NSW COVID Lockdown - Employers' Top Questions Answered

Greater Sydney remains in lockdown following Public Health (Covid-19 Temporary Movement and Gathering Restrictions) Order 2021 (“the Public Health Order”) which came into effect 26 June 2021 and extended on the 28th July 2021 by Premier Berejiklian until 28 August 2021. 

The “lockdown” has created a legal minefield for employers who remain unsure and uncertain as to how they best handle the current situation. 

We have compiled the most common questions asked by our clients who have been impacted by the NSW Covid Lockdown and shared our answers below. 

Employer Obligations in NSW Covid Lockdown


From 18 July most retail premises in Greater Sydney including the Blue Mountains, Central Coast, Wollongong and Shellharbour were ordered to close to the public. Only businesses providing essential products and services can be open. See a list here.

Home Building

From 18 July 2021 renovations, repairs, maintenance and cleaning must stop in Greater Sydney, including the Blue Mountains, Wollongong, Central Coast, and Shellharbour local government areas. 


From 18 July 2021, work at Construction sites in Greater Sydney including the Blue Mountains, Central Coast, Wollongong and Shellharbour, is not to be carried out unless the work is urgently required, predominantly this relates to safety reasons but a full list of exemptions can be found here.

2. If my business is not affected by the shutdown, should I direct my employees to work from home during the NSW COVID Lockdown?

Pursuant to the Public Health Order, employers in the Greater Sydney area MUST require their employees to work at their place of residence unless it is not reasonably practicable to do so. 

Employers should consider the following factors at a minimum in making an assessment as to whether it is reasonably practicable for their employees to work at their place of residence: 

  • The individual role of the employee, 
  • Whether the employee is in a vulnerable person category for contracting Covid-19, 
  • Suitability of the work activities, expectations and workstation set up available, 
  • Ventilation, lighting and noise, 
  • Home environment (children, partners, pets, other vulnerable persons), 
  • Overall health of the employee, and 
  • Compliance with safe work procedures and training requirements. 

There is also a direction within the Public Health Order providing that employers who are not within the Greater Sydney area must ALLOW employees to work from home when it is reasonably practicable for them to do so. If you operate a business outside the Greater Sydney area and an employee makes this request, the abovementioned factors should also be considered when evaluating the employee’s request. 

Working from home for all applicable employees is an effective strategy the employer can put in place to uphold their primary duty under model work health and safety laws, namely, to provide a safe workplace for their employees. This duty undoubtedly includes identifying and minimizing the risks of exposure to Covid-19 for their employees. 

3. What does it mean to standing down an employee?

Being stood down can be described as a period of lawful authorised absence without pay. During a stand down, the employee remains employed – without work or income (unless an agreement is reached for annual leave or long service leave to be used).  

Being stood down therefore does not break the employee’s continuity of service with the employer and does not result in the employer having to end the employee’s employment with the employer by way of dismissal or redundancy. 

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4. When can I stand down an employee?

If your business has had to close or is significantly hampered due to the Public Health Order, you may have a right to stand down your employees under one (1) of the following: 

  • an Enterprise Bargaining Agreement, 
  • an Employment Contract, and/or 
  • Section 524 of the Fair Work Act 2009 (Cth). 

Enterprise Bargaining Agreement or Employment Contract

If you have an entitlement to stand employees down under either an Enterprise Bargaining Agreement or Employment Contract you should comply with the obligations and procedures set out in the relevant clauses of that document. 

Section 524 of the Fair Work Act 2009 (Cth)

Under Section 524 of the Fair Work Act 2009 (Cth), an employer can stand down an employee without pay where they cannot be usefully employed because of a stoppage of work for any cause of which an employer cannot be reasonably held responsible. 

In short, an employer will need to show that: 

  • There has been a stoppage of work, 
  • The employee who is being stood down cannot be usefully redeployed within the business because of the stoppage of work (an employee is able to take on a new role if suitable), and 
  • The cause of the stoppage of work must be one that an employer cannot be reasonably held accountable for. 

Employers will need to carefully consider whether the Order has resulted in a stoppage of work or a reduction in demand of their goods or services. 

Take note, incorrectly standing down an employee may lead to significant penalties imposed on the employer and liability to repay an employee for lost wages or earnings. 

5. Can I direct employees to take Annual Leave

Whether or not an employer can direct an employee to take annual leave will depend on the terms and conditions set out in an applicable Modern Award, Enterprise Bargaining Agreement, Employment Contract or employer Policies. 

No Modern Award or Enterprise Bargaining Agreement

Under the Fair Work Act 2009 (Cth), an employer can direct an employee not covered by a Modern Award or Enterprise Bargaining Agreement to take annual leave where the request is reasonable for them to do so.  

For example, if there is no work to be performed due to the Public Health Order, it is likely to be a reasonable request to direct an employee to take annual leave (subject to the employee’s individual circumstances).  

Modern Awards and Enterprise Bargaining Agreement

If your employees are covered by a Modern Award or Enterprise Bargaining Agreement, there will need to be consideration given to the terms of these documents. Many Modern Awards were altered in 2020 allowing for employers to direct employees to take annual leave due to the Covid-19 pandemic.  

Further, the Fair Work Commission also more recently inserted into several Modern Awards the option for employees to take double the amount of annual leave at a 50% rate of pay.  This allows employees and employers more flexibility in reaching mutually beneficial arrangements during these uncertain times.  

6. Can an employee who has been stood down request Annual Leave?

An employee who has been stood down by their employer may ask to take annual leave instead of being stood down. This request should be made in accordance with employer’s usual procedures for requesting annual leave. 

If an employee who has been stood down requests annual leave, the employer may not refuse the request unless it is reasonable to do so.

Practically speaking, if an employee is being stood down it is likely due to cashflow concerns that might also limit the employer’s ability to pay annual leave. This may be considered a reasonable excuse to reject the employee’s leave application.  

Employers should continue to work with employees on this delicate issue and evaluate requests on a case-by-case basis. 

Business Obligations, business structure

7. What should my Work From Home (WFH) Policy include?

All employers should have a Working From Home Policy they can implement from time to time.  

A Working From Home Policy; sets clear expectations for employees in terms of their performance and productivity, streamlines communication channels and sets a regular expectation as to when employees are expected to be “online” for duty.  

If your business does have a current Working From Home Policy now is the time to review and possibly amend the policy and ensure it is compliant and encompasses the broader issues that have arisen following the pandemic, for example, how does the employee who is working from home for the foreseeable future deal with the disposal of confidential information?  

If you do not have a Working From Home Policy we recommend that a clear written Policy be implemented as a matter of urgency.  

As is the situation with all work policies, all workers must be consulted with in relation to their working from home arrangements. 

8. What are my work health and safety responsibilities for employees working from home?

It is important that employers remember that the model work health and safety laws in force in NSW under the Work Health Act 2011 still apply when employees are working at their place of residence and not at their usual place of work.  

Employers should undertake reasonable steps to ensure that an employee who is working from their place of residence has a workstation and area that meets work health and safety standards.  

We recommend employers ask their employees to complete a check list that considers potential risks and how these risks are to be managed prior to working from their place of residence.  

SafeWork NSW provides a generic checklist which employers can easily circulate to their employees who are working from home.

Free Case Evaluation

Should you have any questions in relation to your rights as an employer or obligations to your employees in connection with the Public Health Order or generally, please do not hesitate to contact us. We offer a free initial case evaluation for all new enquires.