We have previously cautioned employers against being too quick to suspend employees – see “Suspend first, ask questions later?”. But where suspension occurs, is an employer required to keep paying the employee? Suspensions usually arise in three broad situations:
- misconduct or disciplinary reasons;
- stoppage or downturn of work;
- temporary inability to carry out the inherent requirements of a job.
In most cases, employees must continue to be paid whilst on suspension. It is well-settled law that an employer does not have an implied common law right to suspend an employee, with or without pay. This will be so even if an employee has engaged in misconduct which would justify summary or immediate dismissal. There is an exception for public servants who are subject to specific legislative rules and requirements when it comes to unpaid suspensions. The Fair Work Act does not provide a general basis for suspension or suspension without pay. The ability to stand down employees without pay under section 524 of the Fair Work Act 2009 (Cth) is limited to factors outside the employer’s control such as equipment breakdown, industrial action, natural disaster or closure due to government direction. This will normally involve a complete stoppage of work. Suspension due to industrial action is closely regulated by the Fair Work Act. There is no general ability to suspend employment, with or without pay, due to a downtown in work. A right to suspend without pay may exist if provision is made by an employee’s contract of employment, by statute or by an industrial instrument such as an award or enterprise agreement or, in exceedingly rare cases, a term implied in fact or by custom. However, even where a contract provides for suspension without pay, it may be an implied term that the employer will act reasonably in exercising its right to suspend and will only continue that suspension for as long as there are reasonable grounds to do so.
Inherent requirements. Suspension without pay MAY be justified where an employee loses the ability to carry out a fundamental requirement of their job. In BHP Coal Pty Ltd t/a BHP Billiton v Construction, Forestry, Maritime, Mining and Energy Union [2018] FWCFB 4148, the employee’s job was to operate vehicles and mobile equipment at a mine site and a key requirement was the holding of a current drivers licence. The employee’s drivers licence was suspended and BHP Coal suspended the employee without pay, saying there was no other work for the employee to perform. In upholding the employer’s decision, the Fair Work Commission held that neither the applicable enterprise agreement or contract of employment required payment in these circumstances. The Full Bench considered that whilst the employee might have been willing, he was not ready and able to perform the duties required by his contract of employment and therefore had no contractual entitlement to payment of wages, since actual service was required for wages to be earned. This position could potentially extend to analogous situations, particularly those involving appeal processes, eg temporary suspension of a professional practising certificate or a blue card to work with children or an NDIS screening clearance.
What about a temporary medical disability? In Aditya Singhal v Reserve Bank of Australia [2026] FWC 754, Mr Singhal claimed he had suffered a work related psychological injury and that he was medically unable to perform the full range of his duties (although he could carry out some modified duties under medical advice). He claimed that he was still entitled to be paid his normal wage. The Fair Work Commission disagreed and determined that the entitlement to wages under the enterprise agreement was conditional upon the employee performing work in the relevant pay period.
Is an employer required to consider whether the employee can carry out other duties? At common law an employer has a right to refuse to accept part performance of work by an employee. In Singhal, the RBA argued it did not have to accept partial performance of work where medical restrictions meant the employee could not perform the inherent requirements of his role and this was accepted by the Fair Work Commission. However, the situation might well have been different if Mr Singhal’s workers compensation claim had been accepted. This common law position is subject to statutory requirements and particularly the requirements of workers compensation legislation and discrimination legislation requiring employers to provide reasonable adjustments to accommodate an employee’s workplace restrictions or disability unless those changes would cause “unjustifiable hardship” to their business.
Employers should act cautiously. In the case of Preeti Devi v Doutta Galla Aged Services Limited [2018] FWC 4142 Ms Devi studied nursing and worked part time under a student visa, which imposed a limit of 40 hours work per fortnight, also reflected in her employment agreement. Ms Devi was suspended without pay after the employer concluded she had breached her visa conditions by exceeding her working hours. Ms Devi asserted that the employer had repudiated the employment contract and commenced an unfair dismissal claim. The Fair Work Commission held there was an unfair dismissal on the basis there had been no government determination that Ms Devi had in fact breached her visa requirements.
So, in most cases, suspensions will need to be paid. The Fair Work Act only provides for unpaid suspension in narrow situations. An exception may exist where an employee is temporarily unable to carry out an inherent requirement of their job, whether that is due to loss of a licence or for medical reasons. In those cases, the employee should be allowed to access paid leave entitlements if they wish. The specific requirements of applicable industrial award, enterprise agreement or contract provisions will be important. Subject to other legislative requirements, employers are not obligated to accept part performance of duties by employees. However, a reasonableness requirement may be implied, at least in relation to contractual provisions. The reality is that an employee’s ability to challenge a common law contractual right to suspend without pay may be limited. However, award and enterprise agreement employees will be able to raise a dispute in the Fair Work Commission and there is also the risk of an unfair dismissal claim. Other avenues under general protections rights law and discrimination law may also be relevant. In short, employers should suspend sparingly and consider whether savings made through unpaid suspension are practically worthwhile. Please contact us if you would like any further information or help.