The High Court of Australia has upheld an appeal by Esso Australia Pty Ltd (Esso) concerning industrial action taken by the Australian Workers’ Union (AWU). The High Court determined that the industrial action was not protected as it was taken after the AWU had contravened a previous order of the Fair Work Commission (FWC) requiring that it stop organising certain industrial action.

This decision is significant as it clarifies the scope of section 413(5) of the Fair Work Act 2009 (Cth) (Act), which sets out one of the ‘common requirements’ for industrial action taken during the course of negotiating for a proposed enterprise agreement to be protected. The requirement is that the person organising or engaging in the industrial action must ‘not have contravened any orders that apply to them and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement.’ The High Court determined that previous contraventions of orders that have ceased to operate at the time of taking or organising the industrial action are still relevant contraventions.

Esso’s appeal to the High Court arose out of industrial action taken by the AWU during heavily contested bargaining for a replacement enterprise agreement to cover Esso’s various processing plants across Victoria.

After the AWU organised various forms of industrial action against Esso, which included bans on performance of equipment testing, air freeing and leak testing in early 2015, Esso obtained an order from the FWC in March 2015 requiring the AWU to stop certain industrial action.

The AWU continued to organise such industrial action in contravention of the FWC’s order. This prompted Esso to commence proceedings in the Federal Court where it claimed that, as a result of that contravention, the AWU could not satisfy the requirement in section 413(5) of the Act and so any industrial action organised or taken by the AWU after that contravention could not be protected industrial action.

While Esso’s argument was rejected both at first instance, and later, by the Full Court of the Federal Court on appeal, Esso’s argument ultimately succeeded in the High Court.

STRICT COMPLIANCE NECESSARY TO SATISFY COMMON REQUIREMENTS FOR PROTECTED INDUSTRIAL ACTION

Drawing from the legislative history and context of what are now the common requirements in the Act for industrial action to be protected, the majority of the High Court said that the requirement for compliance with orders was not confined to orders in existence at the time of the proposed protected industrial action and was also ‘intended to apply to past contraventions of orders’.

While Gageler J, in dissent, dismissed Esso’s appeal, the majority held that ‘given that the Fair Work Act regime was then and remains predicated on participants abiding by the rules, it is much more likely that the purpose of a provision in that form would have been to deny the immunity of protected industrial action to persons who had not previously complied with a pertinent order or orders and who had thereby demonstrated that they were not prepared, or prepared to take sufficient care, to play by the rules’.

Gageler J however held that to construe section 413(5) in the way contended by Esso would have the consequence of rendering a bargaining representative, having contravened any bargaining or stop order at any time in the bargaining process an ‘industrial cripple and an industrial outlaw’ prevented from taking protected industrial action.

WHAT THIS MEANS FOR YOU

This decision confirms that, for industrial action taken when negotiating a proposed enterprise agreement to be protected, the Act requires those wishing to take such action to not have contravened any orders that applied at any time regarding the proposed action, the agreement or a matter that arose during bargaining.

This applies equally to employers, employees and unions. Previous contraventions of such orders by any of them will mean that any industrial action they take or organise thereafter will be unprotected and they may be exposed to civil penalties (as is expected to be the outcome for the AWU as a result of the High Court’s decision). As a consequence, employers, employees and unions should ensure that they ‘play by the rules’ and comply with orders of the FWC concerning the proposed agreement, otherwise they will risk future action taken by them being found to be unprotected.