The Fair Work Ombudsman (FWO) recently began legal proceedings against an employer after it attempted to avoid its obligations by placing six of its employees on extended stand down due to a lack of work.
Redundancy – happens when an employer either:
- doesn’t need an employee’s job to be done by anyone, or
- becomes insolvent or bankrupt.
Stand down – involves directing an employee to stop performing work for a specified period, and not paying wages to the employee.
Under the FW Act, you can stand down an employee if you cannot usefully employ them due to an interruption to your business
All in all the employees were without work or pay for more than 7 months.
The employees complained to the FWO who tried to resolve the issues.
Inspectors advised the employer standing down employees without pay due to a lack of work is unlawful and the employees had been made redundant.
So the employer was obligated to pay the employees redundancy pay, payment in lieu of notice and accrued leave entitlements.
On top of those payments, the company now faces penalties of up to $51,000 per breach, while its director is looking at $10,200 per breach.
Lesson: please seek advice if you are looking to engage in activities like redundancy and stand downs – they are complicated exercises which require sound advice or they could end up becoming very expensive steps.