Stand-downs: know your obligations

by Chloe Taylor19 Jan 2015
A Tasmanian textile manufacturer is facing court following allegations of avoiding termination pay-outs to six workers.

When the employer placed the staff on extended stand-down without pay, the employees allegedly lost tens of thousands of dollars.

The Fair Work Ombudsman (FWO) has started legal proceedings against the company in an effort to gain full reimbursement for the workers. It is also seeking penalties against the organisation, James Nelson, and its director and part owner Wendy Langridge.

The case will be heard in the Federal Circuit Court.

The mill, based in Launceston, is said to have told six staff members in June 2013 that they would be stood down, unpaid, for almost three months. Around a week before their return, the workers claim they were told that the stand-down would be extended to four months – still without pay. This continued multiple times, until the workers were being made to stand down for over seven months unpaid.

Fair Work inspectors began their investigation following the receipt of complaints from the employees.

When the complaints were received, the FWO told Langridge and the company that it is unlawful to stand-down employees without pay because of a lack of work.

She was advised that the company had actually made the workers redundant, and was legally obliged to pay them redundancy pay, accrued leave entitlements and payment in lieu of notice.

A combined $43,056 is allegedly owed to the workers, with individual debts ranging from $5506 to $11,101.

Accprding to Fair Work Ombudsman Natalie James, the inspectors made repeated efforts to engage with the company and its director in order to resolve the issue before taking legal action, but were unable to secure proper co-operation.

James added that it is crucial for employers to know and comply with their obligations when it comes to termination entitlements.

“Losing paid work is a major life event and termination entitlements such as severance pay play a vitally important role in helping to support people while they make plans to re-enter the workforce,” she said.

Langridge faces a maximum penalty of $10,200 per breach, while the company faces maximum penalties of up to $51,000 per breach.

According to the Fair Work Ombudsman, an employer can send employees home if there is no useful work for them to do because of:
  • equipment break down
  • natural disaster (including floods, bushfires, tropical cyclones)
  • industrial action
This is known as a stand down. This can only happen if the reason for the stand down was out of the employer's control.

Employees can't be stood down just because there is not enough work. Employees can be directed to take annual leave during a shut down and are paid annual leave entitlements.


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