High Court gives significant win to employers during enterprise bargaining

06 Dec 2017

Employers' rights under the Fair Work Act to prevent and sanction inappropriate and unlawful conduct by unions during enterprise bargaining have been reinforced by the High Court this morning (Esso Australia Pty Ltd v Australian Workers Union and Australian Workers Union v Esso Australia Pty Ltd [2017] HCA 54 - Clayton Utz acted in both of these matters).

Organising protected industrial actions during enterprise bargaining

The Fair Work Act disentitles a union from organising protected industrial action when it has contravened an order of the Fair Work Commission. 

The Federal Court had held that a union only loses its entitlement to organise industrial action while the contravened order remained in operation - once the order ceased to operate, the disentitlement to organise industrial action also ceased. 

The High Court held that the disentitlement to organise industrial action continues to apply for the remainder of the period of enterprise bargaining; the cessation of operation of the order of the Commission contravened does not affect this.

The disentitlement of a union to organise industrial action by its members can be a significant benefit to an employer in enterprise bargaining as it removes or severely limits the main form of leverage that unions and their members can use in bargaining.  In many cases the failure or inability to take or maintain industrial action will significantly weaken the union's bargaining power and lead to better industrial outcomes for the employer.

Unlawfully coercing the employer to make an enterprise agreement favourable to the union and its members

Where the employer alleges that the union has taken action to unlawfully coerce the employer to make an enterprise agreement favourable to the union and its members, must the employer prove that the union knew that its actions were unlawful?  The AWU had argued that it believed the action to be lawful and that knowledge of the action being unlawful was a required element of a coercion claim that the employer must prove.

The High Court affirmed that for a coercion claim to succeed, an intention to coerce (ie. to negate choice) must be proved but, crucially, the knowledge that the action was unlawful does not have to be proved.

The position put by the AWU would, had it been successful, have made it virtually impossible for an employer to ever succeed in a coercion action unless the union admitted that it knew its actions were unlawful.  The High Court decision ensures that employers can bring coercion claims.

Implications for employers and their industrial strategy

These decisions reinforce the capacity of employers to take and succeed in actions against unions who behave unlawfully during enterprise bargaining.  Strategic and appropriate use of the protections afforded to employers by the Act can significantly enhance an employer's position in bargaining and can prevent unlawful pressure being brought to bear by unions who are willing to step outside the legal framework.

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