Australia: High Court finds provision of accommodation is not a "payment" prohibited during industrial action

In Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd [2013] HCA 36 (14 August 2013), the High Court of Australia held that the provision of on-site accommodation to employees during a period of protected industrial action was not a "payment" that was prohibited by the Fair Work Act 2009 (Cth) (FW Act). The decision highlights that employers need to carefully consider what benefits should be withheld from employees during periods of protected industrial action.

RELEVANT LEGISLATION

The central issue in the case was the meaning of section 470(1) of the FW Act, which provides that: '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.'

FACTS

The CFMEU represented a number of Mammoet's employees, who worked on construction at the Woodside Pluto LNG Project on the Burrup Peninsula in Western Australia. The employees worked on a fly in/fly out basis. Under the terms of the applicable enterprise agreement, employees were entitled to be provided with suitable accommodation by their employer, or to receive a living away from home allowance while they were on-site. Mammoet paid Woodside a fee for its employees to stay in the Woodside-owned accommodation on site.

Mammoet became aware that some of its employees were proposing to take protected industrial action in the form of a 28 day stoppage of work. In response, Mammoet informed employees that for the period of protected industrial action it would not be paying for their accommodation.

INITIAL PROCEEDINGS

The CFMEU commenced proceedings against Mammoet in the Federal Magistrates Court, claiming that Mammoet's refusal to provide accommodation was "adverse action" in breach of Part 3-1 of the FW Act. Mammoet argued that it was required to stop providing accommodation to the employees because of s 470(1) of the FW Act. Mammoet was successful before the Federal Magistrates Court and on appeal by the CFMEU to the Federal Court.

KEY ISSUES

The three issues to be decided by the High Court were:

1. whether the provision of accommodation was a "payment" within the meaning of s 470(1) of the FW Act;
2. whether payment "in relation to the total duration of the industrial action" (under s 470(1)) includes entitlements of an employee that are dependent on the existence of the contract of employment, rather than the actual performance of work; and
3. whether the entitlement to accommodation was dependent on the employees being ready, willing and available to work during working hours.

DECISION

The High Court (Crennan, Kiefel, Bell, Gageler and Keane JJ) unanimously found in favour of the CFMEU, stating its position on each of the three key issues as follows:

1. Providing accommodation to the employees engaging in protected industrial action was not a "payment" of the kind referred to in s 470(1) of the FW Act. The reference to "payment" in that provision means a payment in money and not simply the transfer of any economic benefit from an employer to an employee. This meant that Mammoet was not required to stop providing accommodation to employees during the period of protected industrial action. ¹
2. Section 470(1) is concerned directly with "strike pay". It prohibits "payment in relation to the total duration of the industrial action". This is focused on the period of employment where the employee does not earn remuneration because they are not performing work. In this case, the accommodation provided by Mammoet was simply a benefit which employees were entitled to upon attending the work site, unless they were directed by the employer to return home in accordance with the terms of the enterprise agreement. The accommodation was not a benefit tied to a specific period of work; it was only tied to the "continuance of the employer-employee relationship" and the presence of the employees on site at the direction of Mammoet. ²
3. Even if the relevant employees were not legally entitled to be provided with accommodation because they were not ready, willing and available to work (a condition not expressly set out in the enterprise agreement), Mammoet's withdrawal of accommodation would amount to adverse action (within s 342 of the FW Act) because it would be an alteration of the employees' positions to their detriment. ³ According to the High Court: "The refusal of the accommodation was not an automatic consequence of the operation of the law upon the conduct of the relevant employees. The denial of the use of accommodation [was a] response to the protected action of the relevant employees. ... [Mammoet's] action in response was a matter of choice by it, a choice which s 340(1) of the Act denied to it." ⁴

LESSONS FOR EMPLOYERS

This decision has particular significance for employers who provide accommodation to their employees, especially on regional and remote resources projects where employees cannot easily return home during industrial action.

When faced with protected industrial action, employers should only deduct monetary amounts connected to the period of work that is subject to industrial action. The withdrawal of other employment conditions, including accommodation, is likely to constitute adverse action in contravention of the general protections provisions in the FW Act. Careful consideration therefore needs to be given to what employment benefits are deducted, in addition to wages, during periods of industrial action.

The effect of the decision might be addressed to some extent by the inclusion of clauses in enterprise agreements and/or employment contracts that deal with the issue of payment for accommodation – and make express provision for accommodation to be withdrawn during periods of industrial action.

Footnotes

¹[2013] HCA 36 at paras [45]-[49].

²[2013] HCA 36 at paras [50]-[51], [59]-[61].

³[2013] HCA 36 at paras [66]-[73].

⁴[2013] HCA 36 at para [74].

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