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The Fair Work Act and Workers Rights

A recent case before the High Court has shed new light on the requirement of employers, and the rights of employees, when industrial action is taken under the Fair Work Act.

During industrial disputes, we often encounter the words strike and lockout. To better understand industrial actions, we have to understand the meaning of some of these labour terms.

A strike action or strike in general is a work stoppage caused by the mass refusal of employees to report to work. This usually occurs in response to employee’s grievances.

Lockout on the other hand refers to a temporary work stoppage or denial of employment during a labor dispute initiated by the management of a company. During lockout, the workers are barred entry to the workplace by the employer.

The Right to Strike in Australia

A (very) brief history of workers rights in Australia can be summed up in 3 Acts.

  • The Industrial Relations Act 1988 (Cth). During this period, the right to strike was not protected by any legislation in Australia. Trade unions and members who participated in any industrial action were exposed to actions for damages in tort and contract.
  • The Industrial Relations Reform Act 1993 (Cth). This Act amended the provision in Division 4 of the Industrial Relations Act 1988 (Cth), providing employees who strike immunity from civil liability in limited circumstances.
  • The Fair Work Act 2009 (Cth). The FWA provides more defined regulations governing labor conditions and regulations, strikes and lockouts.

The Latest Case of Workers Rights

The issues

In this case, the court ruled on the questions as to whether or not the provisions on accommodation constituted “payment” within the meaning of Section 470(1) of the Fair Work Act and whether or not the removal of accommodation by the company (Mammoet Australia) constituted an adverse action.

Facts of the Case

Citation: Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd [2013] HCA 36.

The case involved a group of fly-in/fly-out workers employed by Mammoet to work on Woodside Pluto LNG Project in Western Australia.

The workers lived in accommodation paid for by the employer (Mammoet) as required by their enterprise agreement (Greenfields Agreement).

Mammoet’s employees were employed under the Mammoet Australia Pty Ltd Pluto Project Greenfields Agreement.

In April 2010, the Construction, Forestry, Mining and Energy Union (CFMEU) advised Mammoet Australia Pty Ltd that its fly-in fly-out crane and forklift operators at the Pilbara project would stop work for 28 days while it negotiated a new enterprise agreement.

In its response, Mammoet ordered for a lock out for the same duration. The provisions for board and lodging for its forklift operators were also withdrawn. In its argument before the Federal Court, Mammoet was not obliged to provide accommodation based on Section 470 (1) of Fair Work Act 2009.

Mammoet argued:

  • That the accommodation constituted “payment”, given it had elected to provide lodgings instead of a living away from home allowance (LAFHA) under the terms of their existing enterprise agreement; and
  • That because the employees were not willing to work, they were not entitled to accommodation under the terms of the agreement.

On the other hand, the Construction Forestry Mining and Energy Union (CFMEU) brought a claim against Mammoet on behalf of the crane and forklift employees. CFMEU argued that Mammoet had breached both the terms of the agreement and the provisions of the FWA, alleging that:

  • the threat to remove, and the removal of, employee accommodation in response to the protected industrial action constituted adverse action; and
  • the failure by Mammoet to provide the accommodation was a breach of the Greenfields Agreement.

The controversy lies with the interpretation and application of the provision of Section 470 of the Fair Work Act and the existing contract between the parties.  Generally, the FWA prohibits employers from making payments to employees during the duration of the industrial dispute. Therefore, employers are authorised to withdraw employee accommodation during protected industrial action.

In the same vein, it is unlawful for an employee, or an employee organisation, to accept payment from an employer during periods they are taking industrial action or ask the employer for payment. The law states: “an employer must not make a payment” to an employee “in relation to the total duration” of industrial action.

The Federal Court, in its decision dismissed the claim of CFMEU.

Appeal to the High Court

The CFMEU appealed to The High Court. The Court released its decision on the 19th of August 2013, and in it unanimously declared that:

  • The provision of employees accommodation do not constitute “payment” during the holding of industrial action. The court held that when the Act referred to “payment,” it referred to a cash payment and not simply any transfer of an economic benefit. Section 470 of FWA is limited to payment of money only and does not include non-monetary benefits such as accommodation;
  • The payment which is prohibited under the law was “in relation to the total duration” of the action, that is, payments which are directly attributable to the period of the strike. It follows that Section 470 prohibition on strike pay did not require or authorise the withdrawal of accommodation benefits; and
  • Mammoet is under obligation to provide accommodation to a striking employee under the agreement (Greenfield Agreement) regardless of whether they worked or not. The presence of the workers at the project site entitled them to accommodation under the agreement.

Important reminders to employers

The High Court ruling in this case provide a more defined rules in the treatment of accommodation as different from payment under Section 470 of the Fair Work Act. This will serve as a reminder to employers to be vigilant in offering and accepting terms during the bargaining agreement:

  • An employee’s remuneration is not confined to cash benefits only and may include non-salary benefits.  Accommodation will be considered payment only where it is directly related to the work performed and the employee has that capacity to earn remuneration from that work.
  • Any action authorised by the FWA do not constitute adverse action. In particular, withholding payment when employees take unprotected industrial action cannot constitute adverse action; and
  • The FWA prohibits payment during a period of industrial action. Withholding payment will not render the employer in breach of the collective agreement, which would otherwise require payments to be made.