their usual specialised task. It simply needs to be productive and suitable.

This obligation covers a wide range of potential duties. For a tradesperson, this might mean shifting focus from billable jobs to workshop maintenance if they cannot attend a site due to weather or material shortages. You can direct an employee to clean the workshop, service tools, organise the yard, or undertake stocktaking. These tasks count as useful employment. You must pay them their ordinary rate for this time.

Training is another critical option. If there is no hands-on work, you can use the downtime for upskilling. This includes formal safety inductions, reviewing equipment manuals, or completing online compliance modules related to their trade. Directing an employee to complete mandatory training during a stoppage is a valid way to keep them usefully employed.

You need to document this process. If you decide to stand down a worker without pay, you must keep records showing why no alternative work was available. If an employee refuses a reasonable direction to perform cleaning or other useful duties, you may need to address this as a performance or conduct issue.

To meet your obligations under the Fair Work Regulations 2009 and relevant Modern Awards, review the situation before every shift. Do not assume a stand down applies automatically. If useful work exists, you must provide it or pay the employee their standard wages.

Employee Entitlements During Stand Down

Under the Fair Work Act 2009 (Cth), specifically section 524, a stand down is essentially an unpaid pause in work duties. If you cannot usefully employ an employee because of equipment breakdown, a stoppage of work, or an industrial action, you are not legally required to pay them for the duration of the stand down. This means the employee does not receive wages or their usual salary for the specific days they are stood down.

However, the employment relationship does not end. They remain your employee, and continuity of service is preserved. This is critical because it means their annual leave continues to accrue during this time. Even though they are not working and not getting paid, they are still banking their regular leave hours. This is based on the National Employment Standards (NES), which state that leave accumulates based on ordinary hours worked, and a stand down period counts towards continuous service.

For tradespeople and small businesses facing a sudden stoppage, taking unpaid leave can create significant financial stress for your team. To bridge this gap, you and your employee can agree for them to access their accrued annual leave. This arrangement keeps their income flowing while you cannot provide work. Any agreement to take annual leave must be voluntary and recorded in writing. You cannot force an employee to take leave unless their registered agreement specifically allows it during a stand down.

Superannuation is another area you must manage carefully. The Superannuation Guarantee (Administration) Act 1992 requires you to pay super on Ordinary Time Earnings (OTE). During an unpaid stand down, there are no earnings. Therefore, you are not required to pay the superannuation guarantee for the specific days or weeks the employee is stood down without pay. If the employee chooses to take paid annual leave during this period, you must pay superannuation on those annual leave payments as usual.

Before you stand anyone down, check your modern award or enterprise agreement. Some specific awards have different rules or extra steps you must follow. If you get the process wrong, you risk underpayment claims or disputes. Always document the dates and reasons for the stand down clearly.

Applying to the Fair Work Commission

You can stand down an employee without pay while work stops because of equipment breakdown, industrial action, or a stoppage of work for which you cannot reasonably be held responsible. This is done under section 524 of the Fair Work Act 2009. However, you cannot rely on this section indefinitely to keep an employee off the books without pay.

If the stoppage of work continues for more than one month, or you expect it to last longer than one month, the rules change. Section 525 of the Fair Work Act 2009 requires you to apply to the Fair Work Commission. You must ask the Commission to extend the stand down period for a further specified time. You cannot simply decide to extend the stand down on your own. Failing to make this application when required means you must pay the employee their usual wages, even if no work is available.

When you apply to the Commission, you must prove the circumstances for the stand down still exist. The Commission will look at the specific facts of your case. They will consider whether you have taken all reasonable steps to restart operations. The Commission has the discretion to grant the extension, refuse it, or grant it with specific conditions. You should prepare evidence of the issue, such as reports from mechanics, supplier notices, or evidence of natural disasters, to support your application.

Redundancy and Termination

A stand down is designed to be a temporary measure. It is not a way to manage a permanent lack of work. If the stoppage becomes permanent, you cannot keep the employee on a stand down forever. In this situation, the job likely no longer exists. This usually triggers a redundancy.

Under the Fair Work Act 2009, a redundancy happens when an employer no longer requires the job to be done by anyone because of changes in the operational requirements of the enterprise. If the machinery is permanently broken, the contract is permanently cancelled, or the work site shuts down, the operational requirements of your business have changed.

You must follow proper consultation requirements and notice periods set out in the Fair Work Act 2009 and any applicable Modern Award or Enterprise Agreement. This includes consulting about the redundancy and providing the employee with the required minimum notice of termination. You must also pay the employee their full redundancy pay entitlements, unless the business is a small business employer with fewer than 15 employees and specific exceptions apply.

If you terminate an employee during or after a long stand down without a valid reason, such as redundancy, you risk an unfair dismissal claim. It is critical to distinguish between a temporary pause where you ask the Commission for more time, and a permanent stop where you must follow redundancy procedures.

Date and Employee Details

Fill in the current date at the top of the form. You must enter the employee's full name and job title. Check that these details match the information in your payroll records exactly. If you use a payroll software system, print the employee details from the system to ensure accuracy. You also need to record the name of your business or trading name as it appears on the ABN register.

Dates of Stand Down

You must specify the start date and the expected end date. The start date is usually the first day the employee cannot be usefully employed because of the stoppage. Under the Fair Work Act 2009 (Cth), the stand down continues until the stoppage ends. You cannot set an arbitrary end date that extends beyond the time the work is unavailable. If you are unsure when work will restart, you may write 'Until further notice' or 'Until [specific event] is resolved', but you must review the situation daily. When the stoppage ends, you must notify the employee immediately to return to work.

Payment During Stand Down

In most cases, you do not pay the employee during the stand down period. However, you must check the applicable Modern Award or Enterprise Agreement. Some awards have specific clauses requiring payment for a certain number of days during an equipment breakdown or natural disaster. To confirm this, check the 'Stand Down' clause of the relevant award, such as the Building and Construction General On-site Award 2020 or the Manufacturing and Associated Industries and Occupations Award 2020.

Reason for Stand Down

You must clearly state the reason for the stand down in the designated section. The Fair Work Act 2009 (Cth), specifically section 524, limits the reasons to three specific circumstances. You must select the one that applies to your situation.

1. Industrial Action: Use this if a strike or industrial action by other employees stops the employee from working.
2. Breakdown of Machinery or Equipment: Use this if a critical piece of equipment fails and you cannot reasonably assign the employee other duties. You must explain that the failure is not your fault. For example, write 'Sudden mechanical failure of the primary excavator due to hydraulic rupture. Replacement parts unavailable.'
3. Stoppage of Work: Use this if an event outside your control stops work. This includes natural disasters like floods, fires, or storms, or a lack of supplies that you could not have reasonably foreseen.

Do not simply write 'shortage of work' or 'economic downturn'. These are not valid reasons for a section 524 stand down and may lead to a claim for unpaid wages. You must be specific about the event that caused the stoppage. If a supplier failed to deliver materials, state the supplier's name and the missing items. If a storm caused site damage, describe the damage and the safety risk it presents. Keep your records of this event as evidence in case of a future dispute.

Signatures

You must sign and date the notice as the employer. Provide a printed version of your name and your position, such as 'Director' or 'Site Manager'. Ask the employee to sign and date the notice to acknowledge they have received it. Give the employee a copy immediately and keep the original for your business records.