An employer who relied on the Fair Work Act rules prohibiting payments to striking workers as the basis to remove employees’ accommodation has been found guilty of adverse action in a recent High Court judgment.
The High Court has ruled that the provision of accommodation to striking employees at the Woodside Pluto Liquefied Natural Gas Project did not constitute an unlawful payment to employees with respect to industrial action. Consequently, the employer Mammoet Australia Pty Ltd (Mammoet) was found to have taken adverse action against striking employees, when it removed their entitlement to accommodation.
Employees of Mammoet were engaged to carry out construction work on a fly in-fly out basis at the Woodside Pluto Liquefied Natural Gas Project located in north-west Western Australia. As part of their engagement Mammoet provided the employees with on-site accommodation. In April 2010 the employees notified Mammoet of their intention to take protected industrial action in accordance with the Fair Work Act 2009 (Cth) (FW Act) in the form of a 28 day strike. In response, Mammoet advised employees that it would cease to provide them with accommodation for the duration of the strike.
The CFMEU filed a general protections claim on behalf of the employees. The claim asserted that the removal of accommodation by Mammoet was adverse action, taken because the employees exercised a workplace right to take protected industrial action. The CFMEU also claimed that Mammoet had breached provisions of an applicable enterprise agreement (EA) which set out the employees’ entitlement to accommodation.
In response, Mammoet asserted that it was prohibited from providing accommodation to the striking employees under section 470(1) of the FW Act, which provides:
If an employee engaged, or engages, in protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.
Mammoet claimed that the provision of accommodation would constitute an unlawful payment to employees in relation to the industrial action. It also asserted that it had not breached provisions of the EA because it was an implied condition of the provision of the accommodation that the employees be ready, willing and available to work.
Mammoet’s position in relation to section 470(1) was upheld by the Federal Magistrates Court (now the Federal Circuit Court) and by the Federal Court on appeal. Arguments in relation to the EA were not considered. The CFMEU then appealed to the High Court of Australia.
High Court proceedings
In a unanimous judgment of five judges, the High Court allowed the CFMEU’s appeal and set aside the orders made by the Federal Court.
In relation to the section 470(1) argument, the High Court held that the reference to ‘payment’ should be interpreted as meaning only a payment in money, as this was supported by the context in which the word ‘payment’ was used throughout the FW Act. In addition to this, the High Court noted that section 470(1) was a civil penalty provision, which attracted a significant fine for any employer that contravened it.
The High Court expressed concern that to apply a wider meaning to the term ‘payment’ would create uncertainty for employers, as to whether the provision of particular non-monentary benefits would constitute a payment in contravention of section 470(1). The Court stated, in line with principles of criminal liability, that the scope of a civil penalty should be clear.
The High Court also examined the meaning of the full phrase ‘payment to an employee in relation to the total duration of the industrial action on that day’.
The Court drew a distinction between ‘services on which the entitlement to remuneration commonly depends’ and ‘entitlements of an employee which are dependent on the subsistence of the contract of employment, rather than the actual performance of services’. It concluded that the intention of section 470(1) was to prevent payments to compensate for wages lost during industrial action and not to suspend any other entitlements that may form part of the employment relationship. It noted that whether particular payments fall within the meaning of section 470(1) will depend on the circumstances of each case. As an example, the Court suggested that a payment by way of a gift could contravene section 470(1) if the purpose of the gift was to compensate an employee for wages lost during industrial action.
In relation to the terms of the EA, the High Court found that the provision of accommodation was not implicitly conditional upon employees being ready, willing and available to work. Rather, the Court held that the agreement expressed a clear intention that the entitlement to accommodation was connected to employees travelling to the location. Accordingly, while the employment relationship continued, employees became entitled to accommodation upon travelling to the location at Mammoet’s direction.
The High Court also noted that even if the effect of the EA was that employees were not entitled to accommodation unless they were ready, willing and able to work, the removal of accommodation by Mammoet would still be adverse action because it injured the employees’ positions in their employment. When taken in response to protected industrial action, such action would breach general protections provisions in the FW Act.
The CFMEU’s application was remitted to the Federal Circuit Court to be heard and determined.
Things to note
The High Court’s decision makes clear that section 470(1) of the FW Act only prevents the payment of monetary benefits, which constitute wages for a period of industrial action or compensation for wages lost during a period of industrial action. The denial of any other entitlement in response to protected industrial action may constitute a breach of general protections provisions in the FW Act.
It is also important to note that action taken by an employer, even if lawful under an EA, can still constitute adverse action in breach of the general protections provisions if that action alters the position of the employee to the employee’s detriment.
Employers should exercise caution when restricting entitlements of employees engaging in protected industrial action. Employers should also consider developing policies and procedures for responding to industrial action which, amongst other things, provide suitable guidelines in relation to payment.