s.526 - Stand down

Alleged stand down dispute - whether employee stood down - relief sought judicial power - application dismissed.

[1] On Tuesday 28 July 2020, Mr Dylan Collis made application to the Commission pursuant to s.526 of the Fair Work Act 2009 (the Act) in relation to an alleged stand down (the Application). Mr Collis named SPI Plumbing Pty Ltd as the Respondent to the Application but during its conduct, I was advised by the Respondent's Director, Mr David Ristevski, that the correct name of the Respondent is SPI Plumbing (Australia) Pty Ltd. I therefore varied the Application accordingly, exercising the Commission's discretionary power under s.586(a) of the Act.

[2] Mr Collis contends he has been stood down without pay since Wednesday 8 July 2020 and that the Respondent has not complied with s.524 of the Act, on the basis that the circumstances in that section have not applied. Mr Collis says he has been available to work in his role as a plumber throughout and seeks payment at his full rate of pay for the period during which he has been stood down.

[3] I conducted a conference with the parties at midday on Thursday 30 July 2020 and, having been unable to assist the parties in resolving the matters in dispute through conciliation, made directions for the filing and service of materials and conducted a hearing on Thursday 6 August 2020. At the hearing evidence was given by:

[4] The Respondent is a plumbing company. It employs a crew of 8 plumbers and 3 apprentices, of which Mr Collis is one of the former. It also employs administration staff, of which Ms Bell is one. The Respondent's work is 99% commercial construction. It performs next to no residential construction work. As outlined above, Mr Ristevski is the Director of the Respondent. Mr Hogarty manages day to day plumbing operations. Together, Mr Ristevski and Mr Hogarty source new work for the Respondent.

[5] The Respondent has not yet become eligible for JobKeeper payments although it has suffered a decline in the volume of its work. In early July 2020, Mr Ristevski implemented some operational changes to respond to the reduced volume of work, his objective being to keep the entire plumbing crew employed until things picked up again. The solution arrived at was for all employees to work reduced hours. For the plumbing crew, this meant working every second week only, on a rotating roster. With the exception of Mr Collis, all employees of the Respondent have voluntarily agreed to work less hours since 8 July 2020, on a reduced rate of pay.

[6] On Monday 13 July 2020, Mr Collis received a letter dated 8 July 2020 from Mr Ristevski, which stated:

We all find ourselves in an unprecedented and difficult time due to the impacts of the coronavirus outbreak.

I am writing to inform you that as of 8th July 2020 you have been stood down without pay until further notice from your employment as a plumber with SPI Plumbing (Aust) Pty Ltd because work has slowed considerably.

I will keep you informed by email, as it becomes clear when work will return to normal.

To confirm, SPI Plumbing (Aust) Pty Ltd does not qualify for the JobKeeper scheme, and I am therefore informing you that you will not be receiving JobKeeper payments.

It is hoped to job share with the other plumbers over the coming weeks but at present you have been stood down without pay but remain employed for the period of the stand down. You will continue to accumulate leave entitlements as normal during this period.

If you take paid or unpaid leave that has been authorised by SPI Plumbing (Aust) Pty Ltd, or if you're away from work for any other authorised reason (eg. a public holiday), then you're not considered to be stood down under the Fair Work Act for that time.

You will be paid up to close of business Tuesday 7th July when this stand down takes effect. You will be paid for any public holidays you would usually have worked during this stand down period.

Should you have any questions in relation to this letter or if you wish to take up other employment during the stand down period, please contact me on [telephone number redacted] to discuss.

For up to date information about your workplace entitlements and obligations, including information about stand downs from work, visit the Fair Work Ombudsman Coronavirus and Australian workplace laws website at coronavirus.fairwork.gov.au. This includes recent updates and key links to other government bodies that may be able to support you during this time.

Thank you for your understanding during this difficult time."

[7] The parties have also produced a document dated 20 July 2020 issued to the plumbing crew. This document stated:

"Confirmation of discussions regarding the impact of COVID19

Since the beginning of the pandemic, your support has been greatly appreciated as we find ourselves in difficult times due to the continuing coronavirus outbreak.

There has been a reduction of new contracts being won (unable to compete with some companies unrealistically undercutting) and a delay in new projects being started causing disruption to work schedules.

As a temporary messure, from 13th July, your collective agreement to drop your hourly rate and preparedness for job rotation (no work no pay) has given the business the ability to continue for the foreseeable future. An exact timeline is unknown.

While the business has had some tax relief, SPI Plumbing Pty Ltd and SPI Plumbing (Aust) Pty Ltd do not qualify for the JobKeeper scheme at this stage, therefore no JobKeeper payments.

Through the the Fair Work Act, there is a back up for business where a "stand down" may be an option if there is a stoppage of work - you remain employed for the period of the stand down but without pay. You will continue to accumulate leave entitlements as normal during this period.

If you take paid or unpaid leave that has been authorised by SPI Plumbing (Aust) Pty Ltd, or if you're away from work for any other authorised reason (eg. a public holiday), then you're not considered to be stood down for that time.

Should you have any questions please contact me on [telephone number redacted] to discuss.

For up to date information about your workplace entitlements and obligations, including information about stand downs from work, visit the Fair Work Ombudsman Coronavirus and Australian workplace laws website at coronavirus.fairwork.gov.au. This includes recent updates and key links to other government bodies that may be able to support you during this time.

Thank you for your understanding during this difficult time."

[8] At the hearing, Mr Ristevski and Mr Hogarty provided an update on the state of the Respondent's business. The hearing took place with the Stage 4 Restrictions on business activity having been implemented by the Victorian Government. Mr Ristevski said that the Respondent had not been able to secure new project work and in terms of its current construction project work, there was no one working and it was extremely difficult to plan. There were two reasons for this.

[9] Firstly, the total number of workers permitted to be working on a commercial construction project have been reduced by 75%. That is to say, such projects can only be manned at 25% of full capacity. As to whom is engaged at any one time, Mr Ristevski stated that such decisions are made by the builders managing the projects and as such, the Respondent has to wait until it is called upon to perform the plumbing work it has been contracted to provide.

[10] Secondly, for smaller commercial construction projects (of less than 3 storeys height) the Stage 4 Restrictions permit no more than 5 workers on a site at any time. Again, the decision as to whom is allowed on a site to perform work at any given time is that of the builder managing the particular project.

[11] Mr Hogarty gave evidence that in the period 3-7 August 2020, he expected that the Respondent will not have had a single plumber working. Mr Hogarty also confirmed the builders were deciding which workers were being engaged on projects and that the Respondent was not currently being called upon. The evidence before me indicated that Mr Ristevski and Mr Hogarty were trying to both plan what existing work the Respondent had and secure new work, but that the circumstances were constantly changing and they did not control when their plumbers might be able to perform work on its existing construction project work.

[12] Mr Collis challenges the basis for the stand down since 8 July 2020. He also claims he was the only employee completely stood down and says this came after he requested a redundancy in response to the proposal of the Respondent for a rotating roster and reduced pay rate. While Mr Collis says he has been discriminated against because he is the only employee to be in this situation, he acknowledges he elected not to go on the rotating roster because it would not work for him, particularly if he was trying to source alternate work. Mr Collis submits that as a full time employee, he is entitled to 40 hours work per week at his full rate of pay. Mr Collis says he has been available to work throughout and claims his full rate of pay since 8 July 2020.

[13] The Respondent says its letter dated 8 July 2020 was sent to Mr Collis on 13 July 2020 because during the period 9 July - 13 July 2020, there were some ongoing discussions being held with Mr Collis. The Respondent maintains the stand down was due to a stoppage of work for which it cannot be held responsible, namely COVID-19. It says there is no new work being won and no option exists for full time employment. The Respondent says seven of its plumbers are on the rotating roster and acknowledges the rate of pay has been reduced but says that its plumbing crew is paid at well above award rates of pay. It says Mr Collis has been asked whether he wishes to use his annual leave entitlements on a number of occasions.

[14] Section 524 of the Act falls within Part 3-5 of Chapter 3 of the Act and relevantly provides:

"524 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.

(3) If an employer stands down an employee during a period under subsection (1), the employer is not required to make payments to the employee for that period."

[15] Section 526(1) of the Act provides that the Commission may deal with a dispute about the operation of Part 3-5 of Chapter 3. Section 526(2) states that the Commission may do so by arbitration. Section 526(3) sets out certain standing requirements, which are met by Mr Collis.

[16] Section 526(4) of the Act provides:

"In dealing with the dispute, the FWC must take into account fairness between the parties concerned."

[17] Under s.524 of the Act, an employer may stand down an employee during a period in which the employee cannot usefully be employed because of one of the three circumstances outlined. In this case, it is only s.524(1)(c) that is relevant and the Respondent's position rests on the acceptance of its proposition that Mr Collis cannot usefully be employed because of a stoppage of work due to a cause for which it cannot reasonably be held responsible.

[18] The significance of an employer standing down an employee is that the employer is not required to make payments to the employee for the period of the stand down (s.524(3)). This is the focus of Mr Collis' application.

[19] Mr Collis challenges the basis of the stand down that has been invoked by the Respondent. He says he has been available to work throughout and claims his full rate of pay since 8 July 2020. In effect, Mr Collis seeks a decision that determines that he has been stood down since 8 July 2020 in a manner that does not comply with s.524 of the Act. Deputy President Colman outlined in Construction, Forestry, Maritime, Mining and Energy Union v DP World Melbourne Ltd[1] why this is not within the Commission's power:

"Such a decision would be declaratory in nature. It would purport authoritatively to determine whether the company had a legal justification not to pay employees based on s 524 of the Act. Such a decision would require the exercise of judicial power."[2]

[20] The Deputy President also referred to the decision of the Full Bench in Bristow Helicopters Australia Pty Ltd v AFAP (Bristow Helicopters).[3] I agree with the Deputy President's summation of Bristow Helicopters and his characterisation of it as a useful illustration of the Commission's power under s.526 of the Act:

"In Bristow Helicopters Australia Pty Ltd v AFAP, a Full Bench of the Commission overturned a decision that had determined that an employer had contravened s 524. Pursuant to the decision, orders had been issued requiring the employer to treat the stand downs as null and void and to pay the affected employees their wages for the relevant period. The Full Bench held that these orders were beyond power, and referred to the decision of Gibbs CJ in R v Gough; Ex parte Key Meats Pty Ltd, where his Honour affirmed that the Commission's predecessor had no jurisdiction to determine the legal rights of employees who had been stood down, or to enforce their award rights. The Full Bench upheld a different order made by the Commissioner, which had required that the employer withdraw the stand downs and, prospectively, allow employees to return to work. This order was permissible, as it created new rights and obligations and involved the exercise of arbitral power."[4] (references omitted)

[21] Applying this analysis to the matter before me, it is not within my power to make orders that Mr Collis seeks that would declare the stand down implemented by the Respondent from 8 July 2020 to date void and order the Respondent to pay Mr Collis his wages for this period. Only a Court may make such orders.

[22] It would, however, be within my power to order that the Respondent withdraw the stand down of Mr Collis prospectively, so as to allow him to return to work.

[23] Restrictions under State 4 COVID-19 restrictions for the Construction sector were implemented by the Victorian Government, effective 11:59pm on Wednesday 5 August 2020. Following this, there were subsequent discussions between the Victorian Government and employer and employee representatives from the Construction sector. The website of Business Victoria currently provides guidance material for the Construction sector under State 4 restrictions and defines 'permitted work premises' in the Construction sector as follows:

• Building and non-building construction (including residential).

• Construction of critical and essential infrastructure and services to support these projects, and other construction in line with restrictions.

• Critical repairs to any premises, are allowed, where required for emergency or safety.

[24] The Business Victoria website currently outlines that from 11:59 am on Saturday 8 August 2020, a number of changes need to be adopted by all Melbourne construction sites, including:

1. no more than one worker per four square metres of enclosed workspace is allowed.

2. All employees, supervisors and specialist contractors (which include plumbers) are required to limit movement between multiple sites (no more than three sites per week).

3. Each small-scale construction site is to reduce the number of people on-site to five people plus a supervisor at any one time and limit movement of workers between different sites where possible (no more than three sites per week).

4. Each large-scale construction site is required to limit the daily maximum number of workers on site to the higher of:

i. 25% of their baseline workforce (the average daily number of workers on site across the project lifecycle, as derived from the project's resourcing plan as at 31 July 2020); and

[25] A small-scale construction site is defined as a construction site that does not meet the definition of a large scale construction site. A construction site is considered large scale if it is:

• Permitted to be (at completion) more than three storeys high (excluding basement); or

• Larger than 1,500m2 floor size; or

• Any office or retail fit-out; or

• Industrial, large format or retail use.

[26] Mr Ristevski and Mr Hogarty gave evidence regarding the restrictions imposed from 11.59pm on Wednesday 5 August 2020, the impact they were having on the operations of the Respondent and its capacity to provide work for its plumbing crew. As things stand, the Respondent is securing no new work. Further, its capacity, and that of its plumbing crew, to perform existing work is at the discretion of builders managing the construction projects and access to this work is impacted by the Victorian Government COVID-19 restrictions. I am satisfied on the evidence before me that Mr Collis cannot currently be usefully employed because of a stoppage of work due to these (now updated) Government imposed restrictions in the sector in which the Respondent operates and that the Respondent cannot reasonably be held responsible for this stoppage. As such, I am not persuaded to make an order that the Respondent withdraw the stand down of Mr Collis, so as to allow him to return to work.

[27] Mr Collis has neither worked nor been paid since 8 July 2020. I accept that he has been the only employee of the Respondent to be stood down for the entire period since 8 July 2020 but I observe that this is of his own choosing because he himself made the decision not to go onto the rotating roster. I also observe that Mr Collis has also elected not to take any of his accrued annual leave since 8 July 2020. These two options remain open to him and of course should the circumstances affecting the Construction sector and the Respondent's business change, it is open for him to make another application pursuant to s.526 of the Act if he remains stood down and disputes such a state of affairs.

[28] However, having regard to the circumstances before me and for the reasons stated, the Application is dismissed.

Mr D Ristevski for SPI Plumbing Australia Pty Ltd.

[1] [2020] FWC 4147.

[3] [2017] FWCFB 487 at [53] to [57].

[4] [2020] FWC 4147 at [48].

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