By Adriana Orifici
The High Court’s final decision before the 2013 federal election concerned the highly political area of industrial relations law. The case, Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd  HCA 36, resulted in a win for the union and striking construction workers. While the then opposition leader was determined to not raise the prospect of industrial reforms during the election campaign, the new Coalition government has since sought to undo industrial initiatives of the past government. This might mean that the High Court’s decision is exposed to legislative reform, with mining lobbyists agitating for the government to bring legislation before parliament to overturn the decision.
In Mammoet the High Court unanimously decided that providing accommodation to striking employees is not a ‘payment’ that is prohibited by s 470(1) of the Fair Work Act 2009 (Cth) (Fair Work Act). This decision is significant because it confines the meaning of s 470(1), which prohibits an employer from making ‘a payment’ to an employee taking protected industrial action in relation to the ‘total duration’ of the action on that day. Moreover the effect of the decision is that if an employer fails to provide a striking employee with non-monetary benefits during a period of protected industrial action, this may constitute adverse action under the Fair Work Act or breach of the terms of a relevant industrial instrument.
FIFOs go on strike
Mammoet Australia Pty Ltd (Mammoet) employed fly-in fly-out (FIFO) workers who performed construction work at the Woodside Pluto LNG Project (Pluto Project) in the Pilbara region of Western Australia.
In April 2010, Mammoet received a notice that a group of employees working on the Pluto Project intended to take protected industrial action for a period of 28 days. Mammoet notified those employees that it intended to cease providing them with accommodation during the period of the protected industrial action. The relevant employees were covered by an enterprise agreement under which they were entitled to either accommodation or a living away from home allowance. Mammoet had elected to provide them with accommodation at a camp annexed to the Pluto Project.
Mammoet’s position was that it could not provide the accommodation as it constituted a ‘payment’ to an employee taking protected industrial action under s 470(1) of the Fair Work Act. That provision states:
If an employee engaged, or engages, in protected industrial action against an employer on a day, the employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.
The Construction Forestry Mining and Energy Union (CFMEU) commenced proceedings against Mammoet, as the representative of several affected employees. The CFMEU asserted that providing accommodation was not making a ‘payment’ prohibited by s 470(1) of the Fair Work Act. It also claimed that Mammoet’s withdrawal of accommodation to employees during the protected industrial action constituted adverse action in breach of the general protections provisions in pt 3-1 of the Fair Work Act. In particular it was argued that Mammoet had taken adverse action against its striking workers inconsistent with s 342 of the Fair Work Act.
The Federal Circuit Court and, on appeal, the Federal Court, dismissed the CFMEU’s claim. The CFMEU then appealed to the High Court.
The High Court limits the scope of prohibited strike ‘payments’
The High Court unanimously held that the provision of accommodation was not a ‘payment’ prohibited by s 470(1) of the Fair Work Act. After reviewing the use of the term ‘payment’ and ‘pay’ in other parts of the Fair Work Act, the Court determined that the term ‘payment’ in s 470(1) was intended to mean a payment of money and not simply the transfer of any economic benefit.
Importantly, the High Court held that s 470(1) is not designed to suspend the employer’s obligations in their entirety during a period of industrial action. Rather, it is intended to prohibit ‘strike pay’, that is, payments designed to recoup wages lost because an employee is not performing work due to industrial action.
The High Court found that the provision of accommodation to the affected employees was not a benefit tied to performance of specific work. Rather, it was tied to the ongoing employment relationship and specifically Mammoet’s direction to the employees to travel to the site to perform work on the Pluto Project.
Furthermore, the High Court determined that denial of accommodation in these circumstances constituted adverse action because it altered the position of the affected employees to their prejudice. Under the Fair Work Act, an employer must not take ‘adverse action’ against an employee because he or she has a ‘workplace right’. An adverse action includes altering an employee’s position to the employee’s prejudice. A workplace right includes the right to receive a benefit under a workplace instrument such as an enterprise agreement.
Will the legal clarity create political murkiness?
This decision is consistent with the 2012 Fair Work Act Review Panel’s recommendation that the Fair Work Act be amended to avoid the ‘demonstrably harsh impact on employees’ of the original Federal Circuit Court decision.
In summary, the Panel said that the original decision of the Federal Circuit Court undermined the capacity of employees to take protected industrial action where they live away from home and work in accommodation provided by their employer. The Panel also observed that it had significant potential to create practical problems for employers when employees take short periods of protected industrial action. The Panel recommended that accommodation be expressly excluded from the definition of ‘payment’ for the purposes of div 9 pt 3-3 of the Fair Work Act. Despite this view, the Rudd–Gillard Government did not adopt this recommendation in amendments made to the Fair Work Act in 2012 and 2013.
Whilst the High Court’s decision means that the amendments recommended by the Panel are not necessary, this might not be the end of the matter. The chief executive of the Australian Mines and Metals Association (AMMA), Steve Knott, has stated that if the effect of the decision was to require employers to continue to provide accommodation to striking workers, AMMA would be making representations to the major political parties on the need to reform the Fair Work Act in the wake of the decision.
In practical terms, this decision makes clear that employees must continue to be provided with non-monetary economic benefits, to which they are entitled under an industrial instrument, during a period of protected industrial action. Section 470(1) of the Fair Work Act only permits employers to deduct monetary amounts connected with the period of work that is the subject of the protected industrial action.
Whilst it is relatively straightforward to characterise accommodation as a non-monetary benefit, which is not connected with the period of work that is the subject of the strike, extending this reasoning to all non-monetary benefits to which employees are entitled might prove more difficult and subject to disagreement between workers and employers.
If the provision remains in its current form into the future, whether any particular non-monetary benefit will be a ‘payment’ under s 470(1) of the Fair Work Act will depend, of course, on the facts and circumstances of the case. The High Court observed in its decision that it was not ‘necessary or desirable’ to provide an exhaustive list of those circumstances, but did observe that if an employee was provided with a gift to compensate for wages not earned this might be a payment under s 470(1). A tension clearly exists for employers between contravening s 470(1) of the Fair Work Act (which is a civil remedy provision) on the one hand, and engaging in adverse action by withholding a benefit, on the other. The High Court’s decision provides useful guidance on the general principles that must be applied, but it does not necessarily mark the end of all disputation in this area.
AGLC3 Citation: Adriana Orifici, ‘Fly-In Fly-Out Workers Entitled to Accommodation while on Strike: Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd’ on Opinions on High (16 December 2013) <http://blogs.unimelb.edu.au/opinionsonhigh/2013/12/16/orifici-mammoet>.
Adriana Orifici is a Research Fellow at the Centre of Employment and Labour Relations Law at Melbourne Law School.