Clifford Gouldson Lawyers

A review of Fair Work Australia's powers to intervene in bargaining disputes

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The Federal Government’s intention in relation to industrial bargaining is to minimise the damaging effect that long running and heated disputes between employers and employees can have on the Australian economy as a whole. In a major review of the Fair Work Act 2009 (Cth) (the FW Act), industry groups, union groups and other interested parties are currently making submissions to the Fair Work Act Review Panel and it is evident that many of the submissions to date have focused on the powers that the FW Act confers to deal with bargaining disputes. In an event that provided the FW Act’s bargaining provisions with significant media attention, Qantas grounded its worldwide fleet on 29 October 2011 and proposed to ‘lock-out’ its workers two days later in an attempt to bring to an end its continuous conflict with three of its employees’ unions.

Under the FW Act, a ‘lock-out’ is the only form of action available to an employer that constitutes industrial action, and occurs where an employer prevents some or all of its employees from attending work thereby denying them the opportunity to earn their wages.

The extent of Qantas’ actions has been criticised as being disproportionate t o the disputes with the three unions, given that Qantas’ pilots’ ‘industrial action’ involved little more than wearing red ties rather than the standard Qantas issued ties. Further, the grounding affected almost all Qantas employees in their employment, not only employees who were party to the bargaining disputes.

It was the Federal Government’s intention when drafting the FW Act that the mechanisms to trigger the industrial umpire Fair Work Australia’s (FWA’s) intervention in long running disputes would only be activated in extreme or exceptional circumstances. FWA is only able to suspend or terminate industrial action where the industrial action:

  • causes significant economic harm to the bargaining parties themselves;
  • threatens community safety, harm to a third party or risks significant damage to the Australian economy; or
  • where it is likely that a suspension of the bargaining or a ‘cooling off period’ would assist to resolve the dispute.

Relevantly, the FW Act does not provide a trigger for FWA to deal with a bargaining dispute where, after lengthy periods of industrial action, the parties have simply been unable to reach an agreement.

Qantas’ actions in grounding its worldwide fleet and the significant damage to the Australian economy that followed demonstrated an example of the extent of the extreme or exceptional circumstances required to trigger FWA’s power to intervene.

The Minister for Tertiary Education, Skills, Jobs and Workplace Relations (the Minister) made an application to FWA under the FW Act to terminate (or if not suspend) the industrial action being engaged in (or threatened to be engaged in) by the parties involved in the dispute.

There were increased calls for the Federal Government to terminate the industrial action directly under a power conferred on the Minister by the FW Act (this power also existed under the FW Act’s predecessor the Workplace Relations Act 1996) but this power had never been exercised previously. Instead of intervening directly, the Minister applied to FWA seeking that it exercise its power to stop all parties to the Qantas dispute from engaging in industrial action. The Minister’s direct involvement would likely have given the Australian public the impression that the Federal Government ‘owned’ the industrial dispute or had ulterior motives for ‘meddling’ in the bargaining process.

FWA heard evidence from Federal Government representatives as to the importance of airline services to the Australian economy and to the estimated effect the continued grounding of the Qantas fleet would have on the tourism industry. FWA noted that the value of inbound tourism was estimated at $24 billion per year.

The ability to ‘lock-out’ employees under the FW Act has recently been used by Schweppes Australia Pty Ltd in an attempt to deliberately trigger FWA’s arbitration powers.

It has been submitted to the review panel that the FW Act ought to include a mechanism to trigger FWA’s intervention that does not require such extreme circumstances to occur that the current FW Act requires. FWA ought to be able to intervene to settle long running disputes when it becomes clear that further negotiations between the employer and employees are unlikely to end in a resolution of the dispute, thus preventing a repeat of the events of 29 October 2011.

The Fair Work Review Panel is due to present its report by 31 May 2012.

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