//
[2024] FWC 1282
General information, not legal advice.
Fair Work Commission
2024-05-16
Original judgment source is linked above.
[2024] FWC 1282 [Note: An appeal pursuant to s.604 (C2024/3143) was lodged against this decision.]
s.426 - Industrial action
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
Application by Shoalhaven Starches Pty Ltd T/A Manildra Group to suspend protected industrial action under s 426 of the Fair Work Act 2009 (Cth)
(1) The FWC must make an order suspending protected industrial action for a proposed enterprise agreement that is being engaged in if the requirements set out in this section are met.
Requirement - adverse effect on employers or employees
(2) The FWC must be satisfied that the protected industrial action is adversely affecting:
(a) the employer, or any of the employers, that will be covered by the agreement; or
(b) any of the employees who will be covered by the agreement.
(3) The FWC must be satisfied that the protected industrial action is threatening to cause significant harm to any person other than:
(a) a bargaining representative for the agreement; or
(b) an employee who will be covered by the agreement.
(4) For the purposes of subsection (3), the FWC may take into account any matters it considers relevant including the extent to which the protected industrial action threatens to:
(a) damage the ongoing viability of an enterprise carried on by the person; or
(b) disrupt the supply of goods or services to an enterprise carried on by the person; or
(c) reduce the person's capacity to fulfil a contractual obligation; or
(d) cause other economic loss to the person.
(5) The FWC must be satisfied that the suspension is appropriate taking into account the following:
(a) whether the suspension would be contrary to the public interest or inconsistent with the objects of this Act;
(b) any other matters that the FWC considers relevant.
Order may only be made on application by certain persons
(6) The FWC may make the order only on application by:
(a) an organisation, person or body directly affected by the protected industrial action other than:
(i) a bargaining representative for the agreement; or
(ii) an employee who will be covered by the agreement; or
(b) the Minister; or
(ba) if the industrial action is being engaged in in a State that is a referring State as defined in section 30B or 30L - the Minister of the State who has responsibility for workplace relations matters in the State; or
(bb) if the industrial action is being engaged in in a Territory - the Minister of the Territory who has responsibility for workplace relations matters in the Territory; or
(c) a person prescribed by the regulations.
(1) This section applies if the FWC is required or permitted by this Division to make an order suspending protected industrial action.
(2) The FWC must specify, in the order, the period for which the protected industrial action is suspended.
(3) The FWC may specify, in the order, a longer period of notice of up to 7 working days for the purposes of paragraph 430(2)(b) if the FWC is satisfied that there are exceptional circumstances justifying that longer period of notice.
[21] In construing a provision of an Act, the task is to ascertain the intention of the parliament. The starting point is always the ordinary English meaning of the words of the provision. However, a provision of an Act must always be construed in the context of the Act as a whole and account must always be taken of the purpose of the Act: a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object. Resort may be had to extrinsic materials, including the explanatory memorandum, to assist in ascertaining the purpose of an Act (the mischief it was intended to overcome and its purpose or objects) and in the particular circumstances identified in s.15AB of the Acts Interpretation Act 1901 which, relevantly for present purposes, include to determine the meaning of a provision when the provision is ambiguous.
[22] In CIC Insurance Ltd v Bankstown Football Club Ltd Brennan CJ, Dawson J, Toohey J and Gummow J observed:
"It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent."
[23] In Project Blue Sky v Australian Broadcasting Authority McHugh, Gummow, Kirby and Hayne JJ said:
"The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed."
[24] As to the ordinary English meaning of the word "significant", as noted, by the Deputy President, the relevant ordinary English meaning, as defined in the Macquarie Dictionary, is "important; of consequence".
[25] Turning to the context of the Act as a whole, we note first that for many decades prior to the WorkChoices amendments to the Workplace Relations Act 1996 (WR Act), the Australian Industrial Relations Commission and its predecessors had the power to settle (interstate) industrial disputes through compulsory arbitration. Where a dispute over terms and conditions of employment was resolved by arbitration this occurred through the making of an award, binding the disputants, that had statutory effect. That long standing power to settle disputes by compulsory arbitration was essentially removed by the WorkChoices amendments to the WR Act and has not been restored by the FW Act. Rather, enterprise bargaining may now be seen as a central component of the industrial relations regime provided for in the FW Act by which employees may act collectively to secure improvements in their terms and conditions of employment.
[26] Industrial action is defined broadly in s.19 of the FW Act. Section 408 defines "protected industrial action". Subject to various requirements, industrial action taken for the purpose of advancing claims for a proposed enterprise agreement is "protected industrial action". FW Act which confers immunity from civil action in relation to protected industrial action (s.415). The taking of industrial action that is not protected industrial action is effectively proscribed. Once an enterprise agreement has been made and approved, any industrial action taken by employees covered by the agreement before the nominal expiry date of the agreement will be unprotected (s.417). A person affected by unprotected industrial action that is happening, threatened pending, probable or being organised can apply to FWA for an order that the industrial action stop, not occur or not be organised. If FWA is satisfied that industrial action, that is not, or would not be, protected industrial action, is that happening, threatened pending, probable or being organised then FWA must make an order that the industrial action stop, not occur or not be organised (s.418). Contravention of such an order is prohibited and both civil remedies and injunctive relief are available for such a contravention (s.421) and, in the case of injunctive relief, with all the consequences that flow from breaching an injunction.
[27] Protected industrial action in support of claims for an enterprise agreement, as authorised by the FW Act, is the only lawful mechanism available to employees to achieve improvements to wages and conditions that an employer is not otherwise prepared to agree to.
[28] The FW Act makes provision for the suspension or termination of protected industrial action in certain circumstances. FWA has been given the power to suspend or terminate protected industrial action where such action
(a) is causing or threaten to cause "significant economic harm" to any employer or employees who will be covered by the proposed enterprise agreement, provided such harm is imminent (s.423); or
(b) has threatened, is threatening or would threaten to endanger the life, the personal safety or health, or the welfare, of the population or a part of it; or to cause "significant damage" to the Australian economy or an important part of it (s.424); or
(c) is threatening to cause significant harm to a third party (that is, a person other than a bargaining representative for the proposed agreement or an employee who will be covered by the proposed agreement) (s.426).
[29] FWA also has the power to suspend protected industrial action to facilitate a 'cooling off'- that is, where the suspension would be beneficial to the bargaining representatives for the proposed agreement because it would assist in resolving the matters in dispute (s.425).
[30] Division 7 of Part 3-3 of the FW Act makes provision for the Minister to terminate protected industrial action by making a declaration that the industrial action is threatening, or would threaten, to endanger the life, the personal safety or health, or the welfare of the population or a part of it, or to cause significant damage to the Australian economy or an important part of it (s.431). When such a declaration is made the Minister may, for the purposes of removing or reducing such threat, give a direction that specified bargaining representatives or employees take, or refrain from taking, specified actions (s.433). Contravention of such a direction is prohibited and civil remedies are available (s.434).
[31] When protected industrial action is terminated, either by FWA pursuant to s.423 or s.424 or by the Minister pursuant to s.431, and agreement cannot be reached during a post-industrial action negotiating period, FWA is obliged to make a "workplace determination" in accordance with Part 2-5 of the FW Act whereby FWA arbitrates the improved terms and conditions that will apply for the period of operation of the workplace determination. Thus, a workplace determination represents a benefit that accrues to employees when the 'right' to take industrial action is removed through a termination of protected industrial action pursuant to s.423, s.424 or s.431.
[32] The power conferred by s.426 of the FW Act is a power to suspend protected industrial action on the basis of significant harm to a third party. There is no power conferred on FWA to terminate protected industrial action the basis of significant harm to a third party. Importantly, there is no provision for a workplace determination where an order suspending protected industrial action is made under s.426.
[33] The absence of a power in FWA to terminate protected industrial action on the basis of significant harm to a third party (as distinct from suspend protected industrial action on that basis) and the fact that only one suspension on that basis may be ordered are matters of particular significance in the present context. It is to be inferred that Parliament did not intend that protected industrial action should be terminated on the basis of harm to third parties unless that harm, actual or threatened, can be brought within the circumstances in identified in s.423 or s.424 or unless the Minister can be persuaded to make a declaration pursuant to s.430. This suggests, as is emphasised in the Explanatory Memorandum, that Parliament intended that a suspension under s.426 to provide a single instance of temporary respite for third parties from the adverse effects of protected industrial action.
[34] The objects of the FW Act are set out in s.3:
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia's future economic prosperity and take into account Australia's international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.
[35] The objects in (a), (f) and (g) are the objects most obviously engaged in the present context with the object in (f) of particular relevance.
[36] Since protected industrial action is confined to the process surrounding the making of agreements Section 171 which sets out the object of Part 2-4 of the Act is also relevant. Section 171 provides:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay."
[37] The objective to "facilitate good faith bargaining and the making of enterprise agreements" is of particular relevance. Like the Workplace Relations Act 1996 before it, the FW Act creates what the Explanatory Memorandum justifiably describes as a "right" in employees to take protected industrial action in support of claims for an enterprise agreement. That legislation may properly be seen as the means by which Australia has given effect to its important obligations under the International Labour Organisation Conventions particularly Convention no. 87 Freedom of Association and Protection of the Right to Organise 1948 and Convention No, 98 Right to Organise and Collective Bargaining 1949, both ratified by Australia in 1973.
[38] Viewed in the context of the Act as a whole, and having regard to the legislative purpose behind the regime in the FW Act for the taking of protected industrial action as a means of advancing claims for an enterprise agreement as the vehicle through which employees are able to seek to achieve improvement in their terms and conditions of employment, the precise meaning intended by the Parliament in using the expression "significant harm" in s.426(3) is unclear. The ordinary meaning provides insufficient guide to distinguish what harm is significant for the purposes of Section 426 since most industrial action threatens harm which is "important" or "of consequence" to the bargaining parties and also often to third parties. This ambiguity activates an entitlement to have regard to the Explanatory Memorandum pursuant to s.15AB(1)(b)(i) of the Acts Interpretation Act 1901.
[39] The Explanatory Memorandum for the FW Act includes the following in the introductory remarks in relation to Part 3-3 which deals with "Industrial Action":
"Division 6 - Suspension or termination of protected industrial action by FWA
1706. Division 6 sets out the grounds upon which FWA may suspend or terminate protected industrial action organised, or engaged in, in relation to a proposed enterprise agreement.
1707. Suspension or termination of protected industrial action brings to an end the right to take protected industrial action. Protected industrial action may be resumed after any period of suspension, but will be subject to any requirements for the giving of notice before any action may be taken. A termination of protected industrial action may lead to FWA making a workplace determination under Part 2-5.
1708. The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease - at least temporarily.
1709. It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.
[40] The Explanatory Memorandum contains the following in relation to s.426:
"1726. FWA is required to suspend protected industrial action if action is being engaged in and it is satisfied that (subclause 426(1)):
1727. The factors that FWA may take into account when determining whether protected industrial action is threatening to cause significant harm to a third person are specified in subclause 426(4). They are:
1728. FWA may make the order on application by an organisation, person or body directly affected by the industrial action, the Minister, or a person prescribed by the regulations (subclause 426(6)). The Bill provides employees with right to take protected industrial action in support of a proposed single enterprise agreement. The purpose of this clause is to provide FWA with a means to address significantly serious impacts that industrial action is having on the welfare of third parties. It allows for a respite from industrial action which is causing them significant harm. The harm to the third party would need to be significant, that is a more serious nature than merely suffering of a loss, inconvenience or delay. Therefore, it is anticipated that FWA would suspend industrial action on this basis only in very rare cases.
1729. Protected industrial action cannot be terminated on this ground."
[41] As members of a specialist industrial tribunal, we observe that effective industrial action will almost always cause harm to the employer's business which, in turn, will frequently adversely affect third parties being the customers, clients or other persons who depend upon the timely supply of goods or services by that employer. This was recognised by Drummond J in FH Transport Pty Ltd v TWU where his Honour observed:
"It is inevitable... that action engaged in directly by unions against very many kinds of employer will, by disrupting the business operations of those employers, also have a direct or indirect disruptive impact on the business and other activities of third parties."
[42] In National Tertiary Education Industry Union v University of South Australia a Full Bench was concerned with an appeal against a decision suspending protected industrial action pursuant to s.424 of the FW Act. The Full Bench observed:
"[8] Within the scheme of the Act, the powers in relation to the suspension or termination of protected industrial action are intended to be used in exceptional circumstances and where significant harm is being caused by the action. This is clear from the Explanatory Memorandum to the Fair Work Bill 2008:
The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease - at least temporarily.
It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining." [paras. 1708-1709]"
[43] Just as that Full Bench considered that the power in s.424 was intended to be used only in "exceptional circumstances", we consider that the power in s.426 is likewise intended only to be used in exceptional circumstances. That outcome is determined by a proper construction of the expression "significant harm' and also by a proper appreciation of when it will be "appropriate" to make an order within the meaning of s.424(5). It is also consonant with the approach taken by the majority of the Full Court of the Federal Court in relation to s.170MW of the Workplace Relations Act 1996 in Re Polites; Ex parte Construction, Forestry, Mining and Energy Union and paragraphs 1709 and 1728 of the Explanatory Memorandum in particular.
[44] When regard is had to context of the FW Act as a whole and to the explanatory memorandum, the expression "significant harm" in s.426(3) should be construed as having a meaning that refers to harm that has an importance or is of such consequence that it is harm above and beyond the sort of loss, inconvenience or delay that is commonly a consequence of industrial action. In this context, the word "significant" indicates harm that is exceptional in its character or magnitude when viewed against the sort of harm that might ordinarily be expected to flow from industrial action in a similar context. In this way, an order will only be available under s.426 in very rare cases, as contemplated by the Explanatory Memorandum. It follows that it will not, of itself, be sufficient that the harm, viewed in isolation, can be characterised as "substantial". Substantial harm to third parties is a common consequence of effective industrial action. Unless the harm is out of the ordinary then suspension would contrary to the legislative intention that suspension should not be able to used generally to prevent legitimate protected industrial action in the course of bargaining. In assessing whether there is "significant harm" context is also important. A particular quantum of financial loss may constitute "significant harm" in one context but not in another.
[45] In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission the High Court was concerned with whether a decision of a Full Bench of the AIRC allowing an appeal against a decision of Boulton J making an order pursuant to s.170MW of the Workplace Relations Act 1996, as it then stood, suspending a bargaining period. Pursuant to s.170MW(1) the AIRC had a discretion to suspend or terminate a bargaining period (which necessarily involved a suspension or termination of industrial action) if, but only if, it was satisfied as to one of the circumstances set out in subsections (2) to (7) of s.170MW. Section 170MW(3) provided:
"A circumstance for the purposes of subsection (1) is that industrial action that is being taken to support or advance claims in respect of [a] proposed agreement is threatening:
(a) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
(b) to cause significant damage to the Australian economy or an important part of it."
[46] Gleeson CJ and Gaudron and Hayne JJ held:
"[27] For reasons that will be given shortly, it is not necessary to decide whether the Full Bench of the Commission was correct in ascribing error to Boulton J. However, it may conveniently be noted that the process by which the Full Court concluded that Giudice J "[identified] errors that, in truth, were not errors" is not beyond criticism. For example, the Full Court considered that Giudice J mistook the nature of the exercise involved in forming the satisfaction that industrial action is threatening "to cause significant damage to the Australian economy" for the purposes of s 170MW(3)(b) of the Act because he implied "that a measurable likely effect on the economy must be identified and then an assessment made whether that was 'threatening ... to cause significant damage'." In the view of the Full Court, Giudice J was in error because all that was necessary was that "there [be] some material that might reasonably found that satisfaction".
[28] As already explained, the nature of the threat as to which a decision-maker must be satisfied under s 170MW(3) of the Act involves a measure of subjectivity or value judgment. A decision under that sub-section would involve appealable error if, for example, regard was had to irrelevant material, relevant material was disregarded, or, although there was some factual material by reference to which the decision-maker might be satisfied, he or she mistook those facts. If the Full Court intended to suggest otherwise, it was wrong. More to the point, however, is that a decision under s 170MW(3)(b) that industrial action is "threatening ... to cause significant damage to the Australian economy or an important part of it" (emphasis added) is not simply a matter of impression or value judgment. The presence of the words "significant" and "important" in s 170MW(3)(b) indicate that the decision-maker must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That was the point of the observations of Giudice J with respect to the absence of economic data."
[47] In the same way, the presence of the word "significant" in the expression "significant harm" s.426(3) of the FW Act, and the attention that s.426(4) directs to the "extent" of harm of the kind expressly identified in s.426(4), means that a member at first instance must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That is not to say that, in relation to financial loss, the evidence must precisely quantify the amount of a loss. Rather, there must be evidence that allows for an assessment of the order of magnitude of any financial harm relied upon by an applicant. Contrary to the submissions of the CFMEU, we accept that there was some evidence of that sort in this case. The decision in Coal and Allied reinforces our view that the expression "significant harm" when properly construed has a meaning that in truth accords with the Explanatory Memorandum.
Adverse effect on employer or employees (s 426(2))
Threatening to cause significant harm (s 426(3) & 4)
"1. Pursuant to ss 426 and 427 of the Fair Work Act 2009 (Cth), the following protected industrial action by members of the Communications, Electrical Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU) employed by Endeavour Energy Network Management Pty Ltd T/A Endeavour Energy for whom the ETU is the bargaining representative and who will be covered by a proposed enterprise agreement to replace the Endeavour Energy Enterprise Agreement 2021 is suspended in the period from 6am on Friday, 17 May 2024 until 6pm on Sunday, 19 May 2024:
(a) a 24 hour ban on field staff switching for workgroups, contractors, ASPs, supply authorities or Ausconnex jobs, except to make safe in a fault;
(b) a 24 hour ban on using physical or digital locking systems, including (but not limited to) locking or unlocking of phones, iPads, tablets, computers, switchboard, switch rooms, electrical cabinets, access gates, airbrakes switches, circuit breakers, switching stations and sub stations;
(c) a 24 hour ban on writing or approving switching plans for planned switching at short Notice (72 hours or less);
(d) a 24 hour ban on answering work calls and emails out of hours; and
insofar as any such action concerns the switching related work required to be undertaken by Endeavour Energy for the Manildra Group of companies at, or in connection with, its Shoalhaven Starches plant in Nowra (Bomaderry), New South Wales.
(a) Endeavour Energy Network Management Pty Ltd T/A Endeavour Energy
(b) the Communications, Electrical Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; and
(c) All employees of Endeavour for whom the ETU is the bargaining representative and who will be covered by a proposed enterprise agreement to replace the Endeavour Energy Enterprise Agreement 2021.
Ms L Doust, of counsel, for the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
[2] $190,000/ week x 52 = $9,880,000. Therefore, 6 months = $4,940,000 and 3 months = $2,470,000
[5] TWU v Broadspectrum (Australia) Pty Ltd [2019] FWCFB 663 at [30]
Printed by authority of the Commonwealth Government Printer
Shoalhaven Starches Pty Ltd T/A Manildra Group
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2024] FWC 1282