During negotiations for a new Enterprise Bargaining Agreement (“EBA”), employees and employers may engage in “industrial action” such as strikes or stand downs.
The Fair Work Act 2009 (Cth) (“FW Act”) deals with industrial action in Part 3-3.
Industrial action is considered “protected industrial action” under s.408 of the FW Act if it is an approved form of industrial action and is an:
(a) employee claim action for the agreement;
(b) employee response action for the agreement; or
(c) employer response action for the agreement.
The industrial action must also meet the following “common requirements” under s.413 of the FW Act:
(a) The industrial action must not relate to a proposed enterprise agreement that is a Greenfields agreement or multi-enterprise agreement;
(b) The person organising or engaging in the industrial action, whether a bargaining representative or an employee, must be genuinely trying to reach agreement;
(c) The person proposing to take the industrial action must meet the notice requirements under s.414 of the FW Act (i.e. three days’ written notice for an employee claim action, no specific time for an employee response action and “all reasonable steps… to notify” for employer response actions);
(d) The person organising or engaging in the industrial action must not have contravened any orders that apply to them or that relate to the industrial action, the agreement or a matter that arose during bargaining for the agreement;
(e) The person organising or engaging in the industrial action must comply with the requirement to not take industrial action until the nominal expiry date of the enterprise agreement has passed; and
(f) There must not be in operation an order suspending or terminating industrial action in relation to the agreement or a ministerial declaration or a serious breach declaration.
If an industrial action is protected then s.415 of the FW Act states that the participants in the action have legal immunity except in cases where there is or likely to be personal injury, damage to property or unlawful taking of property. If the action is not protected, then the effected party may take legal proceedings to stop the action and claim compensation for any damage or loss suffered.
Stopping unprotected industrial action
There are several options available to employers who are seeking to restrain employees from taking unprotected industrial action. These are:
- Applying to the Fair Work Commission (“FWC”) for an order that the action be stopped;
- Applying to the Federal Court for a statutory injunction or other order under the FW Act;
- Applying under the Competition and Consumer Act 2010 (Cth) to restrain an unlawful “secondary boycott”; or
- Seeking Common Law relief in a State or Federal Court for breach of contract or the commission of a tort.
The FWC has the authority to declare an industrial action as being either protected or unlawful. If it finds that the action is unprotected, under s.418 of the FW Act, the FWC must order that the action stop.
This provides a relatively quick and cost-effective method of resolving industrial actions that is less confrontational than a court and does not usually involve the unsuccessful party paying the legal costs of the other party. However, there are legal and practical limitations to an FWC order. These are:
(a) To attract jurisdiction, the action must be industrial in character, meaning it will not catch all forms of action or action by all persons;
(b) The provisions of s.420 of the FW Act (making interim orders) may not be sufficient to obtain urgent relief, such as where urgent action is required to obtain an order to stop unlawful conduct without notice to the offending party or parties;
(c) As noted, the FWC cannot enforce its own orders, meaning that in the event of a contravention of a term of an order, an employer is compelled to enforce the order in either the Federal Court of Australia or the Federal Circuit Court of Australia;
(d) The FWC cannot make other consequential orders such as compensation orders or deal with other types of legal causes of action that relate to the same subject matter, such as common law actions; and
(e) A person who is unhappy with a FWC order may seek to challenge it in the Courts meaning there is no immediate guarantee of finality.
Federal Court Applications
The Federal Court has statutory authority under the FW Act to make orders in relation to unprotected actions. There are three circumstances where the Court may grant an injunction. These are:
- Industrial action taken before the nominal expiry date of the EBA (s417 FW Act);
- Where action is taken in contravention of a FWC stop action order (s421 FW Act); or
- Where there is “pattern bargaining” – an attempt by a union (for example) to have common terms included in multiple EMBs at the same time (s422 FW Act).
Secondary Boycott Applications
The Part IV of the Competition and Consumer Act 2010 (Cth) makes it unlawful to engage in a “secondary boycott”. A secondary boycott occurs where a person (1st person), in concert with another person (2nd person), engages in conduct that hinders the supplies of goods and services between a 3rd person and a 4th person (being a corporation), where the conduct is engaged in for the purpose, and would be likely to have the effect, of causing substantial loss or damage to the business of the 4th person.
The classic secondary boycott in an industrial context is where a union or unions apply pressure to the supplier of an employer to supply goods (e.g., manufacturing components) or services (e.g., labour hire services) to the target employer in a manner different to that undertaken normally, with the purpose and likely effect of causing the target employer to suffer substantial loss or damage.
If an employer is facing a secondary boycott, they may apply to the Federal Court for injunctive relief to stop the boycott. Employers may also notify the Australian Competition and Consumer Commission which has powers to enforce the Competition and Consumer Act, including the provisions relating to secondary boycotts.
Common Law Relief for Breach of Contract or Commission of a Tort
In almost all cases, an unprotected action would be considered a breach of the employment contract due to their failure to follow reasonable and lawful directions to perform work. Therefore, employers may exercise their contractual rights such as performance review, disciplinary action or termination. There are risks associated with this however, as taking disciplinary steps during EBA negotiations may further strain the industrial relationship of the workplace. Termination or other adverse action also gives rise to the potential for unfair dismissal or general protections applications.
Unprotected actions may also give rise to claims for the commission of a tort or civil wrong. These include:
- Contractual interference – where a person directly or indirectly pressures someone into breaching a contract such as an employment contract or a supplier’s contract;
- Conspiracy to injure – where two or more persons work together to harm deliberately inflict economic loss on another, even if their actions are not unlawful. As unprotected actions are unlawful by definition, conspiracy by unlawful means can be straightforward to establish;
- Intimidation – where a person, intending to cause loss to another person, threatens a third party with violence or serious damage to property unless that third party does something which is harmful to the other person;
- Trespass and Public or private nuisance – where a person unlawfully enters the property of another or causes unwanted disruptions. This is especially useful to restrain picketing; or
- Defamation – where a person makes defamatory statements, for instance on signs, posters or verbally.
Claims for tortious actions are traditionally made in a State Court, however if the claim is brought in conjunction to a claim under the FW Act, the entirety of the matter may be heard by the Federal Court.
There is a benefit to employers in bringing tortious claims due to the greater ability to seek injunctions and compensatory damages as well as punitive or exemplary damages if the court deems it appropriate. Punitive damages may be particularly attractive if a union is acting particularly inappropriately.
Other strategies to prevent unprotected actions
Rather than solely relying on legal proceedings, employers have a number of other options at their disposal. Under s.19 and s.524 of the FW Act, respectively, employers may initiate a lock out or a stand down of employees. This will prevent employees from working. If employees are stood down, they are not entitled to wages which is a strong incentive to ending industrial action.
Other options include:
- Reporting criminal behaviour to the Police, such as picketing that involves trespass;
- Notifying as soon as practicable the appropriate workplace regulator such as Fair Work Building & Construction;
- In the case of unlawful boycott action, notifying the ACCC;
- Devising a media strategy; or
- Devising an employee communication strategy.
Message for Employers
Regardless of the action taken by employees, it is recommended that legal advice be sought prior to responding. As can be seen, there are a large number of options available to employers and careful consideration must be given to determine the most appropriate one for the circumstances. Depending on the circumstances, it may be necessary to bypass the FWC and take urgent Court action. There is also the risk that after action is taken by an employer, employees may claim either unfair dismissal or adverse action, resulting in further legal disputes.