How To Terminate A Stood Down Employee

So you’ve stood down an employee and now you want to terminate their employment contract. The rules relating to termination of a stood down employee are no different to the general rules surrounding termination of employment.

The meaning of ‘stood down’ employee:

A ‘stood down’ employee is an employee that is directed to stop attending work. If an employee has stopped attending work, the employer does not have to pay them. However, they are still an employee. This is because the employment contract does not end when an employee is ‘stood down’. Thus, the employment is on ‘hold’.

Importantly, an employer can only stand down an employee if they are no longer useful at work. However, being ‘useful’ has a strict meaning. Section 524 of the Fair Work Act 2009 (Cth) explains this strict meaning. Accordingly, an employee is no longer useful at work when:

  1. Equipment has broken that causes the employers business to shut down or,
  2. Industrial action (strikes) occurs, not organised by the employer or,
  3. Work has stopped for a reason the employer cannot be responsible for, e.g. severe weather or natural disasters. 

Importantly, a stand down does not affect or change the legal relationship between the employer and employee.

How Can I Terminate a Stood Down Employee?

A stood down employee is still an employee. Consequently, their termination must be valid and legal. Therefore, the usual rules about termination apply to terminating a stood down employee. A valid and legal termination can occur by: (1) termination with notice, (2) termination via payment without notice or, (3) termination via instant dismissal.

Termination via Notice:

If an employer wishes to terminate an employee, they must comply with the requisite notice. The requisite notice is the minimum period of time that an employee should be given before their employment contract officially ends. This minimum period of notice is a legal requirement.

The notice should be in writing and should include the following:

  • It must state that the time period will commence the day after the employer has given their employee notice of the termination and,
  • State the last day of the employee’s employment and,
  • Should state any reasons for the termination.

You can customise your own ‘Termination of Employment’ document here.

How to Determine the Notice Period:

The employment contract should state what the appropriate notice period is. If it does not, the notice period in the relevant award or enterprise agreement must be followed. The Table can determine what legal notice periods apply. It is important to note that the employment contract can provide for a longer notice period than awards or enterprise agreements. If it does, the employer must grant this longer notice period. Therefore, before deciding on a notice period, the employer should check the employment contract, relevant award or enterprise agreement.

Termination via Payment without Notice:

An employer may want to terminate their stood down employee immediately, without notice. The employer can do this. However, the employer must pay the stood down employee the pay they would have received if the employer had given them notice.

For example, Anna has been working for her employer for over 5 years. Anna’s employer wants to terminate her employment. Anna is legally entitled to receive 5 weeks notice. But, Anna’s employer does not want to give her notice. Therefore, Anna’s employer has the option to pay Anna 5 weeks worth of pay in return for Anna’s immediate termination.

Therefore, an employer can immediately terminate their employee if payment is provided to cover the notice period.

Termination via Instant Dismissal:

The employer has a limited right to terminate their stood-down employee in this way. Instant dismissal is termination without payment or notice. However, this limited right may arise if the employee has engaged in some workplace misconduct. First, the employer must identify some misconduct or improper behaviour. Second, the employer must show that the employee’s behaviour is sufficently serious. Examples of misconduct justifying instant dismissal include:

  • Refusal or failure to attend or perform work,
  • Drunkenness,
  • Obscene language,
  • Immoral behaviour, 
  • Dishonesty,
  • Assault,
  • Insubordination

To learn more about the process and requirements, you can read our guide on ‘Termination for Misconduct’.

Key Takeaways:

Termination of a stood down employee occurs in the same manner as termination of an employee. This is because a stood down employee is still an employee. Thus, the usual rules surrounding termination of an employment contract still apply. Therefore, an employer can terminate its employee by: (1) notice, (2) payment without notice and, (3) instant dismissal without notice or payment.

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