13 March 2020

The Coronavirus/COVID-19 Impact – Is Your Business Ready?

Lachlan Thorburn, Michael Coates
Lachlan Thorburn Litigation Lawyer
Michael Coates Intellectual Property Lawyer

News reporting on the Coronavirus (COVID-19) over the past few weeks has reached fever pitch, with all signs pointing to a potential spread of the virus throughout Australia having a significant impact on a business’ bottom line.  As can reasonably be expected, anxiety levels are high for both employers and employees.

With the extreme (and sometimes unfortunate) measures being undertaken by Governments and businesses globally, including full-scale city shutdowns, cancellation of sporting events and tourist attractions, and businesses being unable to effectively operate, you may find that your employees are starting to ask questions as to how they may be affected.

Current Coronavirus Status

The World Health Organisation (WHO) is issuing regular updates on the virus, and we recommend that you regularly monitor the WHO and Government Health websites for the most up to date information on the coronavirus.

At the time of publication of this update, the current status of health advice is that if “you are not in an area where COVID-19 is spreading or have not been in contact with an infected patient, your risk of infection is low”.

Access the most updated WHO Situation Report by clicking here.

Do you have a Pandemic or Infectious Diseases Policy?

Employers should already have a Pandemic or Infectious Diseases Policy setting out how they will address safety and operations in the event of a significant outbreak. You should be reviewing this policy to ensure it meets your current needs. If you do not have a policy in place, you should consider preparing one before you need it.

Consultation with your workforce

Whether your workforce is covered by a modern award or enterprise agreement or not, it is best practice to ensure that you engage in regular, clear and concise communications with your employees to address and alleviate their concerns about potential workplace changes that may affect their immediate employment conditions.

It’s also important to remember that all employers have a responsibility under WHS/OHS laws to disseminate information to employees about health and safety in the workplace and also, eliminate or reduce risks or hazards. We strongly recommend you consider sharing regular updates around the status of the coronavirus that are aligned with what is being rolled out by WHO and the Department of Health.

As such, we recommend:

  1. regular updates on maintaining hygiene standards in the office;
  2. wipe down any shared resources (reception phone etc.);
  3. clear and concise signage around the office on maintaining hygiene (clean hands etc);
  4. implementation of sanitary measures throughout the workplace (hand sanitisers etc);
  5. ensure employees understand that if they are unwell, they should sneeze or cough into their elbows and never their hands;
  6. if employees have travelled to an affected area or have been in contact with an coronavirus infected person, you can act as per any plan you have in place (not attend work for example), and potentially, direct them to work from home;
  7. display coronavirus information material around the office and in client areas.

These are just some of the practical measures you could adopt.

If your business is considering either ‘shutting down’, enforcing a ‘stand down’, or directing employees to work from home, we strongly recommend that you consult with your employees about the potential major changes to their ongoing employment. This will be a mandatory requirement under a modern award and an enterprise agreement. Employers should advise the employees of their entitlements

We also strongly recommend that when sharing information and updates with your employees, always ensure that the communication is focused on promoting a culture of respect and understanding. Why is this important? You need to ensure your business avoids creating an environment of fear or potential discrimination within the workplace.

Employers should also create an environment where employees can ask questions and/or share any concerns that they may have.

It goes without saying that the key to minimising the spread of the virus is good old-fashioned hygiene. Employers should consider reviewing guidance material on managing influenza outbreaks available on State and Federal Government Health Department websites. Review the guidelines and look at implementing any recommendations in your business.

Statutory entitlement to standing down employees

Many employers may well be impacted by the Coronavirus to a significant degree and as a result, may have, or may be required, to cease trading for a period of time due to safety concerns. The Fair Work Act 2009 (Cth) (the “Act”) allows an employer to “stand down an employee during a period in which the employee cannot usefully be employed because of … a stoppage of work for any cause for which the employer cannot reasonably be held responsible” (section 524(1)(c) of the Act). A pandemic, such as the Coronavirus, would be the kind of event which may allow a business to stand down its employees under section 524 of the Act.

The ability for an employer to stand down an employee in these circumstances is subject to any provisions concerning work stoppages and stand downs in an enterprise agreement or contract of employment that applies to the employer and employee. If an enterprise agreement or contract of employment contains provisions concerning stand downs during a work stoppage, those provisions will apply.

A “stand down” arrangement due to a stoppage of work under the Act is different from a “close-down or shut-down” period where an employee may be directed to take paid annual leave.

Employers may not be required to pay employees for the stand down period

When an employer does not require work to be performed by a permanent employee, subject to an employee’s agreement, an employer will have a common law duty to continue to pay the employee for the period.

However, in cases where an employer experiences a stoppage of work and stands down employees in accordance with section 524 of the Act, an employer is not required to make payments to those employees for the period of the stand down (section 524(3) of the Act).

If an employer has an enterprise agreement or employment contract containing provisions concerning stand downs during a work stoppage, those provisions will apply.

Employees may take paid or unpaid leave entitlements during the stand down period

Given that most employers will not be required to make payments to employees during a stand down period, employees (other than casuals) may seek, and are entitled to take, accrued paid annual leave by agreement with their employer during this period.

Employers must not unreasonably refuse an employee’s request to take paid annual leave. It may be unreasonable for an employer to refuse an employee’s request to take annual leave if the employee is faced with the prospect of being stood down as a result of the Coronavirus. What is “reasonable” will depend on the circumstances of each employee, and the employer’s business needs, but if the employee has accrued annual leave, one would consider a decision of an employer to refuse to allow the employee to take annual leave in these circumstances to most likely be unreasonable.

Should an employee not have sufficient annual leave accrued to cover the period of the stand down, employers may consider offering or agreeing to provide those employees with annual leave in advance. However, there is no obligation for employers to offer or provide annual leave in advance during a stand down period.

If an employee does take annual leave (or other paid leave) during the stand down period, the employee will not be taken to be stood down and will continue to accrue service-related entitlements for that period (for the sake of clarity – an employee who has been stood down will continue to accrue service-related entitlements during the stand down period, even if they are not being paid or taking annual leave entitlements during the stand down).

What are your obligations if employees are unable to work?

Employers may need to consider their obligations for each of the possible scenarios below. We recommend checking your Pandemic or Infectious Diseases Policy to ensure it meets your needs.

  • What if your employee can’t attend work because they have or are suspected of having Coronavirus or they are caring for someone in this situation?

Employees should use their paid personal/carer’s leave entitlements. Employees (other than casuals) are eligible and may take paid personal leave if they are:

  1. not fit for work because of a personal illness or injury; or
  2. caring for or supporting a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because of a personal illness or injury affecting the member or an unexpected emergency affecting the member are entitled to take paid personal or carer’s leave, including during a period of stand down.

Members of an employee’s immediate family include a spouse or de facto partner, a child, parent, grandparent, grandchild or sibling of the employee.

An employee is required to provide notice of taking personal or carer’s leave, as soon as reasonably practicable (which may be after the absence has started) and must advise their employer of the period, or expected period, of the absence.

An employer may request that an employee provide evidence that the leave is taken for a permissible reason.

If an employee’s paid personal or carer’s leave are exhausted, your employee might wish to consider other alternatives, such as taking annual leave or leave without pay. Given the employer’s duty of care to all employees, employers should request medical clearance prior to an employee returning to work.

  • What if your employee is quarantined, or unable to return from overseas?

Consider whether the employee can access their paid personal/carer’s leave entitlements or annual leave. You may decide that employees can take other paid or unpaid leave. We recommend a consistent approach taking into account your operational needs. If multiple quarantine events have the effect of creating a stoppage of work the stand down provisions referred to above may apply.

  • What if your employees want to stay at home as a precaution?

In this scenario, an employee will need to request to work from home or to take some form of paid or unpaid leave. An employer should treat these requests as it would treat other applications for this type of leave. An important factor is the reasonable business interests of the employer.

  • Can an employer give a direction to take annual leave?

An employer can direct an employee to take annual leave, but only when an award or registered agreement allows it and the requirement is reasonable.

Similarly, the NES allows an employer to require an award or agreement-free employee to take a period of annual leave, but only if the requirement is reasonable.

A requirement to take annual leave may be reasonable if, for example:

  1. the employee has an excessive annual leave balance;
  2. the employer’s enterprise is being shut down for a period (such as between Christmas and New Year).

In assessing reasonableness, the following factors are relevant:

  1. the needs of the employee and the employer’s business;
  2. any agreed arrangement with the employee;
  3. custom and practice of the business;
  4. timing of the direction or requirement to take leave;
  5. the length of the period of notice given.
  • Can an employer direct an employee to work from home?

An employer can give a reasonable and lawful direction to work from home in circumstances where the ordinary place of business is shut down. Most modern businesses have a working from home policy or procedure in place, but it is unlikely that it covers periods where employees are subject to an enforced quarantine or a direction to work from home. We recommend that you check your relevant policies to ensure these situations are covered. We would also strongly recommend that you review and test your IT Systems to ensure that the IT System can cope with a large number of employees required to work remotely.

If you’ve got any questions about if your business is prepared for the coronavirus, and what you need to do if it isn’t, we recommend getting in touch with your legal counsel as soon as possible.



Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).


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