The High Court of Australia has held that the provision of accommodation to employees does not constitute a “payment” to those employees and should not be withheld in circumstances where section 470(1) of the Fair Work Act 2009 (Cth) (FW Act) dictates payments are to be withheld because employees have engaged in industrial action.

Implications for employers

The decision makes clear that section 470(1) is designed to prohibit payment of wages to employees during periods of industrial action, rather than provision of other benefits. Accordingly, employers should be wary of seeking to withhold other types of benefits during periods of industrial action, as this might amount to adverse action under the general protection provisions of the FW Act.

Background

Law

Relevantly in the present instance:

  • section 470(1) of the FW Act Act prohibits employers from making payments to employees whilst they are engaging in protected industrial action; and
  • Part 3-1 of the FW Act prohibits a party taking “adverse action” against an employee or independent contractor, because the affected party has a “workplace right” (see sections 340 to 342 inclusive) or engages in industrial activity (section 347). Relevantly, in the present instance:
    • under section 415, employees are able to engage in “protected industrial action” when bargaining for an enterprise agreement. No claim can be made against employees in relation to protected action;
    • engaging in protected industrial action constitutes both a workplace right (section 341(2)(c)) and engaging in industrial activity (section 347(f)); and
    • “adverse action” may include, among other things, injuring the employee in his or her employment, altering the position of the employee to the employee’s prejudice, or discriminating between the employee and other employees (section 341(1)).

Facts

Mammoet Australia Pty Ltd’s (Mammoet) employees were all members of the Construction, Forestry, Mining and Energy Union (CFMEU), working on construction at the Woodside Pluto Liquefied Natural Gas Project located on the Burrup Peninsula in the remote north-west of Western Australia. The employees worked on a fly-in fly-out basis. Mammoet provided the employees’ accommodation while on location.

Mammoet was advised by a number of its employees that they intended to engage in protected industrial action. Mammoet notified the relevant employees that it intended to cease providing them with accommodation during the period of protected industrial action. Mammoet justified this position on the basis that:

  • first, withholding of accommodation was required under section 470(1); and
  • second, even if it was wrong about what section 470(1) required, Mammoet was able to withhold the payment under the relevant enterprise agreement, which relevantly stated that:

“Employees shall have no right to be paid for any time that they are not ready, willing and available to follow all lawful directions of the Company or to carry out all duties that they are capable of performing.”

The CFMEU rejected Mammoet’s position and brought proceedings in the Federal Magistrates’ Court of Australia (now the Federal Circuit Court), arguing that Mammoet’s conduct amounted to adverse action in breach of Part 3-1 of the FW Act.

Decision at first instance

At first instance, Federal Magistrate Lucev held that the provision of accommodation constituted a payment for the purposes of section 470(1), as the legislative purpose of section 470(1) was to ensure employees bore the economic loss of their industrial action. Accordingly, Mammoet was legally required to withhold accommodation during the protected industrial action and had not taken prohibited adverse action.

The CFMEU appealed to the Federal Court of Australia (FCA).

Decision on appeal to the Federal Court of Australia

Justice Gilmour of the FCA affirmed Federal Magistrate Lucev’s decision, holding that:

  • the purpose of section 470(1) was to encourage employers and employees to negotiate and resolve disputes by ensuring that each bears the costs of their industrial action. This is to ensure that the employer bears the cost of lost production and the employee receives no payment. In His Honour’s view, this purpose would be undermined if the employer had to bear the cost of employees’ accommodation during a period of industrial action; and
  • the word “payment” should not be construed narrowly in the context of s470(1). It extends to payments in kind, including the benefit of accommodation provided to enable employees to be in a position to perform their employment and earn their pay.

The CFMEU appealed to the High Court.

The High Court’s decision

In a unanimous decision, the High Court overturned the findings of the previous Courts, holding that section 470(1) of the FW Act relates to monetary payment and not necessarily to other employer obligations.

The High Court found that:

  • other provisions within the FW Act that refer to terms such as “payment”, “pay” and “payment of wages” are referring to a payment in money, lending support for an interpretation that s470(1) is also referring to a payment of money;
  • section 470(1) is a civil remedy provision. This lends further support for the reference to “payment” in section 470(1) being a reference to a payment in money. Otherwise, liability could be attracted not only for the taking of positive action, such as transferring money, but also by doing no more than maintaining the status quo;
  • there is no suggestion that the purpose of section 470(1) of the FW Act is to suspend the entirety of an employer’s obligations under the employment relationship;
  • provision of something of value, such as accommodation, does not necessarily mean that there has been a payment to the employee;
  • legislative history confirms that the purpose of section 470(1) is to prohibit payment of wages not earned by an employee during a period of industrial action;
  • here, the accommodation was a benefit to which the employees were entitled upon attending at the work site unless and until they were directed to return to their usual place of residence. It was neither a payment of money, nor provided in relation to the non-performance of work during the period of industrial action; and
  • on a proper construction of the enterprise agreement, the employees remained legally entitled to insist upon the provision of accommodation notwithstanding that they were not ready, willing and available to work. Even if the opposite were true, the respondent’s denial of accommodation would constitute an alteration of the position of the relevant employees’ to their prejudice so as to constitute prohibited adverse action under the FW Act.

Construction Forestry Mining & Energy Union v Mammoet Australia Pty Ltd [2013] HCA 36