Pandemic forces courts to consider meaning of ‘stoppage of work’

Before the COVID-19 pandemic, many employers were not aware of section 524 of the Fair Work Act 2009 (Cth) (FW Act), which enables an employer to stand down an employee, without pay, if the employee cannot be usefully employed.

This includes when there has been a ‘stoppage of work’ for which the employer cannot be held responsible. Similar language is sometimes used in enterprise agreements and/or employment contracts to expand employers’ rights in this respect.

The concept of what constitutes a ‘stoppage of work’ had not been the subject of a great deal of judicial commentary before the pandemic. However, stand downs following the downturn in work in many industries and mass closures of businesses over the past two years have caused enough disputes to result in new case law on the topic.

Early cases (including during the pandemic) consistently provided that, for an employer to stand down its employees, there had to be a complete cessation of work, meaning that business operations had to completely shut down.

However, in April 2022, the Full Court of the Federal Court of Australia held that this is not always the case. In Australian Licensed Aircraft Engineers Association v Qantas Airways Limited [2022] FCAFC 50, the Full Court upheld a single judge’s decision that the meaning of ‘stoppage of work’ may be expanded in ‘extreme’ cases.

Because of the pandemic, Qantas and Jetstar were barely able to function, with most flights effectively cancelled. However, they did not experience a complete cessation of business activity – they still offered reduced flights, for example to ‘fly in fly out’ workers. It was in this context that they stood down almost all their aircraft engineers.

The Full Court considered Qantas and Jetstar’s use of the stand down provisions in their respective enterprise agreements (similar to those in the FW Act), and found that both Qantas and Jetstar had no reasonable choice but to stand down the engineers – because this decision was made to ensure the financial viability of the airlines.

In the main judgment, Justice Besanko reasoned that ‘stand down provisions cannot be engaged by mere market fluctuations or reductions in profitability’. Drawing on earlier case law, it is clear that an employer does not have a right to stand down employees whenever it suits the employer; and that stand down provisions are not to be seen as ‘an automatic, albeit partial, safeguard for the employer against economic loss’.

However, economic considerations can be relevant to the assessment of whether an employer is responsible for the stoppage of work – and extreme market fluctuations can be considered to be outside of the employer’s control. In this case, the COVID-19 pandemic meant there was almost a complete collapse of the international and domestic market for airline services, and the airlines had no reasonable choice but to decide to reduce their operational flying capacity. Accordingly, the stoppage of work (the reduction in flights) was beyond the airlines’ reasonable control.

Interestingly, although fellow appeal judge Justice Bromberg agreed with the orders proposed by Justice Besanko, he did not agree with the entirety of the reasoning. He argued that it was not the reduced number of flights that was the relevant ‘stoppage of work’. Rather, a cessation of the employer’s economic activities (like the provision of passenger flying services) may well lead to a cessation of work for employees involved in providing those services. In this case, it was the cessation in the work of one or more of the workforces of aircraft maintenance engineers that was relevant. But the outcome of this reasoning was the same in this case – that is, there was a stoppage of work that justified the stand down.

The Australian Licensed Aircraft Engineers’ Association is considering applying to the High Court of Australia to challenge the decision. It may be that Justice Bromberg’s reasoning is relevant to that appeal.

Of course, the pandemic might be viewed as an isolated event. However, Australia is very likely to have to grapple with other unpredictable and volatile events in future – and in those situations, employers will face a stoppage of work. Get in touch with our Employment, Workplace Relations and Safety team if you would like help deciding whether you can stand down workers, either under the FW Act or otherwise.