Can I Stand Down Staff Without Pay? Only If There Is Nothing Useful For Them To Do

Microsoft was still working through a global Microsoft 365 outage on 13 November, one that disrupted Exchange Online access worldwide. Australian teams opened their laptops to nothing. Section 524 of the Fair Work Act does let an employer stop paying people when work stops, and the test is narrower than most founders assume.

The comfortable reading is that somebody else broke something, so the wages stop. The Act asks whose fault the stoppage was, then asks a second question that decides most cases. Outstaffer employs people for a living, so treat what we sell as disclosed interest, not neutral advice.

The stand down power turns on what each person can still usefully do

Section 524(1) of the Fair Work Act 2009 permits an employer to stand an employee down for a period in which the employee “cannot usefully be employed” because of industrial action the employer did not organise, a breakdown of machinery the employer cannot reasonably be held responsible for, or a stoppage of work for any other such cause. Subsection 524(3) then removes the obligation to pay.

Two conditions, joined. The cause sits outside your control, and the individual has nothing useful to do.

In a business built on knowledge work the second condition bites. A developer can write code locally. A bookkeeper can work through paper. Who runs the team day to day decides whether anyone has anything to give them.

A stand down clause in your contract can remove the statutory power

Subsection 524(2) is the part nobody expects. Where an enterprise agreement or a contract of employment applies to both parties and provides for stand down in the same circumstance, the employer may not act under subsection 524(1) at all. The Act’s own notes say the employer proceeds under that instrument instead, which may add requirements such as consultation or notice.

A clause added for protection narrows the power rather than widening it.

Does a vendor outage count as a stoppage of work?

Possibly on the first condition, rarely the second. Microsoft said a core process on its own servers was becoming overwhelmed, and has published no root cause. Either way, no Australian employer is responsible for it. Whether a given person could be usefully employed across those hours is a separate finding, made one employee at a time. Section 526 lets the Fair Work Commission arbitrate that dispute, taking fairness between the parties into account.

What about someone already on leave?

Section 525 says an employee is not taken to be stood down while on leave authorised by the employer, paid or unpaid, or otherwise authorised to be absent. A stand down cannot be run over the top of annual leave to preserve the balance.

What one idle day of stand down costs against payroll

ABS Average Weekly Earnings for May 2026, released 13 August 2026, puts full-time adult average weekly ordinary time earnings at $2,083.70. Across five days that is $416.74 a head.

Twenty full-time people idle for a day is roughly $8,335 against nothing produced. That is an economy-wide average, not your payroll, so read it as the shape of the bill. It is the same money behind how much working capital a new hire needs.

The counter-argument, and where it stops

The fair version of the other side is that section 524 exists so a small employer is not ruined by something it did not cause, and using it in a real stoppage is the Act working as designed.

Where it stops is reach. Section 524 runs between a national system employer and a national system employee, so it says nothing about a team in Manila, whose position is set by local law. The Act is more careful about geography than founders expect.

Related reading

• When Your Remote Hire Takes Sick Leave, Someone Is Already Liable
• Your Manila Team Has Ten Days Off That Your Sydney Office Does Not

What to do before the next outage

Read your employment contracts and find whether they carry a stand down clause, which decides the power you hold. Then write down, per role, what each person can do offline. Fair Work questions turn on your own facts, so get advice before you stop anyone’s pay.

If the employment side should sit with someone whose job it is, set up a role and see the full cost.

What could half your team have done yesterday with no email?