High Court decisions show a need to change the rules

26 April 2018
Three recent decisions of the High Court provide a clear indication that the industrial relations framework in Australia is in dire need of repair, and, that the rules need to be changed. Brief points on each case follow:

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union 2018 HCA 3

In the Penalty Case Decision it was held that a pecuniary penalty order can include an additional order that compels an individual not to accept a financial contribution to pay the penalty from a Union. In the Penalty Case Decision, the union in question was, as it was then known, the CFMEU, Construction and General Division, Victoria Branch (“CFMEU”).

The context of the case was that it was alleged, and, ultimately held, that Mr Myles, the then Vice President of the CFMEU, had blockaded a road to stop a concrete pour on the Package B Project. It was alleged that the blockade of the site was to coerce Abigroup to employ an onsite delegate, which Abigroup had refused to do. The issue on appeal was whether the CFMEU could be ordered to not directly or indirectly indemnify Mr Myles for any penalty imposed upon him (“the non-indemnification order”). The matter was appealed from the Federal Court to the Full Federal Court, and, finally to the High Court.

Keane Nettle and Gordon JJ jointly held (with Kiefal CJ agreeing in a separate judgement and Gageler J dissenting) that an order, such as the non-indemnification order, could not be made to prohibit a Union from indemnifying a Union Official. However, on construction of section 546 of the Fair Work Act 2009 (Cth) (“FW Act”), it was held that an implied power exists for a court to make an order that a Union Official not seek, or accept indemnity, or a contribution, from a Union in order to pay the pecuniary penalty imposed upon them.

The Penalty Case Decision means that a Union Official who engages in specific and tactical conduct at the direction of their Union can be ordered not to accept financial assistance from their Union to pay the penalty. The Penalty Case Decision has clear ramifications for those Unions who employ particular strategies against hostile employers.

Esso Australia Pty Ltd v The Australian Workers’ Union [2017] HCA 54

This case was covered in the last Maurice Blackburn bulletin. In summary the Esso decision means that if a bargaining representative contravenes a Fair Work Commission order relating to industrial action, any subsequent industrial action organised for the sameEnterprise Agreement (“EA”) will not be protected industrial action. Additionally, even if a Union has a genuine belief that it is engaging in protected industrial action, if that action is later held to be unlawful, the Union can be found to have coerced the relevant employer and breached the General Protections provisions of the FW Act.

ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 13

In the ALDI Decision, ALDI was establishing a new store in South Australia. ALDI made written offers of employment to existing employees to work at the new store and seventeen employees accepted the offers. ALDI commenced bargaining with the seventeen employees for an EA to cover them at that store. The bargaining did not include the TWU or the SDA. An EA was ultimately approved by the FWC without Union involvement.

The TWU and SDA appealed against the approval, arguing, in part, that the Agreement should have been a Greenfields Agreement because a new enterprise was being established and the relevant employees had not yet commenced working there. The Full Court of the Federal Court agreed, ruling that by approving the EA in these circumstances, the requirement at section 186 (2) of the FW Act that the EA be genuinely agreed to, had not been complied with.

On appeal to the High Court, the decision of the Full Court of the Federal Court was overturned. The High Court held that section 186 (2) (a) of the FW Act, and, the requirement for genuine agreement is not " whether the employees voting for the agreement are actually employed under its terms, but rather whether the agreement covers all employees who may in future have the terms and conditions of their jobs regulated by it".

While the EA was ultimately remitted to the Full Bench of the Fair Work Commission to re-determine whether the EA satisfied the Better Off Overall Test, the High Court’s decision on “coverage” increases the capacity of employers to avoid negotiating with Unions. Previously a new site, such as the ALDI store in question, would have been a Greenfields site, and, Unions would have had a right to bargain for a Greenfields Agreement. However, as a result of the ALDI decision, established employers will now rely on this jurisprudence as a blueprint to bypass a Union’s involvement in bargaining when commencing new operations, and, instead seek to deal directly with employees.  

Where to from here?

The three cases listed above all highlight that the FW Act has been severely compromised in its effectiveness to protect the rights of workers. The unfortunate reality is that the cases above are not aberrant but instead in keeping with the jurisprudence that has developed in and around the FW Act. While there are many more cases that can be identified to support the proposition that we need to change the rules, the three cases above are at least a snapshot of some recent examples that support the urgent need for change.


Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union 2018 HCA 3

ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 13

Esso Australia Pty Ltd v The Australian Workers’ Union [2017] HCA 54

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