Australia: How to recognise when industrial action is (and isn't) occurring

The concept of 'industrial action' plays a crucial role in the bargaining regime under the Fair Work Act 2009 (FW Act) so it is therefore very important that employers are able to recognise when it is – and isn't – occurring.

The definition of industrial action in section 19 of the FW Act is, however, complex. In this article, we unpack some of the complexities of its definition, and also provide some clear guidance for employers on understanding and recognising industrial action.

WHY IT'S IMPORTANT FOR EMPLOYERS TO BE ABLE TO RECOGNISE INDUSTRIAL ACTION

There are four principal contexts in which it is important for employers to be able to recognise industrial action:

  1. Protected industrial action. Employees and unions can obtain protection against common law and statutory liability in respect of strikes, work bans, work to rules etc only where the action in question falls within the definition of 'industrial action' in section 19 of the FW Act, and has been approved in accordance with the relevant provisions of that Act.
  2. Orders against unprotected industrial action. The FW Act contains a number of provisions whereby orders or injunctions can be obtained to prevent certain forms of action by employees and unions. For example, this can be the case when an applicable enterprise agreement has not yet reached its nominal expiry date (section 417), or the action is not 'protected industrial action' (section 418).
  3. Such orders are available only when the action in question falls within the statutory definition of 'industrial action'. Unlawful action which falls outside the scope of that definition can still be restrained by court orders and may lead to the award of damages, but not in reliance on these provisions.

  4. Payment of wages. Under the FW Act, it is unlawful for an employer to pay wages to employees for periods when they have engaged, or are engaging, in protected industrial action involving what would colloquially be described as a 'strike'. It is also unlawful for employees or unions to seek payment in respect of such periods, or for an employee to accept such payment. In the case of protected 'partial work bans', employers may elect to withhold wages under sections 471 and 472 of the FW Act, but are not obliged to do so.
  5. It is also unlawful for an employer to pay wages in respect of any period where employees are engaged in any form of unprotected industrial action, or for an employee to seek or accept payment in respect of such action. If, however, action taken by employees is not 'industrial action' within the meaning of section 19, then the employer is not obliged to withhold wages under the FW Act (although it may do so in accordance with the relevant common law principles).

  6. Stand down. Section 524(1) of the FW Act entitles an employer to stand down employees, without pay, in circumstances where they cannot usefully be employed because of (amongst other things) industrial action other than industrial action engaged in by the employer, even though those employees are not themselves participating in industrial action.1

HOW TO RECOGNISE INDUSTRIAL ACTION: UNPACKING THE SECTION 19 DEFINITION

As the four contexts outlined above show, it is extremely important that employers understand and are able to recognise what constitutes industrial action and what doesn't.

In this next section, we try to make recognising industrial action a little easier by unpacking some of the complexities surrounding its definition in section 19 of the FW Act.

THE CORE DEFINITION

Section 19(1) of the FW Act defines 'industrial action' by reference to four forms of action, three of which can be engaged in only by employees and their representatives and one of which can be engaged in only by employers. These four forms of action are as follows:

  1. 'the performance of work by an employee in a manner different from that in which it is customarily performed' or 'the adoption of a practice in relation to work by an employee'. In both circumstances, the action must result in 'a restriction or limitation on, or a delay in, the performance of the work';
  2. 'a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee';
  3. 'a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work'; and
  4. the lockout of employees from their employment by their employer.

INDUSTRIAL ACTION BY EMPLOYEES

The actions contemplated by section 19(1)(c) constitute what would conventionally be described as a 'strike' (although, interestingly, that term is not used in the FW Act), and are readily recognisable as such.

There is an obvious overlap between the forms of conduct contemplated by sections 19(1)(b) and (c) in that both would encompass situations where employees refuse to work. However, section 19(1)(b) would extend to bans, limitations or restrictions falling short of an outright refusal to perform any work, for example, where employees:

  • impose a ban on part of their duties but indicate a preparedness to perform the remainder; or
  • refuse to work overtime even though required to do so under their contract of employment or an applicable enterprise agreement.

More problematic is section 19(1)(a). While clearly intended to capture forms of action which fall short of traditional strikes and work bans, this could include just about any form of employee conduct intended to exert industrial pressure upon an employer (for example, a work to rule, whereby a strict adherence to the employee's contract of employment and/or the employer's policies and procedures could result in disruption to the normal operation of the employer's business.2)

Depending on the circumstances, it could also include such activities as:

  • 'wearing, distributing and posting union campaign material such as t-shirts, badges, written communications and stickers';
  • not responding to emails;
  • attaching bargaining-related messages to emails or to voicemails;
  • wearing red ties rather than company-issued ties whilst on duty;
  • refusing to participate in firm-related events outside working hours;
  • responding to emails with the caps lock turned on; and
  • refusing to salute superiors in a uniformed service.

The critical factor in relation to section 19(1)(a) action is that it must result in a 'restriction or limitation on, or a delay in, the performance of the work'. Both the Fair Work Commission and the Federal Court have encountered considerable difficulty in applying this concept, and they have not yet arrived at any clear or consistent position in relation to what forms of action will satisfy the statutory criteria.

For example, in the Mornington Shire Council Case,3 a majority of a Full Bench of Fair Work Australia (as it then was) determined that proposed industrial action by health workers which involved, amongst other things, 'distributing information to clients, and the media about the reason for the industrial action', was capable of constituting 'industrial action' within the meaning of section 19. This was because distributing the information might involve cessation or interruption of work, and as such 'would clearly involve the performance of work in a manner different from that in which it is customarily performed', resulting in a delay in the performance of work for purposes of section 19(1)(a).

In contrast, in Ambulance Victoria,4 Justice Tracey of the Federal Court determined that the proposed release of ambulance response times by ambulance staff 'cannot in any relevant sense, be said to result in a restriction or limitation on or delay in the performance of the employee's normal duties', and that what was being proposed was 'the taking of action above and beyond and outside the range of their normal work rather than the placing of a restriction on the performance of those duties'. Paradoxically, his Honour considered that the situation might be otherwise if the employees had proposed to stop work 'even for a short period' in order to distribute the data – in other words, in order to fall within the statutory definition of industrial action, the employees concerned needed to go on strike!

LOCKOUTS

According to section 19(3), an employer locks out its employees if it 'prevents the employees from performing work under their contracts of employment without terminating those contracts'.

Two critical points for employers to note in this context are:

  • that this is the only form of industrial action which employers can lawfully take under the FW Act; and
  • that employers may lock out employees only in response to industrial action by employees and/or their representatives.

Note: This is different from the situation under the Work Choices legislation that operated prior to 2009 under which employers could lawfully engage in industrial action short of a lockout, and could use the lockout as a pre-emptive tactic.

THE EXCEPTIONS: WHAT DOESN'T CONSTITUTE INDUSTRIAL ACTION UNDER SECTION 19?

Section 19(2) provides that there are certain forms of action which do not constitute 'industrial action' for purposes of section 19(1):

  • action by employees which is 'authorised or agreed to' by their employer;
  • action by employers that is 'authorised or agreed to' by or on behalf of their employees; and
  • action by an employee where the action 'was based on a reasonable concern of the employee about an imminent risk to his or her health or safety' and 'the employee did not unreasonably fail to comply with a direction of his or her employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform'.

Curiously, the FW Act says nothing about how agreement is to be communicated for purposes of this subsection. There is, for example, no requirement that the agreement be in writing, or that it be communicated in advance of the taking of the industrial action.5 Logically, this appears to mean that an employer could 'agree' to employees taking industrial action after the conclusion of the action, and could pay wages in respect of that action without running foul of the statutory prohibition on payment in respect of industrial action. This is due to the fact that the act of agreeing to the action would deprive it of its character of 'industrial action' for purposes of the section 19 definition.

The occupational health and safety exception reflects the fact that at common law and under section 84 of the Work Health and Safety Act 2011, employees are entitled to refuse to perform work which they have reason to believe would expose them to a serious risk to their health and safety. The exception is intended to ensure that workers who exercise their right to refuse unsafe work will not be found to have engaged in industrial action. It is often claimed that this exception is exploited for industrial rather than occupational health and safety purposes. These claims are not without substance – especially in the construction industry.

THE LEGISLATIVE NOTE

A further complication in applying the section 19 definition derives from the 'legislative note' which appears after section 19(1), and refers to a decision of the Full Bench of the former Australian Industrial Relations Commission in a case involving The Age newspaper.6 In the course of its decision in this case, the Full Bench suggested that 'action will not be industrial in character if it stands completely outside the area of disputation and bargaining'.

The Note is not part of the FW Act, and does not lay down any hard and fast rule of law. Indeed, there have been suggestions that it 'tends to overstate the purport of the remarks made by the Full Bench'.7 Overstated or not, the Note does serve as a timely reminder that action will not fall within the statutory definition unless it is 'industrial' in the sense that it relates to the kinds of matters which can properly be the subject of bargaining for an enterprise agreement. For example, the Note has been relied upon to support a finding that a refusal by employees to provide urine samples in the context of a dispute about an employer's drug and alcohol policy did not constitute 'industrial action' for purposes of an application by the employer for an order under section 418 of the FW Act to stop alleged industrial action.8 It has also been used to support the rejection of an application by a union for a section 418 order to prevent an employer from redeploying members of a police band which had been 'privatised'.9

PICKETING

Picketing is a common feature of industrial disputation in Australia, as in many other countries. In legal terms, it is an extremely precarious activity, because workers who engage in it will very likely find that their actions are both tortious and contrary to the criminal law.

According to the Full Court of the Federal Court in David's Distribution, however, picketing does not of itself constitute 'industrial action' (either for purposes of attracting protection against civil or criminal liability, or for the making of orders under provisions such as section 418 of the FW Act.10)

Of course, if employees stop work in order to picket, the stoppage will very likely be 'industrial action', and its lawfulness or otherwise will depend on whether the action has been approved in accordance with the relevant provisions of the FW Act.

While the reasoning of the Court in David's Distribution is not entirely compelling in certain respects, it must be assumed to be good law unless or until it is overturned by either the High Court or the Parliament. This means that employees who engage in picketing activity are not protected against common law liability in respect of their actions on the picket line. It also means that employers cannot obtain orders under section 418 to stop or prevent picketing. They can, however, seek injunctive relief (and/or damages) in reliance upon picketers' tortious conduct and/or to restrain their breach of statute.11

RECOGNISING INDUSTRIAL ACTION: THE KEY TAKEAWAYS FOR EMPLOYERS

There is no doubt that the definition of industrial action in section 19 of the FW Act is complex.

It is very much the product of its history and of political influences, and in some respects is not entirely satisfactory as a means of enabling employers and employees/unions readily to understand exactly what they can and cannot do in the course of bargaining. As such, it presents both challenges and opportunities for employers.

Set out below are five key takeaways that employers should keep in mind:

  1. Employee action which falls outside the scope of the statutory definition cannot be restrained by means of orders under the FW Act. However, it may provide the basis for proceedings under section 343 and/or be susceptible to the issue of injunctions, claims for damages etc at common law or under measures such as the boycott provisions in the Competition and Consumer Act 2010.
  2. Employer action which falls short of a lockout cannot be restrained by an order made under section 418 of the FW Act by virtue of the fact that it is not 'industrial action' and/or may stand 'outside the area of disputation and bargaining'. It is also unlikely to be tortious. On the other hand, it may involve a breach of contract, and may be unlawful by force of the general protection provisions in Part 3-1 of the FW Act – most obviously, the prohibition on coercion in section 343.
  3. If employees are engaging in any protected industrial action which involves a failure or refusal to work, however short, employers must ensure they do not pay wages for the duration of the stoppage. Where protected action involves a partial work ban, employers should be alert to the possibility that they can withhold wages in respect of any such ban in accordance with sections 471 and 472 of the FW Act. In respect of unprotected industrial action, employers are required to withhold wages in accordance with section 474.12
  4. Paradoxically, if employee conduct falls outside the statutory definition of industrial action then employers may pay wages if they so choose, or may elect to withhold wages in accordance with the relevant common law principles. Furthermore, in the case of conduct which does fall within the scope of the section 19 definition, employers can always deprive that conduct of its character of industrial action by agreeing to the action in question, thereby bringing it within the exception in section 19(2)(a).
  5. If an employer suspects that action included in a protected action ballot application may fall outside the scope of the statutory definition, it would have the option of opposing a protected action ballot order on the ground that the proposed action was not 'industrial action' as defined, and was therefore not capable of constituting protected industrial action. Alternatively, an employer could elect to 'hold fire' until after the proposed action has been approved, and it receives notification of the taking of industrial action, at which point they may decide to seek injunctive relief to restrain the proposed action on the ground that it is not 'industrial action', and as such is not capable of being protected under the FW Act.

Footnotes

1 Where an enterprise agreement or a contract of employment provides for stand down of employees then the employer may stand down in reliance upon that provision, and may not rely upon section 524(1).

2 See, eg, Secretary of State for Employment v ASLEF (No 2) [1972] 2 QB 455.

3 Re Mornington Peninsula Shire Council [2011] FWAFB 4809.

4 Ambulance Victoria v United Voice [2014] FCA 1119.

5 The definition of 'building industrial action' in section 36(1)(e) of the former Building and Construction Industry Improvement Act 2005 required that to fall within the equivalent exception, action had to be 'authorised or agreed to, in advance and in writing, by the employer'. Clause 7(2)(a) of the Building and Construction (Improving Productivity) Bill 2013 which is presently before the Senate is to the same effect.

6 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v The Age Company Limited PR946290, reported as The Age Co Ltd v CEPU (2004) 133 IR 197.

7 ACT v AEU [2010] FWA 3454, [31] (per Deegan C).

8 Boral Cement v AWU [2012] FWAFB 350.

9 Police Federation of Australia v Chief Commissioner of Police (Victoria Police) [2014] FWCFB 2063.

10 David's Distribution Pty Ltd v NUW (1999) 91 FCR 463.

11 For a recent instance where Supreme Court injunctions to restrain unlawful picketing played an important role in settling a protracted industrial dispute see Viva Energy Refining Pty Ltd v AWU [2016] VSC 619.

12 This requires that the employer must withhold a minimum of four hours' pay irrespective of the duration of the action. If the duration is greater than four hours, then the employer must withhold wages for the total period of the action. The four hour requirement means that on occasion employers may have to go to the administrative trouble and expense of making a four hour deduction in respect of action which was of very short duration – unless they have authorised or agreed to the action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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