MESSAGE FROM THE EDITOR
This month, the Australian government has increased their
crackdown on union corruption with the establishment of a new joint
police taskforce aimed at targeting alleged bribery, fraud,
intimidation, extortion and nepotism within the Australian labour
movement.
Also, some important cases have made their way through the Federal
Circuit Court. In Evans v Trilab Pty Ltd [2014] FCCA 2464,
the Court has expanded the scope of the accepted interpretation of
an employee's 'workplace right' (for the purposes of
adverse action complaints). In CFMEU v Whitehaven Coal Limited
[2014] FCCA 2657, the Court provided some useful insights into
how it calculates what penalties should be imposed for breaches of
enterprise bargaining agreements.
Adam Salter,Partner
IN THE PIPELINE—HIGHLIGHTING CHANGES OF INTEREST TO EMPLOYERS IN AUSTRALIA
Industrial Disputes More Likely as Prime Minister
Increases Pressure on Corrupt Trade Unions
The tradition of new Australian federal governments making
widespread legislative changes to labour law upon winning power
seemed to have been broken in 2013: the newly elected Prime
Minister Tony Abbott had already declared that the labour policies
of the previous Liberal government were "dead, buried and
cremated" and that he would not enact major reforms to
employment law before 2016. Since that time, as promised, there has
been no wholesale revision of Australian labour law. Employees and
employers have enjoyed a welcome period of stability in labour
relations.
That period of stability may now be coming to an end: as readers
will be aware, the Abbott government established a Royal Commission
(an investigative body with wide powers to seize documents and
compel testimony) into trade union governance in March 2014. Since
then, the Royal Commission has heard testimony that officials of
certain trade unions have engaged in bribery, fraud, intimidation,
extortion and nepotism. The Assistant Commission of Victoria Police
claimed that individual union officials were engaging in serious
criminal conduct, and organised crime figures were committing
criminal offences on behalf of certain officials. The allegations
have been unquestionably embarrassing to the labour movement, which
is currently experiencing its lowest ever levels of private sector
workforce penetration.
Now, the Prime Minister has announced a further development that
may further destabilise certain parts of the union movement: a new
joint taskforce will be formed from officers of the Australian
Federal Police and Victoria Police to investigate violence and
corruption within the construction industry. Unlike the Royal
Commission, the taskforce will have the power to arrest suspects
and prepare criminal cases to be brought by prosecutors. It seems
that if Mr Abbott does not intend to change the law around labour
relations and unions, he at least intends to ensure they abide by
the existing laws.
In the long term, identification and prosecution of criminal
activity within unions should benefit employers, honest officials
and employees alike. But in the short term, the joint police
taskforce may increase the likelihood of labour disputes in already
volatile construction sector and even spill over into other heavily
unionised sectors like extractives and logistics. Companies
operating in those sectors should review their crisis management
plans and anticipate that negotiating with trade unions over
enterprise agreements or redundancies may be even more sensitive
than ever before.
HOT OFF THE BENCH—DECISIONS OF INTEREST FROM THE AUSTRALIAN COURTS
Federal Circuit Court Acknowledges Breadth of Workplace
Rights in Adverse Action Claims
In Evans v Trilab Pty Ltd [2014] FCCA 2464, Judge Lucev
held that an adverse action claim can be based on the exercise of
rights that do not arise from statutory, regulatory or contractual
provisions and are only indirectly connected to
employment.
Hayden Evans (Evans) managed a soil testing
laboratory for Trilab Pty Ltd (Trilab). Trilab and
Evans differed on the appropriate method to test soil. Evans
believed that the firm's preferred method did not comply with
Australian standards. He propagated that belief among his staff.
Evans raised the matter with his superiors on numerous occasions.
Trilab declined to use Evans's preferred method, and the
chairman of the board directed Evans to abandon the issue. Four
days after the direction, the chairman dismissed Evans on the basis
of his performance review and his intransigence on the testing
issue.
Feeling aggrieved, Evans claimed that he had been dismissed for
exercising his workplace right to make a complaint or inquiry under
s 341(1)(c)(ii) of the Fair Work Act 2009 (Cth)
(Act). Trilab sought summary dismissal of
Evans's claim for the reasons that the complaint could not be
characterized as an employment complaint under the Act. Judge Lucev
disagreed, considering that a right need not arise from statute,
regulation or contract and the complaint need be only indirectly
related to the employee's terms and conditions of employment.
His Honour concluded that Evans's conduct had the capacity to
be described as a complaint that bore upon his employment. Judge
Lucev therefore refused to dismiss the claim.
Lessons for Employers
Evans stands for only the proposition that a complaint
regarding standards can be characterized as a complaint in relation
to a workplace right. Even so, employers should take away three
points. The first is that courts are starting to take a liberal
view of whether a complaint is connected to employment. For this
reason, employers should carefully document their responses to
complaints and should never dismiss them out of hand. If it is
necessary to dismiss an employee shortly after he or she has made a
complaint, the reasons for the dismissal should be carefully given
in writing (and the employer should be sure that it has
investigated and addressed the complaint).
Judicial Disquiet Towards $19,000 Penalty Applied to
Whitehaven Coal
Judge Emmettof the Federal Circuit Court has approved a $19,000
penalty to be applied to Whitehaven Coal
(Whitehaven) pursuant to the Act after it breached
an enterprise bargaining agreement (EBA) in the
course of closing one of its mines. Judge Emmett expressed concern
that the penalty could be 'manifestly excessive'.
Whitehaven and the CFMEU had three EBAs, one for each of its mines
in northwestern New South Wales. Two of the agreements required
Whitehaven to notify employees when a definite decision had been
made to introduce a workplace change. The third agreement was more
generous, conferring upon the employees a right to be consulted
regarding the changes and giving them the right to representation
in those consultations.
Whitehaven resolved to reduce its operations at its mines in
northwestern New South Wales. It had foreshadowed this in
negotiations with the CFMEU in February 2013. One month later,
Whitehaven announced it would reduce its operations by making
redundant certain positions in all three of its mines and effected
those redundancies on the same day. In doing so, Whitehaven had
failed to consult its employees governed by the third agreement.
The CFMEU commenced proceedings against Whitehaven, but the dispute
was resolved by agreement: Whitehaven would pay $19,000 to the
CFMEU—40% of the maximum penalty under the Fair Work Act
2009 (Cth). Judge Emmett approved the settlement but
considered that it may be considered manifestly excessive. The
reason for this conclusion was that Whitehaven had never before
breached an EBA; it had conceded liability and co-operated in
making a joint submission to the court.
Lessons for Employers
Employers can take two points away from the approval of this
penalty. The first is that employers should not capitulate readily
to union demands in negotiations. Courts are willing to take a
balanced view of employers' breaches of EBAs and the Act.
Employers should not take to heart warnings by unions that their
conduct will be viewed dimly by the courts. Equally, employers
should carefully review EBAs and employment contracts before acting
on any decision affecting employees.
ACKNOWLEDGMENTS
Thanks to associates Michael Whitbread, Viv Jones and Andrew
Berriman for their assistance in the preparation of this
Update.
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