Fair Work Act 2009

s.526 - Stand down

Coral Princess Cruises (N.Q.) Pty Ltd T/A Coral Expeditions

Application to deal with a dispute involving stand down - s 524(1)(c) - stand down in relation to a stoppage of work - stand down relating to a government directive due to COVID-19 - whether employees could have been usefully employed - whether the Applicant was capable of useful employment - Fair Work Act 2009 ss 524,526.

[1] This decision is in relation to an application by Mr Michael Marson (the Applicant) pursuant to s 526 of the Fair Work Act 2009 (the Act). The Applicant contends Coral Expeditions (the Respondent) stood him down in contravention of s 524 of the Act. The question of whether the stand down was in breach of the Act turns on whether there was any useful work for the Applicant to perform.

[2] The matter was allocated to my Chambers on 27 March 2020. On 1 April 2020, a conference was convened. The parties were unable to resolve the matter by agreement, so directions were sent requiring the parties to provide submissions and any documentation relevant to their claim. The parties have consented to a Decision being handed down on the papers.

[3] The Respondent conducts a tourism-centric operation - a cruise line whose website states that it takes 'guests to some of the most beautiful, yet undiscovered, regions of Australia, Asia-Pacific and Indian Ocean Islands.'[1] The dispute arises against the backdrop of the COVID-19 pandemic, which has placed immense pressure on governments, businesses and people across the globe. The Respondent - due to government regulations to combat spread of the virus - is no longer able to conduct its business.[2] Revenue has dropped to zero and the Respondent has made several refunds on, what are now, cancelled cruises.[3]

[4] On 26 March 2020, the Applicant, a Marine Superintendent within the Marine Division, was notified that he had been stood down. The Respondent in their submission outline briefly their considerations prior to standing down their employees:[4]

Considerable analysis by the Board and the Senior Management Executive was undertaken considering the costs, specialist retention requirements and basic workflows resultant from an immediate halt of business. On the initial scenario of a return to operations in June, the company had no choice but to reduce staff costs and applied a very clearly described first wave of actions which included cessation of roles that had resigned and proposed roles around growth, standing down of all casuals, standing down non-essential salaried staff/crew, reducing hours to part time and or reducing wages by 20-30% across the company. This equates to 50% (107 stood down) reduction of workforce.

Additionally, any remaining staff have been advised that should we not be able to be operational by end of June 2020 further measures would need to be applied. Given the developments of COVID 19 and expectations as outlined above we anticipate further measures will be applied by end of April to only a skeletal crew around the foundation of the Job Keeper Scheme. Mike Marson is by no means isolated or singled out.

[5] The Marine Superintendent performs a myriad of roles, but primarily is 'responsible for the overall performance of the of the Marine Division. This extends to vessel maintenance, crewing and compliance to company and legislative requirements pertinent to the operation of the vessels.'[5] The Applicant reports directly to the head of the Marine Division, the Group General Manager. The role of Marine Superintendent is one that largely facilitates other aspects of the business, with several of the Applicant's responsibilities being shared with other employees and being largely administrative in function, such as:[6]

• 'Meet weekly with the Group General Manager, providing detailed information relating to all aspects of the Operational Marine Department.'
• 'Meet weekly with the HR Manager providing constructive input on crew management activities...'
• 'Keep the HR Manager informed of all crew issues and resolutions.'
• 'Review rosters as prepared by HR Crewing and Logistic...'
• 'In conjunction with the HR Manager, Fleet Engineer and Senior Master, maintain a pool of potential replacement crew;'
• 'In conjunction with the Group General Manager, conduct performance appraisals for Fleet Engineer and Marine Ops Admin...'
• 'Provide support to Masters, Mates and Chief Engineers to conduct Marine Crew performance reviews as required.'
• 'Support the HR Manager & Group General Manager, as required to ensure vessel Masters are... conducting regular inspections...'
• 'In conjunction with the Senior Master and Fleet Engineer, verify the Safety Management System is fully functional...' and
• 'In conjunction with the Fleet Engineer be responsible for the ongoing development and maintenance of an efficient preventative management program...'

[6] Part 3-5 of the Act relates to stand down - the relevant parts are extracted below:

526 FWC may deal with a dispute about the operation of this Part

(1) The FWC may deal with a dispute about the operation of this Part.

(2) The FWC may deal with the dispute by arbitration.

(3) The FWC may deal with the dispute only on application by any of the following:

(a) an employee who has been, or is going to be, stood down under subsection 524(1) (or purportedly under subsection 524(1));

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

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.

[7] There are three primary criteria which must be satisfied for a stand down to be lawful under s 524(1). First, the employee must be stood down during a time in which they cannot be usefully employed. Second, one of the three sub-criteria must be present. In the present case, s 524(1)(c) has been argued: a stoppage of work for which the employer cannot be held responsible. The third criteria dictates that the employee cannot be usefully employed because of the stoppage, as articulated by Gostenik DP in CEPU v FMP Group:[7]

Indeed the structure and language of s.524(1) shows that there needs to be a temporal connection between one of the circumstances arising and the standing down of an employee because the employee cannot usefully be employed. The words "because of" in s.524(1) are used to indicate a causal link between the occurrence of a circumstance and the absence of useful employment.

[8] The concept of what constitutes a 'stoppage of work' has not been the subject of significant judicial commentary. In City of Wanneroo v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, Williams C applied the dictionary definition, stating:[8]

The Macquarie Dictionary Online 2008 relevantly defines "stoppage" as:

1.the act of stopping; cessation of activity, etc...

4.a cessation of work as a protest; strike: a twenty-four hour stoppage.

[9] The facts of this case are that the Respondent has entirely halted trade due to a government directive to help curb the spread of COVID-19. To include an event such as COVID-19 within the ambit of the section reflects the broad approach to interpretation adopted in Coal & Allied Mining Services Pty Ltd v MacPherson:[9]

[13] Significantly neither the Supplementary Memorandum nor the Act indicates that the stand down provisions, now contained in ss 691A and 691B, were intended by Parliament to have the operation of a code which would operate to exclude any other circumstances giving rise to a stand down. Those circumstances would be impossible to anticipate and understandably no attempt has been made by the Act to make provision for them. The Act does however relate to the specific circumstances where stand down may be effected, those being instances where the employer is unable to use the services of the employee.

[15] Properly understood, a stand down, in that context, encompasses a large range of situations where, for various reasons, an employer is unable to provide useful work for its employees, for a particular period of time, for circumstances beyond its control. The employer may be temporarily deprived of electricity to run its operation. It may not have sufficient component supplies to manufacture its goods, due to industrial disputation by the employees of its suppliers. The employer's factory may have been flooded. Numerous examples readily come to mind...

[10] While the events that could cause a stoppage have not been prescribed to a finite list, the requirement of a genuine stoppage has been interpreted strictly. In Bristow Helicopters, Cambridge C stated:[10]

[62]... The circumstances contemplated by subsection 524 (1) (c) of the Act would require identification of some event which involved work being consciously halted for some reason and ordinarily for some identified period of time. A reduction in the available work for the EC 225 helicopters, for whatever reasons, does not represent a stoppage of work in satisfaction of the terms of subsection 524 (1) (c) of the Act.

[11] On appeal, the Full Bench agreed, stating:[11]

[45] ...It cannot be said on the evidence that there was a stoppage of work in circumstances where:

(a) There remained search and rescue work to be carried out with EC225 aircraft;

(b) There remained work with the EC225 notified by the Appellant after 19 May 2016 until 2 June 2016;

(c) CASA cleared the EC225 for search and rescue and ground runs from 16 June 2016; and

(d) There remained the decision and ability of the Appellant to retrain, and engage on training, its workforce.

[46] As such, we are not satisfied that the Commissioner erred in construing section 524(1)(c) of the Act.

[12] A mere reduction in available work can not constitute a stoppage - this would go against the ordinary definition of a 'stoppage', as is required by statutory interpretation.[12] Such an interpretation would develop a perverse outcome where s 524(1)(c) could be applied so liberally as to deprive employees their fundamental entitlement to work under an employment relationship.[13] In Bristow Helicopters it is clear that the employer still had trade in which it could engage and the examples set down by the Full Bench indicate that there was sufficient useful work that could be undertaken.

[13] However, there remains a question of whether a genuine stoppage of work occurs when an employer's business is not trading, but there still exists some limited functions that can be performed. This is not a question of whether there is a stoppage of work: a stoppage exists where there is a cessation of trade. 'Work', according to the dictionary definition applies to the 'activity' of the business, which in this case relates to the carriage of passengers on various cruise holidays. This activity has entirely halted and should, therefore, be properly characterised as a stoppage of work. This continues to be the case regardless of whether some administrative or caretaker functions of the business continue to be required - these functions do not properly represent the 'activity' of the business.

[14] Where that cessation of trade is outside the control of the employer that will satisfy s 524(1)(c). Any question relating to whether a particular employee, or specific unit of the business can be stood down, is one that should be properly considered in relation to whether the employee can be usefully employed, not whether there has been a stoppage.

[15] Ultimately, this interpretation best fulfils the legislative intent of this section and is the most appropriate interpretation when considering the ordinary meaning. If a cessation of trade was not considered a genuine stoppage of work, then there would be numerous situations in which an employer would be unable to stand down an employee who cannot be usefully employed, only because certain ancillary facets of their business have not entirely ceased to operate. These more administrative roles do not constitute the activity of the business.

[16] I find that there was a genuine stoppage of work, owing to the inability of the Respondent to engage in its primary function. I find that there was no intervening cause between the government restrictions on travel and the Respondent's decision to stand down the Applicant.[14]

[17] Watson VP in AMWU v McCain relevantly summarised the explanatory memorandum and particular case law, which was recently affirmed by Flick J in CEPU v Qantas:[15]

[14] In applications under s526 of the Act reliance has been placed on the explanatory memorandum leading to the enactment of sections 524-6. Paragraph 2077 of the explanatory memorandum provides:

An employer can only stand down an employee if they cannot be usefully employed. If the employer is able to obtain some benefit or value for the work that could be performed by an employee then the employer would not be able to stand down the employee.

[15] I agree that this statement should be used as an aid in interpreting the effect of s524. As the concepts involved in s524 and the approach contained in the explanatory memorandum reflect previous case law dealing with stand down provisions in awards it is also appropriate to obtain some guidance from that case law on the proper interpretation of relevant concepts.

[16] A frequently applied statement on the meaning of "useful work" is contained in the 1971 judgement of Spicer CJ and Smithers J of the Commonwealth Industrial Court in Re Carpenters and Joiners Award. As has been noted in subsequent cases, that statement was made in the context that deploying some employees and not others could lead to industrial unrest. I prefer to apply the approach of Morling J in Townsend v General Motors Holden's Ltd who, after reviewing the various authorities said:

In my opinion the question whether an employee cannot be usefully employed because of a strike is largely a question of fact. No doubt, as a matter of law, some considerations will be irrelevant in determining the question of fact. But I reject the argument that the economic consequences to the employer are to be ignored in deciding the whether employees can be usefully employed. I accept that it is a material matter that work has been scheduled to be done by an employee on a day when, in fact, he is stood down. In many cases that will be a powerful indication that the work which was scheduled to be done was work which would have been useful to the employer. If the employee is stood down in those circumstances the employer will necessarily have to establish that because of circumstances that arose after the work was first scheduled to be done, the employee could not be usefully employed.

What I have so far said does not mean that cl. 6(g)(i) of the award gives GMH the right to unilaterally stand down its employees whenever there is a strike and it is convenient for it to do so. An employee may be able to be usefully employed although, as a matter of convenience, GMH would prefer him not to be at work. Questions of fact and degree will always be involved in determining whether, on the one hand, an employee cannot be usefully employed or whether, on the other hand, he can be usefully employed but it is not convenient to GHM to employ him. Whether a particular set of facts falls on one side of the line or the other will itself be a question of fact. In deciding that question I think it is proper to take the approach which Shepperd J. thought appropriate in a somewhat similar context - see In re Dispute - Australian Iron & Steel Pty Ltd; re Stand down of Bricklayers (No. 1) (1972) A. R. (N.S.W.) 285 at p. 296. That is to say, if it is shown that an employer has acted upon proper principles and in good faith, "the evidence... will not... be gone through with a tooth-comb in order to apply to its actions a standard of perfection which in cases such as this will always be impossible to achieve".

[18] The quoted passage from VP Watson makes reference to the decision in Re Carpenters.[16] While the Vice President preferred the approach in Townsend v General Motors,[17] I am of the view that the two cases are capable of concurrent application. Indeed, Morling J in Townsend relevantly extracts the interpretation of 'usefully employed' by Spicer CJ and Smithers J in Re Carpenters:[18]

The expression "usefully employed" necessarily connotes that by the employment in contemplation there will be a net benefit to the employer's business by reason of the performance of the particular work done. If the performance of the work done will prejudice the conduct of the employer's business then it is not useful to him although the work in itself would probably, to some extent, contribute to production.

[19] VP Watson's extract from Townsend primarily stipulates that 'useful employment' is a question of fact and that necessarily in determining the factual matrix, one must give consideration to the conduct of the employer. If the employer has acted in good faith, this will be a factual consideration in favour of the employer. This reflects s 526(4) of the Act, which imports notions of fairness between the parties. Often the employer is acting in an emerging and transient environment - comprising a strike action, a sudden breakage of machinery or in this case, an evolving regulatory framework resulting in a total loss of trade. It is extremely difficult for an employer in these circumstances to be able to act upon all the facts in a reasoned and deliberate way and it is because of this that the conduct of the employer must be assessed against more general notions of fairness and good faith. Where the employer is acting out of self-preservation, it is difficult to contemplate how their actions would be outside the realms of good faith or fairness.

[20] Re Carpenters provides further context to what can be considered useful employment, which was adopted with approval in Jarrad and is extracted below:[19]

I agree with and adopt with respect the following passage from the "observations" appearing in the joint judgment of Spicer Cl and Smithers J, in the Australian Industrial Court in Re Carpenters and Joiners Award [1971] CthArbRp 479; (1971) 17 FLR 330 at 333:-

(b)(i) Where useful employment is not available for all the employees normally engaged in a class of work performed in some aspect of production but is available for one or more of such employees it cannot on that ground be said with respect to any particular employee that he cannot be usefully employed.

(ii) When in the circumstances referred to in the last preceding sub-paragraph some employee or employees are engaged to perform the available useful work then it can be said with respect to the others that they cannot be usefully employed.

[21] The approach above in Re Carpenters stipulates as a general rule that where there is a category of work available to be performed, no single employee cannot be usefully employed. However, the ambit of useful employment is then limited to the amount of useful work available to be performed. Where the available useful work does not extend to all employees, those remaining employees cannot be deemed to be capable of useful employment.

[22] In this way, the test of useful employment can be comprised of two parts. First, 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. Second, a more general analysis of the conduct of the employer against notions of good faith and fairness must be undertaken. 'It is a question of fact as to whether an employee "cannot usefully be employed" and in resolving that question regard may be had to the "economic consequences" to the employer.'[20]

[23] The Respondent has stood down some 107 employees, equalling 50% of its workforce.[21] To stand down such a large portion of one's staff helps to ameliorate the concern that any action of an employer could be targeted at a particular employee. As submitted by the Respondent, the conclusion to stand down was not taken upon lightly; only after considerable analysis considering costs, retention requirements and ongoing workflow was the decision to stand down undertaken.

[24] The Respondent business has no income and due to their business model, even in caretaker mode, they incur some $1.5 million in fixed overheads. To curb expenditure the Respondent has stood down all casuals and ceased hiring for any existing vacant roles, as well as new roles based on proposed growth. The Respondent has also been given a 6-month extension on all vessel survey requirements from 1 April, 2020 and all future slipping and refit maintenance has been extended out to the end of 2021.[22] All scheduled maintenance (other than cosmetic and basic maintenance) has also been placed on hold.[23]

[25] These measures can be seen as a business necessity and indicate that the decision was not done maliciously, but in good faith, when contemplating the economic strain on the employer. The fact that the stand down was widespread, impacting employees from all facets of the company - as well as another employee from the Marine Department - further indicates that the actions taken were fair and considered. This weighs in the Respondent's favour and must be taken into account in considering whether the stand down was lawful.

[26] On the Respondent's evidence, due to the ships no longer being operational, the technical team retained within the Marine Department are sufficient to support the caretaker requirements of the business:[24]

Given the ship has not been operational the technical team of vessel crew, Ship Master and Fleet Engineer facilitate the requirement of support needed by the [Group General Manager] and head of department.

[27] From the evidence provided it appears that the role of Marine Superintendent is largely concerned with facilitating other units of the business and providing assistance to the Group General Manager. In the current climate, the Group General Manager has subsumed HR responsibilities and is attending to the other administrative tasks associated.[25]

[28] The Applicant in his F13 states:

3. The Stand Down Provisions in section 524(1)(c) of the Act; my role in the business is the Marine Superintendent, include being responsible for maintaining the fleet of ships to Classification and AMSA standards, all licencing and certification, maintenance and repairs. The cruises for guests have stopped, but all certification, government regulation and licencing MUST continue, it is my job to do this, therefore my role is still required, there is no stoppage of work for me and the provisions to stand me down legitimately do not apply.

[29] The Applicant further submitted in his submissions that his role is useful because the Marine Superintendent:

• Organises the Department's finances;[26]

• Organises the majority of the contractors;[27]

• Administers the Safety Management System;[28]

• As the Designated Person Ashore, is required for the safe operation of the vessel;[29]

[30] The Applicant contends that because the work that he performs continues, his role is automatically considered "useful" to the Respondent. This appears to be an incorrect construction of the law around useful employment, as a role can be considered useful, but not a particular individual, as stated in Re Carpenters.

[31] On the evidence of the Respondent, the Marine Team, of which the Marine Superintendent is part, is capable of reallocating the work to other individuals within the Department. The particular tasks being performed by the Marine Superintendent, due to COVID-19 have largely diminished in size. The ship has half as many employees, reducing the HR tasks; large portions of maintenance, except routine work, have been postponed and attendance with regulatory bodies is currently minimal. In this environment, the role of the Marine Superintendent can be performed by the other currently retained employees. Given the shift in available work I am not persuaded that there is sufficient useful work for the Applicant to perform.

[32] Further, the Group General Manager has previously held the role of the Applicant and on his evidence, is competent in performing the responsibilities required of the Marine Superintendent.[30] In an environment where the business is running at full capacity the administrative load would appear to be too much for a single individual. However, in a time where the ship is not operational, the business is not trading and the number of staff are below half, the amount of useful work would decrease. The Respondent in their submissions make it clear 'administrative support is not required in the state of "caretaker mode" that the vessels are now in.'[31] On this evidence, which I accept, it becomes clear that while there is useful work to be performed by members of the Marine Department, that, in a caretaker state, the role of Marine Superintendent, cannot be characterised as useful to the Respondent.

[33] When taking the 'economic consequences on the employer'[32] into account, it cannot be said there is a contemplated net benefit in retaining the Applicant as a large portion of the tasks contemplated are so reduced in capacity that they can be performed by other members of the Marine Department. Because of this, the Marine Superintendent does not generate 'a net benefit to the employer's business.'[33] This reflects the conclusion drawn in Re Carpenters and approved in Jarrad that when 'some employee or employees are engaged to perform the available useful work then it can be said with respect to the others that they cannot be usefully employed.'[34] I conclude that while there is useful work which can be performed, the volume of work is insufficient for the Applicant to be characterised as 'usefully employed'.

[34] I appreciate the Applicant's contention that there is work which exists that can be done; work that he could do and some which he has traditionally done. However, due to the pandemic, the Respondent is not trading and therefore, the amount of work which exists is limited. Further, it is difficult to classify an abundance of work as useful when one contemplates the extreme economic pressure of the situation. The Respondent has allocated the useful work accordingly and that allocation appears to be reasonable. I consider that the numerous measures the Respondent has taken to preserve itself, including a widely implemented stand down, indicate that the action was not one targeted at the Applicant. The evidence provided shows that the decision to stand down was not one made without due consideration and I conclude that the Respondent acted upon proper principles and in good faith.

[35]

This case concerns a cruise line that has had no opportunity but to lay up all its ships and halt all voyages: Coral Expeditions has stood down its employees in an attempt to stay afloat. Australia, and the rest of the world, continues to sail through the uncharted waters of a pandemic not seen for 102 years and the Respondent has made a genuine attempt to salvage their operation against crushing financial conditions. To eschew economic considerations in a time such as this would be contrary to both the case law and notions of fairness. These facts constitute a total and government mandated stoppage of work and epitomise the purpose of Part 3-5 of the Act. In these circumstances, I find that the Applicant is not capable of useful employment and the claim is therefore dismissed.

[1] https://www.coralexpeditions.com/au/about-us/.

[2] Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Emergency Requirements) Amendment Determination (No. 1) 2020.

[5] Position Description: Marine Superintendent, page 1.

[6] Position Description: Marine Superintendent, pages 1-4.

[7] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor v FMP Group (Australia) P/L [2013] FWC 2554, [31] (CEPU v FMP Group).

[8] [2008] AIRC 135, [30].

[9] Coal & Allied Mining Services Pty Ltd v MacPherson [2010] FCAFC 83, [13]-[15]. While this case is interpreting the Workplace Relations Act 1996, s 691A(1) is in largely the same terms as s 524 and I consider that interpretation relevant.

[10] Australian Federation of Air Pilots v Bristow Helicopters Australia Pty Ltd [2016] FWC 8515, [62] (Bristow Helicopters).

[11] Bristow Helicopters Australia Pty Ltd v Australian Federation of Air Pilots [2017] FWCFB 487, [45]-[46].

[12] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656, [23], quoting Australian Education Union v Department of Education and Children's Services (2012) 248 CLR 1, [26]-[28].

[13] Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust) Pty Ltd (1966) 8 FLR 70, 74-75.

[14] Jarrad v Melbourne and Metropolitan Tramways Board [1915] ArgusLawRp 35; (1978) 21 ALR 201, 204 (Jarrad).

[15] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v McCain Foods (Aust) Pty Ltd [2011] FWA 6810, [14]-[16] (AMWU v McCain). For the recent affirmation see Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656, [21] (18 May 2020) (CEPU v Qantas). Note that only a portion of this extract from [16] was extracted in CEPU v Qantas.

[16] Re Carpenters and Joiners Award [1971] CthArbRp 479; (1971) 17 FLR 330, 333 (Re Carpenters).

[17] Townsend v General Motors-Holden's Ltd (1983) 4 IR 358.

[18] Re Carpenters and Joiners Award [1971] CthArbRp 479; (1971) 17 FLR 330, 334.

[19] Jarrad v Melbourne and Metropolitan Tramways Board [1915] ArgusLawRp 35; (1978) 21 ALR 201, 207.

[20] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Qantas Airways Limited [2020] FCA 656, [21] (18 May 2020).

[21] Respondent's Submissions, at [1].

[32] Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v McCain Foods (Aust) Pty Ltd [2011] FWA 6810, [14]-[16].

[33] Re Carpenters and Joiners Award [1971] CthArbRp 479; (1971) 17 FLR 330, 334.

[34] Jarrad v Melbourne and Metropolitan Tramways Board [1915] ArgusLawRp 35; (1978) 21 ALR 201, 207.

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