The High Court has confirmed the ability of the Federal Courts to order an individual who is involved in a contravention the Fair Work Act 2009 to personally pay a pecuniary penalty.

In Issue

  • Whether a court has the power to order an individual to personally pay a penalty for a contravention of the Fair Work Act 2009.

The Background

Mr Joseph Myles was an official of the Construction, Forestry, Mining and Energy Union (CFMEU). In 2013, Mr Myles organised and carried out a blockade to the entrance to a building site, preventing a concrete pour and causing the cancellation of scheduled work to be performed.

This action was taken in response to an unsuccessful demand by the CFMEU and Mr Myles that there be a CFMEU delegate on site. The Australian Building and Construction Commissioner brought an application against the CFMEU and Mr Myles in the Federal Court seeking penalties against them for contraventions of s348 of the Fair Work Act 2009 (Cth) (FW Act), which prohibits the taking or organising of action against another person with the intention of coercing a person to engage in industrial activity.

The Decision at Trial

The Federal Court made declarations that the CFMEU and Mr Myles had contravened s348 of the FW Act and imposed pecuniary penalties on both of them. The trial judge ordered the CFMEU pay a total pecuniary penalty of $60,000 and Mr Myles to pay $18,000.

The trial judge also made a non-indemnification order under s545(1) of the FW Act directing that the CFMEU could not indemnify Mr Myles in respect of the penalties (in whole or in part) that he was ordered to pay. The trial judge identified the source of the court’s power to make this order as being s545(1) of the FW Act.

The Issues on Appeal

The primary issues on appeal concerned whether s545(1) of the FW Act or s23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) empower a judge to make a non-indemnification order.

The Decision on Appeal

The High Court unanimously held that neither s545(1) of the FW Act nor s23 of the FCA Act empowered a judge to make a non-indemnification order. It found that this order is penal and beyond the scope of those sections.

However, the majority of the High Court held that a personal payment order could be made under s546 of the FWA, which conferred an implied power on a court to make a personal payment order as is reasonably required or necessary to achieve the objective specifically provided by the legislation. This was appropriate in the present matter given that the principal purpose of penalties imposed under to the FW Act are specifically to deter the contravener’s future conduct.

Implications for you

The High Court has confirmed that a court can order an individual to personally pay a penalty under the FW Act. These orders are designed to ensure that an individual who is responsible for unlawful conduct cannot avoid paying the penalty.

This has important implications for employers, unions, Councils and insurers, who may in their normal course of their operations, seek to indemnify an individual against payment of such penalties in that these orders have the effect of preventing them from doing so. Employees who would have otherwise expected their employer, union, Council or insurer to indemnify them in respect of any orders for penalties may therefore no longer be able to rely on this where a court has ordered them to pay the penalty personally.

Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3 (14 February 2018)