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Important industrial relations update for flood affected businesses

By Kristin Ramsey31 Jan 2013

The widespread damage caused by the recent wild weather and flooding across the eastern-seaboard gives rise to a number of significant personal and commercial difficulties.

In an industrial relations context, many of our clients have been seeking advice on their legal obligations in situations where their employees are not able to attend for work as a result of the wild weather, or they have no useful work for employees to perform as a result of disruption to the business.

Whilst it is important for businesses to be aware of their legal obligations towards their employees in circumstances involving natural disasters and other unexpected disruptions to operations, a consultative and flexible approach will help both businesses and individuals get back to full speed as soon as possible.

One of my employees can’t come to work – do I have to pay them?

There are a number of reasons why an employee might not be currently able to attend for work, including:

  • damage to their property;
  • personal illness or injury;
  • a need to care or provide support to family and friends who have suffered property damage, illness or injury;
  • an inability to physically get to work as a result of closed roads or disruptions to public transport; or
  • because they are a member of a voluntary emergency services team.

In 2011, we saw many businesses being incredibly generous to employees who had been affected by the flooding at that time, including by providing additional paid leave, lump sum assistance payments and access to counselling services.

The reality however is that many (especially smaller businesses) simply cannot afford to provide this level of assistance.

Strictly speaking, absent a relevant entitlement to paid leave, a business is generally not required to pay an employee who is unable to attend for work.

However, it is essential for businesses to obtain an understanding of the reason why an employee is unable to attend for work, before making a decision on whether or not to pay them for the absence as various leave entitlements may apply. In addition, individual contracts, enterprise agreements and applicable awards need to be reviewed to check whether such instruments provide employees with additional entitlements in the particular situation.

Businesses also need to be aware that disciplining, terminating or otherwise adversely treating an employee who is legitimately absent from work as a result of a natural disaster are highly likely to be in breach of their obligations under industrial legislation and therefore result in legal claims.

What if I don’t have any work for my employees to do?

The other situation that can arise in the face of a natural or widespread disaster is the disruption of operations to the extent that there is no useful work for employees, or groups of employees, to perform.

Examples of such situations include where business premises have flooded or where there has been an electrical failure.

Another issue may be that it is not safe for employees to return to the workplace (for example due to risk of illness as a result of residual floodwaters).

The Fair Work Act gives businesses the right to temporarily stand down employees (without pay) in a range of circumstances, including where the employee cannot be usefully employed as a result of a:

  • breakdown or machinery or equipment; or
  • stoppage of work,
  • for which the employer cannot be held responsible.

Some awards and enterprise agreement may also permit stand down in a broader range of circumstances.

Depending on the particular circumstances, these provisions may be relied upon by businesses that have suffered damage or disruption to their operations as a result of the wild weather and who therefore are not able to effectively operate over a short period.

The provisions also offer a valuable alternative to termination of employment, which depending on the financial circumstances of the business might otherwise have been the only other viable option.

Further considerations

If your business has been affected by the wild weather (or indeed any natural disaster or significant disruption) there are a range of options that should be considered before standing employees down without pay or not paying them for absences.

Such options include:

  • allowing employees to access annual leave, long service leave and (where appropriate) personal/carer’s leave;
  • giving consideration to flexible work options (including options to work from home, other remote work locations, or changes to working hours); and
  • (in the event of significant disruption to operations) giving consideration to whether there is alternative work that employees could perform.

Careful consideration also needs to be given to the terms of individual contracts, company policies, enterprise agreements and applicable awards before taking any action that could be considered as adverse or detrimental to an employee or a particular group of employees.

Other key actions include consulting with affected employees and ensuring that employees are treated consistently.

Failure to consider these issues or take these steps could cause businesses to be in breach of their legal obligations and expose them to complaints or even legal claims.

What can we do to prepare for future disruptions?

Situations such as these are a good reminder of the importance of business continuity plans, good backup systems and documented emergency response policies and procedures.

Our specialised Workplace Relations Health and Safety team can provide you with assistance in these areas and also offer employment and industrial relations advice to flood affected businesses. Please contact Kristin Ramsey if you require any assistance in this area.