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02 Apr 2012

Terminating and suspending industrial action in the post-Qantas environment

by Dr Graham Smith, Leigh Howard

The Fair Work Act has created a high bar for suspension or termination of protected action.

Practitioners will agree that the lockout by Qantas on Saturday, 29 October 2011, which was terminated by a Full Bench of Fair Work Australia (FWA) in the early hours of Monday, 31 October 2011,[1] was one of the most dramatic events seen since the introduction and evolu­tion of enterprise bargaining and protected industrial action. Qantas’ high risk, high reward strategy of locking out approximately 3000 employees, potentially affecting hundreds of thousands of passengers globally, has given rise to many questions, and new perspectives, for parties experiencing protracted industrial disputation.

The purpose of this article is to examine the legisla­tive powers of FWA to intervene in industrial disputes. This article assesses FWA’s current jurisdiction to sus­pend or terminate protected action under the Fair Work Act 2009 (Cth), and in doing so, explores how FWA has administered its powers to date in the cases. As will be shown, the scheme enacted by the Fair Work Act has created a high bar for suspension or termination of protected action, and when properly considered, the events in Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations [2] (Qantas) were a direct con­sequence of it.

Suspending or terminating protected industrial action under the Fair Work Act: Avenues, outcomes and grounds

Compared to predecessor industrial legislation, the Fair Work Act has altered and expanded upon each mechanism to suspend or terminate protected industrial action. The intention behind the mechanisms has also been clarified. As the Explanatory Memorandum describes:

"The [Fair Work Act] recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.

It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining." [3]

The revised rules are prescriptive and complex. In order to demystify it, it is useful to categorise the key requirements into the following categories:

  • “avenues” (pathways that can lead to the protected action ceasing),
  • “outcomes” (how the protected action can cease); and
  • “grounds” (circumstances that give rise to the jurisdiction to cease the protected action).

Under the scheme, avenues and outcomes differ depending upon each ground.

Avenues for suspending or terminating protected action

There are five “avenues” in which protected action could be suspended or terminated under Pt 3-3 of the Fair Work Act. They are:

(a) upon an application to FWA by the parties (ie. the employer or trade union);

(b) upon an application to FWA by a third party;

(c) on FWA’s own initiative;

(d) upon application to FWA by the Federal Minister for workplace relations or a state/territory minister with responsibility for workplace relations; or

(e) by a ministerial declaration by the Federal Minister for workplace relations (without application to FWA).

Outcomes

There are three “outcomes”. Protected action can be terminated, and the right to protected action is quashed. FWA is then able to arbitrate the dispute (termed a “workplace determination”) if the parties have yet to negotiate an agreement after a 21 day period (extendable to 42 days). [4] Secondly, it can be suspended for a defined period of time that FWA determines as appropriate. [5]

Thirdly, FWA can order a cooling off if satisfied that it would assist the parties in resolving the dispute at hand. Only one extension of the period of suspension or cooling-off is available. [6] Importantly, if one of these outcomes is ordered, it applies to all the protected action on foot in the dispute, not just the protected action that is the subject of the application. [7]

Grounds

The three outcomes, through the five avenues, can only be triggered if certain “grounds” are occurring or are likely to occur. There are six separate grounds. The grounds have mostly been adapted from the successive reforms to industrial legislation, in that they focus on harm to health, safety and the economy, but they have been slightly expanded in each case. In its short history, FWA has been required to decide upon each ground brought under almost every avenue.

A summary of each ground, along with the major cases that have been brought under them, is offered below.

Ground 1: Significant economic harm to the employer and employees (s 423)

FWA discretion and criteria

Under section 423, FWA has discretion to suspend or terminate protected action should it be causing “signifi­cant economic harm” to the employer and employees. Applications may be made under all avenues, except by application from a third party. The following elements must be met:

(a) FWA must be satisfied that the protected action is causing, or threatening to cause, significant eco­nomic harm to the employer and employees; [8]

(b) the protected action must be occurring and have occurred for a protracted period of time; [9]

(c) the dispute that is subject of the protected action will not be resolved for a protracted period of time; [10] and

(d) if the significant economic harm has not yet eventuated, the risk of it occurring must be imminent. [11]

If the protected action is a retaliation in response to other protected action (for example, a lockout in response to employee protected action), then FWA will only consider the harm that is borne by the employees in such action. [12] In determining what constitutes “significant economic harm”, the factors that FWA have regard to include the following:

(a) the source, nature and degree of harm suffered or likely to be suffered;

(b) the likelihood that the harm will continue to be caused;

(c) the capacity of the person (ie. employee or employer) to bear the harm inflicted upon them;

(d) the views of the person and the bargaining repre­sentatives for the agreement;

(e) whether the bargaining representatives have met the good faith bargaining requirements during negotiations;

(f) whether the bargaining representatives have not contravened any bargaining orders in relation to the agreement;

(g) the objective of promoting and facilitating bargain­ing for the agreement; and

(h) if FWA is considering terminating the protected action (rather than suspend it):

(i) whether the bargaining representatives genu­inely are unable to reach agreement on the terms that should be included in the agreement; and

(ii) whether there is no reasonable prospect of agreement being reached. [13]

Cases before FWA

At the time of writing section 423 had been considered five times by FWA,[14] and in all but one case the application has failed. This can be explained by the fact that employees will usually collectively endorse the pro­tected action, despite any suffering that may be inflicted, and will campaign against such an order. [15] In those circumstances, and noting that employee harm is a prerequisite to an order even when employer harm is evident, it is difficult to establish that protected action is causing significant economic harm upon employees.

In Schweppes Australia v United Voice, the only successful case to date, this issue was overcome when a number of employees wrote to FWA (on an anonymous basis) to ask that the protected action stop. Based on the contents of those letters, Kaufman SDP summonsed the parties to FWA. After an affidavit was filed confirming the thrust of those letters, his Honour terminated the protected action on his own motion. [16]

Ground 2: Endangering the life, safety or wellbeing of the population (section 424(1)(c))

Nature of ground

Under s 424(1)(c), FWA must suspend or terminate protected action if satisfied that the action is or is going to endanger life, personal safety, health or welfare of the population or part of it. Applications may be made under all avenues, except by application from a third party. The concepts of “endanger”, “life”, “health”, “safety” and “welfare” are not defined in the Fair Work Act, and the Explanatory Memorandum is of little assistance. The concepts take their ordinary English meaning.

FWA cases

At the time of writing, FWA has been called upon to interpret section 424(1)(c) 12 times, and six applications have resulted in either suspension or termination. [17] Cases to date have concerned service providers of essential goods such as health care and utilities, and accordingly, FWA has taken a more sensitive and inter­ventionist approach. FWA has not looked favourably upon a failure to customise protected action in order to limit any potential harm that may be caused to life, safety or wellbeing. [18]

Ground 3: Significant harm to a third party (section 426)

Nature of ground and tests

FWA must suspend, but not terminate, protected action should it be causing significant harm to a third party, being a person that is not the employer, employees or bargaining representative. Only two avenues, being upon application by a third party or application by the Minister, are available under this ground. Whilst the inquiry is directed at “significant harm”, and not “sig­nificant economic harm” (as in section 423), FWA has equated the tests to be of the same nature. [19]

To gain such an order FWA must be satisfied of the following:

(a) the protected action must be causing significant economic harm to a third party; [20]

(b) the protected action must be “adversely affecting” either the employer or the employees; [21] and

(c) protected action must be on foot (rather than merely threatening, pending or probable). [22]

FWA must also be satisfied that the suspension is “appropriate”, by taking into account:

(a) whether the suspension would be contrary to the public interest or the objectives behind the Fair Work Act; and

(b) any other matter that FWA considers relevant. [23]

In assessing significant harm, FWA is again entitled to take account of any matter it considers relevant, but can consider the extent that the protected action threat­ens to:

(a) damage the ongoing viability of the third party’s enterprise;

(b) disrupt the supply of goods or services to the third party;

(c) reduce the third party’s capacity to fulfill a con­tractual obligation; and

(d) cause any other economic loss caused to the person. [24]

Woodside case

This ground has only been determined once, unsuc­cessfully, in Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (Woodside). [25] In Woodside, a Full Bench of FWA confirmed how the suspension and termination provisions generally operate in light of the legislative intention behind the Fair Work Act, and has proved to be the most significant decision concerning suspension or termination of protected action to date. In an expansive interpretation, the Full Bench concluded that “substantial harm to third parties is a common consequence of effective industrial action,” [26] and went on to hold:

"the word “significant” indicates harm that is excep­tional in its character or magnitude when viewed against the sort of harm that might ordinarily be expected to flow from industrial action in a similar context. In this way, an order will only be available under section 426 in very rare cases ... Unless the harm is out of the ordinary then suspension would contrary to the legislative intention that suspension should not be able to used generally to prevent legitimate protected industrial action in the course of bargaining. [27] (emphasis added)".

The Full Bench reasoned that the basis for such a high threshold was justified once the right to strike, as enshrined in international law and reflected in the Fair Work Act’s extrinsic materials, was duly considered and applied. [28] Arguably (and perhaps owing to the expanded intention behind the Fair Work Act, outlined above), this reasoning goes beyond that of the High Court in Coal and Allied Operations Pty Ltd v AIRC, [29] which said the following when called upon to interpret very similar statutory language in predecessor legislation:

"[T]he nature of the threat as to which a decision-maker must be satisfied under [the predecessor legislation] involves a measure of subjectivity or value judgment ... The presence of the words “significant” and “important” in [the predecessor legislation] indicate that the decision-maker must have some basis for his or her satisfaction over and above generalised predictions as to the likely conse­quences of the industrial action in question." [30]

The reasoning in Woodside has been influential in subsequent decisions and partly explains the number of failed applications across each ground.

Ground 4: If FWA considers that a cooling-off is appropriate (section 425)

Under section 425, FWA must to suspend protected action for a cooling-off period if FWA is satisfied it is appro­priate. Only one avenue, being an application by the bargaining representatives, is available. In determining such an application, FWA is to take into account:

(a) whether the suspension would be beneficial to the bargaining representatives in assisting in the reso­lution of outstanding matters;

(b) the duration of the protected action;

(c) whether the suspension would be contrary to the public interest or inconsistent with the objects of the Fair Work Act; and

(d) any other matters that FWA considers relevant.

Applications to FWA

At the time of writing, six applications for a cooling off have been made before FWA, and only one has been granted. [31] The general trend of FWA decisions under section 425 has been to refuse a cooling-off “unless there was a finding that a cooling-off period would assist in the resolution” of an agreement. [32] However, and taking the holdings of Woodside to their full extent, it could be argued that the existence of the possibility of protected action “has the effect of reducing the differences between the parties and making agreement more likely.” [33] So construed, it seems that cooling-off will only be ordered by FWA if there is a real and probable prospect that such an order would shepherd the parties to agreement.

Ground 5: Significant damage to the Australian economy or an important part of it (section 424(1)(d))

Nature of ground and terms

Under section 424(1)(d), FWA is obliged to suspend or terminate protected action if satisfied that the action is or is going to cause significant damage to the Australian economy or an important part of it. Again all avenues may be used under section 424(1)(d), save by application by a third party. The terms “significant damage” and “impor­tant part [of the Australian economy]” are not defined and thus take their ordinary meaning.

Applications to FWA

Applications under section 424(1)(d) have been brought before FWA three times, and two have been success­ful.[34] Cases brought under this ground commonly involve economic forecasting as to how protected action will impact on parts of the Australian economy, and are thus necessarily imprecise. [35] Whilst the Qantas dispute could have been brought under any number of different grounds, it was pleaded under section 424(1)(d). This was due to the fact that the Federal Minister had to act immediately, and evidence of damage to the Australian economy was readily available by calling senior public officials with expertise in affected sectors of the economy. [36]

Ground 6: If the Federal Minister is satisfied that a threat to health, safety, welfare or economic damage exists (section 431)

Declaration by Federal Minister

The final ground for intervention is through a decla­ration published by the Federal Minister under section 431, which is effected if the minister is satisfied that:

(a) the protected action is being engaged in, or is threatened, impending or probable; and

(b) the protected action is threatening, or would threaten:

(i) to endanger the life, the personal safety or health, or the welfare, of the population or a part of it; or

(ii) to cause significant damage to the Australian economy or an important part of it. [37]

A declaration can only terminate and not suspend protected action. The Federal Minister must publish the declaration in the Government Gazette and make all bargaining representatives aware of the declaration as soon as practicable. [38] The Fair Work Act does not provide a mechanism to review a declaration; however, judicial review would be available.

Administrative process

Such a declaration has not yet been made, and the Gillard government came under some criticism for refraining from issuing a declaration during the Qantas dispute. [39] However, a declaration made under section 431 is an administrative process, subject to the principles of pro­cedural fairness and natural justice. If it is assumed that the government was notified of the lockout at the same time the public was, the urgent application to FWA would have produced a quicker outcome. That applica­tion, made on the evening of Saturday, 29 October 2011, and listed by FWA for 10:00 pm that night, is analysed in our article to be published in the next issue of the Employment Law Bulletin.


This article was first published in the Employment Law Bulletin,April 2012

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[1] Minister for Tertiary Education, Skills, Jobs and Workplace Relations, Re [2011] FWA 7444; BC201170021. [go back to article]

[2] Above,n1. [go back to article]

[3] Explanatory Memorandum, Fair Work Bill 2008, 267–268. [go back to article]

[4] Section 266 Fair Work Act. [go back to article]

[5] Sections 423–427 Fair Work Act. [go back to article]

[6] Section 428 Fair Work Act. [go back to article]

[7] National Tertiary Education Industry Union v University of South Australia (2010) 194 IR 30; [2010] FWAFB 1014 at [11]. [go back to article]

[8] Section 423(2) Fair Work Act. [go back to article]

[9] Section 423(6)(a) Fair Work Act. [go back to article]

[10] Section 423(6)(b) Fair Work Act. [go back to article]

[11] Section 423(5) Fair Work Act. [go back to article]

[12] Section 423(3) Fair Work Act. [go back to article]

[13] Section 423(4) Fair Work Act. [go back to article]

[14] Successful cases: Schweppes Australia Pty Ltd v United Voice (B2012/461, Kaufman SDP, 10 February 2012) (Schweppes). Unsuccessful cases: Prysmian Power Cables and Systems Australia v NUW [2010] FWA 9402; Nyrstar Port Pirie v CFMEU [2009] FWA 1148 and Schweppes Australia Pty Ltd v United Voice [2011] FWA 114; POAGS Pty Ltd v MUA [2012] FWA 114. [go back to article]

[15] See for example Prysmian Power Cables and Systems Austra­lia v NUW [2010] FWA 9402 [47], [92] where a unanimous resolution was passed by employees requesting the Tribunal not to order a termination of the protected action. Cargill C concluded that the resolution indicated that the protected action did not meet the requisite magnitude to be significant for employees. [go back to article]

[16] Schweppes, PN5-15, at [503]–[530]. [go back to article]

[17] Successful cases: Ambulance Victoria v LHMU (2009) 187 IR 119; [2009] FWA 44; NTEU v University of South Australia (2010) 194 IR 30; [2010] FWAFB 1014; Re Pelican Point Power Ltd [2010] FWA 8666; Tyco Australia Pty Ltd v CEPU [2011] FWAFB 1598; Victoria v CPSU [2011] FWA 9245; Victorian Hospitals Industrial Association v ANF [2011] FWA 8165. Unsuccessful cases: Minda Incorporated v LHMU [2010] FWA 3753; Minda Incorporated v LHMU [2010] FWA 3217; Geo Group Australia Pty Ltd v United Voice [2011] FWA 9025; St John Ambulance Australia (NT) Inc v United Voice [2011] FWA 4782; Toyota Motor Corporation Australia Ltd v AMWU [2011] FWA 6268; G4S Custodial Services Pty Ltd v HSU [2011] FWA 5902. [go back to article]

[18] See University of South Australia v NTEU [2009] FWA 1535, [39] where SDP O’Callaghan was implicitly critical of the NTEU’s refusal to modify a ban on marking student assess­ments to accommodate graduating students. [go back to article]

[19] The test under section 423, while setting out a greater number of factors, does not direct that FWA consider only the listed factors. As such, it can be inferred that FWA has discretion to consider anything additionally relevant, akin to the test in section 426. See Prysmian Power Cables and Systems Austra­lia v NUW [2010] FWA 9402 at [84] per Cargill C. [go back to article]

[20] Section 426(3) Fair Work Act. [go back to article]

[21] Section 426(2) Fair Work Act. [go back to article]

[22] Section 426(1) Fair Work Act. [go back to article]

[23] Section 426(5) Fair Work Act. [go back to article]

[24] Section 426(4) Fair Work Act. [go back to article]

[25] Construction, Forestry, Mining and Energy Union v Woodside Burrup Pty Ltd (2010) 198 IR 360; [2010] FWAFB 6021 (Woodside). [go back to article]

[26] Above, n 25 at [44]. [go back to article]

[27] Above, n 25 at [44]. [go back to article]

[28] Above, n 25 at [37]–[44]. [go back to article]

[29] Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194; 174 ALR 585; [2000] HCA 47; BC200005034. [go back to article]

[30] Above, n 29. at [28] per Gleeson CJ, Gaudron and Hayne JJ. [jump back to article]

[31] Successful cases: Nyrstar Port Pirie v CFMEU [2009] FWA 1144. Unsuccessful cases: Tas Paper Pty Ltd v AMWU [2009] FWA 1872; Transit Australia Pty Ltd v TWU [2011] FWA 5006; Mammoet Australia Pty Ltd v CFMEU [2010] 4389; Patrick Stevedores Holdings Pty Ltd v MUA [2011] FWA 3059; CEPU v Carter Holt Harvey Wood Products Australia Pty Ltd [2011] FWA 101. [go back to article]

[32] Mammoet Australia Pty Ltd v CFMEU [2010] FWA 4389 at [27] per McCarthy DP; applied in CEPU v Carter Holt Harvey Wood Products Australia Pty Ltd [2011] FWA 101 at [6] per Blair C. [go back to article]

[33] Mammoet Australia Pty Ltd v CFMEU [2010] FWA 4389 at [31] per McCarthy DP. [go back to article]

[34] Successful cases: Qantas; Sucrogen v AWU [2010] FWA 6192. Unsuccessful cases: Toyota Motor Corporation Australia Ltd v AMWU [2011] FWA 6268. [go back to article]

[35] Cf Sucrogen v AWU [2010] FWA 6192, where protected action was suspended to prevent a sugar harvest from being compro­mised, with Toyota Motor Corporation Australia Ltd v AMWU [2011] FWA 6268, where a suspension order was refused despite protected action potentially delaying a refit of plant equipment. The delay in the latter case eventuated in a stand down: AMWU v Toyota Boshoku Australia Pty Ltd [2012] FWA 1135. [go back to article]

[36] Re Minister for Tertiary Education, Skills, Jobs and Workplace Relations [2011] FWAFB 7444; BC201170021 (Qantas). [go back to article]

[37] Section 431(1) Fair Work Act. [go back to article]

[38] Section 432 Fair Work Act. While unclear, it seems that publication in the Government Gazette is not a precondition for the declara­tion to take effect. The declaration takes effect on the day that it is “made”, rather than published: section 43 1(2) Fair Work Act. [go back to article]

[39] Eric Abetz MP, “Qantas Evidence is Clear: Government Could Have Acted But Didn’t” (Media Release, 4 November 2011). [go back to article]

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.