Federal Court Finds Picketing Might Be Protected Action And Certified Agreements Might Have Contractual Effect

In a recent decision, Justice Finkelstein of the Federal Court reopened the debate surrounding the legal status of 'picketing' and whether certified (or unregistered) agreements can operate and have effect as contracts at common law.

Facts

In support of their position in an ongoing industrial dispute, the CEPU notified Australia Post of their intention to impose a 'peaceful picket line'. An employee of Australia Post, Mr Shead, took part in the picket line and is alleged to have engaged in various forms of unruly behaviour in breach of Australia Post's Code of Ethics.

Australia Post investigated Mr Shead's conduct on the picket line. The outcome of the investigation was that dismissal was recommended.

The CEPU commenced proceedings in the Federal Court seeking an injunction to prevent the dismissal of Mr Shead by reference to section 170MU of the Workplace Relations Act 1996. This provision prevents an employer from prejudicing an employee in their employment because they have engaged in protected industrial action.

For present purposes, the principal issue for determination was whether picketing could constitute 'industrial action' for the purposes of section 170MU. If it could not, the CEPU's application must fail. In the course of examining this issue, Justice Finkelstein did however offer his view on whether a certified agreement could have effect as a contract at common law.

After reviewing the authorities, Justice Finkelstein held that whether picketing could be 'industrial action' was far from clear. As a result, his Honour rejected Australia Post's primary contention that an injunction could not be issued because 'picketing is not and can never be industrial action'.

Justice Finkelstein ruled that the correctness of Australia Post's contention had not been authoritatively determined. On the basis of this finding and the connection between the picket line and investigation conducted by Australia Post, his Honour decided to grant the injunction sought. He concluded that in this case, Australia Post was not helped by the reverse onus in section 170MU(3) noting that 'a boarder line case will go against the employer' at the injunction stage.

The injunction prevents Australia Post from moving to terminate Mr Shead by reference to his conduct on the picket line until the final hearing and determination of the matter.

The relevant certified agreement provided for a process to be followed in disciplinary matters. In this context, his Honour considered whether the notice given to Mr Shead of the investigation might amount to a 'breach of contract'. This called for consideration of whether the certified agreement constituted a contract between the parties.

Justice Finkelstein considered the Victorian Appeals Court decision of Ryan v Textile Clothing and Footwear Union of Australia. In that case, it was held that the relevant agreement under consideration (which was an unregistered agreement) did not give rise to a contract.

Justice Finkelstein held that he was 'tentatively inclined to take the opposite conclusion'. This was because he found that:

• the parties to the Australia Post agreement were clearly defined

• there was an intention to create legal relations, and

• there was 'consideration' in the form of both parties' promises.

His Honour did couch his view as a 'tentative' one and no reference was made to a recent Federal Court decision where it was found that a certified agreement did not operate as a contract. Accordingly, his Honour's finding should not necessarily be taken to overturn what was generally considered to be the settled position with respect to the status of certified and unregistered agreements at common law.

• Peaceful picketing does not contravene the law. It is only in the context of bargaining that the issue of picketing being protected industrial action can arise. Unions are likely to use the decision to further their bargaining position by notifying employers of their intention to establish a picket. Whether the conduct is unlawful and actionable by an employer will depend upon the circumstances of each case.

• The decision does not mean that unions and employees have a licence to conduct unruly pickets. Employers will continue to have access to the courts for relief in the overwhelming majority of picketing cases where pickets are not conducted peacefully or lawfully.

• The courts generally have had some difficulty in concluding that collective agreements between an employer and unions (whether certified or not) have contractual implications. This is primarily due to the elements required for the formation of a binding contract, with agreements of this nature generally having industrial consequences. The decision may reopen the debate, however compliance with the particular industrial instrument will mean that the employer cannot be exposed to any claims for breach (whether pursued under the statutory scheme or at common law).

Clients with any queries regarding the decision and its implications should contact one of the Freehills ER partners.