Do you need to pay staff if we shut down during a natural disaster?
Natural disasters can cause widespread damage, disrupt daily life, and create significant challenges for businesses.
Whether it’s a cyclone, flood, or bushfire, these events can throw a wrench into your operations and force a temporary shutdown.
The question on many business owners minds during these times is: Do we need to pay our staff if we shut down during a natural disaster?
If you’re considering shutting down your operations due to a natural disaster or any other, understanding your obligations to your employees is crucial.
- Review the award or EBA for your employees
The first step in determining if you need to pay your staff during a shutdown is to check the relevant Award or Enterprise Bargaining Agreement (EBA) that governs their employment.
These documents may contain clauses specific to shutdowns due to natural disasters. In some cases, your Award or EBA may require you to continue paying your staff for the duration of the shutdown.
It’s important to note that shutdown provisions may vary significantly depending on the nature of the shutdown.
For example, a business closure due to a natural disaster (e.g., a cyclone) may be treated differently from a shutdown due to inclement weather, public holidays, or even a lack of work.
Always ensure you review the clauses that specifically address shutdowns under natural disaster conditions, as these may have different rules or entitlements compared to other types of shutdowns.
- What happens If the award or EBA is silent?
If your Award or EBA does not specifically address shutdowns during natural disasters, the Fair Work Act will come into play.
According to the Fair Work Act, an employer is allowed to stand down employees without pay if they cannot be “usefully employed” due to circumstances such as a natural disaster.
This can apply in cases of significant disruptions like floods, bushfires, or cyclones that render it impossible for employees to perform their usual duties.
However, the Fair Work Act also sets limits on this provision.
Employers cannot simply stand down employees due to a general lack of work or if the business is quiet as a result of weather conditions.
The key factor is whether the natural disaster directly prevents employees from being able to work.
- What are my responsibilities under the Fair Work Act?
Before proceeding with a complete shutdown or standdown, Fair Work recommends considering other options that could allow employees to continue working.
This includes:
- Allowing employees to work from home (if feasible)
- Reassigning staff to other worksites or roles that may still be operational
- Approving annual leave or paid personal leave for the duration of the shutdown
In instances where these alternatives are not possible, and a standdown is necessary, it is crucial that the standdown is justified as being due to the natural disaster.
The Fair Work website provides further guidance on when and how standdowns are applicable during severe weather or natural disasters. You can check out their resources here https://www.FairWork.gov.au/pay-and-wages/pay-during-inclement-or-severe-weather-natural-disasters
- Beyond the minimum: How to support your team
While the Fair Work Act outlines the minimum standards for how you should handle shutdowns during natural disasters, as a business owner, you are free to go beyond these minimums if it benefits your employees and your business.
If your cash flow is stable or if you’re looking to maintain goodwill with your staff, you may decide to continue paying employees as though they were working their normal hours during the shutdown.
This can help boost morale and ensure that your staff feels supported during an uncertain time.
Some businesses have adopted creative solutions to balance their financial and employee needs, such as:
- Allowing employees to go into negative TOIL (Time Off in Lieu) and later work back those hours over the coming weeks
- Offering paid leave or paid personal leave, if available, rather than forcing employees into unpaid leave
- Continuing with normal pay, without reducing employees leave entitlements
Ultimately, it’s up to you to decide what is right for your business.
The key is to ensure that you meet the minimum requirements set out by your Award/EBA or Fair Work, and to communicate clearly with your team about the approach you are taking.
- What about legal advice (Disclaimer)?
It’s important to remember that the information shared in this blog post is based on general principles and not legal advice.
As every business situation can be unique, it may be beneficial to consult with a legal expert or a workplace relations consultant to ensure you are fully compliant with the Fair Work Act, your Award or EBA, and any other relevant regulations during a natural disaster shutdown.
Conclusion:
The aftermath of a natural disaster can be overwhelming, and figuring out how to handle staff payments during a shutdown can add another layer of stress.
To navigate this, ensure that you are well-versed in the provisions of your employees Award or EBA, understand the Fair Work Act’s standdown provisions, and consider all available options before taking any drastic steps.
Whether you choose to follow the minimum requirements or go above and beyond to support your employees, clear communication and careful planning will help your business weather the storm – both literally and figuratively.
Stay safe, and remember: Preparation is key, both for your business and your team.
