Introduction
The ongoing USA/Israel–Iran conflict demonstrates how global events can rapidly disrupt Australian workplaces and challenge standard business operations.
Recently, a ceasefire was abruptly announced alongside a proposed resolution framework. The initial relief was quickly dashed—the ceasefire collapsed within 24 hours, and the Strait of Hormuz remains closed at the time of writing. With negotiations stalled, persistent uncertainty is placing acute pressure on global fuel supply and business operations.
For Australian employers—particularly those in resource, transport and energy-dependent sectors—these volatile developments demand immediate consideration: when can employees lawfully be stood down in response to external disruption?
The Legal Framework: Section 524 of the Fair Work Act
Section 524(1)(c) of the Fair Work Act 2009 (Cth) (the FW Act) allows employers to stand down employees without pay, but only in limited circumstances.
To lawfully stand down an employee, an employer must establish (generally):
- A stoppage of work;
- That the stoppage is beyond the employer’s control; and
- That the employee cannot be usefully employed because of the stoppage
This is a narrow provision and does not cover reduced demand, inconvenience, or future disruptions.
An enterprise agreement or contract usually overrides these rules and must be strictly followed.
A Timely Example: Pre-emptive Stand Downs
Recent reporting highlights the practical challenges facing employers.
In mid-March, a Western Australian mining company reportedly stood down a significant portion of its fly-in fly-out workforce in anticipation of fuel shortages linked to the war (see: Fuel crisis forces WA resources company Blue Cap Mining to send workers home)
While the full circumstances are not publicly known, the pre-emptive nature of the decision raises a key legal issue: whether a stand-down can be justified on the basis of anticipated disruption rather than an existing stoppage of work.
What the Case Law Tells Us
The Fair Work Commission and courts interpret section 524 strictly.
1. Stoppage of Work Requires More Than a Slowdown
In Marson v Coral Princess Cruises (N.Q.) Pty Ltd (t/a Coral Expeditions), the Commission found that reduction, not stoppage, of work insufficient(1). A stoppage requires a substantial cessation, not just reduced activity.
Key takeaway: Employers cannot rely on section 524 where work continues, even at a reduced level.
2. “Usefully Employed” Sets a High Threshold
In CEPU v Qantas, the Court confirmed that 'useful employment' depends on whether productive work is available, and if the employer acts fairly and in good faith(2).
Key takeaway: Employers must actively consider redeployment options before standing down employees.
3. External Events Must Create a Real Stoppage
In Australian Federation of Air Pilots v Bristow Helicopters Australia Pty Ltd, the Court emphasised that the cause of the stoppage must directly prevent the continuation of work(3).
Key takeaway: There must be a direct link between the event and the stoppage.
Key Risks for Employers
Employers who act prematurely—or without satisfying the statutory requirements—may face significant exposure, including:
- Fair Work Commission disputes;
- Breach of contract or enterprise agreement claims;
- General protections claims under the FW Act; and
- Potential liability may also arise under other laws, such as the Australian Consumer Law.
In the context of the war in Iran, stand downs implemented in anticipation of fuel shortages—rather than in response to an actual inability to perform work—are acutely vulnerableto immediate challenge.
Force Majeure Is Not a Shortcut
Many businesses will also be reviewing their contractual positions in light of ongoing disruption.
As we discussed in our recent article, “Force Majeure and the Middle East Crisis: What Every Business Needs to Know”, force majeure clauses may provide relief where external events disrupt contractual performance.
However, employers should be cautious not to conflate contractual relief with employment law rights.
Force majeure does not automatically permit stand down under the FW Act. The test set by section 524 must be met.
Practical Steps for Employers
Before implementing a stand down, employers should:
- Identify whether there is a genuine stoppage of work, not merely a projected risk;
- Assess whether employees can be usefully employed in alternative roles;
- Review applicable contracts and enterprise agreements;
- Comply with any consultation or notice obligations; and
- Consider alternative measures, such as reduced hours, redeployment or agreed leave arrangements.
Conclusion
The USA/Israel–Iran conflict highlights the urgent need for employers to understand when and how they can lawfully respond to global disruptions. Adhering strictly to the Fair Work Act is essential to avoid legal exposure during such events.
Section 524 of the FW Act allows employers to respond to operational stoppages, but the threshold for lawfully standing down employees is high, making compliance essential to avoid legal consequences.
Employers should proceed with caution, ensuring that any response to external disruptionis legally sound, evidence-based, and proportionate.
How Can Sharrock Pitman Legal Help?
If your business is considering workforce changes in response to global disruption, our employment team can assist with:
- Assessing whether a stand down is lawful;
- Reviewing employment contracts and enterprise agreements; and
- Managing risk in workforce restructuring decisions.
Call Sharrock Pitman Legal today on 1300 205 506 or complete the form below to get started.
[1][2020] FWC 2721 at 12.
[2]Ibid at 17 – 22.
[3][2016] FWC 8515 at 53; and subsequently affirmed by the Full Bench in Bristow Helicopters v Australian Federation of Air Pilots [2017] FWCFB 487.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. For advice tailored to your specific circumstances, please consult one of our qualified lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Anthony Sangster Robles is an Associate in our Employment Law and Commercial Law teams. Please contact Anthony directly on (03) 8561 3316 or email anthony@sharrockpitman.com.au.
