Introduction

The Fair Work Act (2009) (the “FW Act”) permits employers to reduce an employee’s payments in the event that they engage in a partial work ban, subject to the employer providing written notice in accordance with the FW Act.

In a recent decision of the Fair Work Commission (the “FWC”), two unions representing bus drivers were successful in challenging the proportion of wages deducted by the employers in response to their partial work bans. This resulted in a significant decrease to the percentage of wages that could be deducted by the employers during the protected industrial action.

Background

The Applicants were unions who represented the bus drivers that were employed by the two employers. The employers had entered into contracts with the State Government to provide public bus services in two regions of the Sydney bus network.

The unions’ members took protected industrial action in November 2021 by refusing to accept fares from passengers by turning off Opal card machines during their shifts. While there was no impact to passengers or services, this resulted in the State Government receiving no revenue for these trips. The two employers issued their respective employees with notices under section 471 of the FW Act, which resulted in the drivers’ wages being reduced by 31.50% and 25% respectively.

The employers both contended that the use of ticketing machines was “an integral and ongoing component of the work performed”. The reduction was based on the percentage of time that the employers calculated employees would spend attending to “the collection of fares using the Opal machines, over and above the work boarding and deboarding passengers”. The employers estimated the time spent ensuring passengers complied with tapping on and off as being 40-50% of the drivers’ shifts.

The unions challenged the reductions by applying to the FWC under section 472 of the FW Act. The unions claimed that the reductions were too harsh considering the action being taken, contending that the drivers only spent five to eight minutes of their workday attending to the operation and function of the Opal card machines. The unions submitted that this represented a reduction of 1.04% to 1.67% to their members’ wages.

Outcome

Under section 472 of the FW Act, the FWC may make an order varying the proportion by which an employee’s payments are reduced by an employer due to a partial work ban. In doing so, the FWC must consider:

• whether the proportion specified in the notice given by the employer was reasonable having regard to the nature and extent of the partial work ban; and
• the fairness between the parties taking into consideration all the circumstances of the case.

In considering the reasonableness of the calculation, the FWC is required to apply the steps set out in the Fair Work Regulations 2009 for determining the proportion of an employee’s payment that will be reduced as a result of a partial work ban. The FWC reflected on the “work” that the partial work ban applied to, being all the “essential tasks performed by drivers in order to allow fares to be collected.” The FWC did not agree with the employers that the impacted work also included the boarding and deboarding of passengers as this occurred regardless of whether fares were taken. As a result, the FWC concluded that the severity of the wage reduction was not reasonable as it considered aspects of work that “should not be taken into account”.

In considering the fairness between the parties, the FWC considered that there had been no reduction in revenue or other direct financial detriment, or disruption to public bus services because of the partial work bans. Under the contracts with the State Government, the employers were paid by the State Government in exchange for supplying public bus services (including drivers), rather than receiving fares from customers. Under this contractual arrangement, the employers suffered no reduction in revenue but in fact stood to make a “windfall gain” from the reduction of wages, as their labour expenses would be reduced while their revenue remained unchanged.

The FWC accepted the unions’ claim that the drivers spent approximately eight minutes per shift operating the Opal machines. In light of this, the FWC ordered that the deduction to wages should be reduced to 1.5% for drivers employed by both employers.

Key takeaways

• • Employers may deduct a proportion of an employee’s wages during a partial work ban, provided that they comply with the notice requirements under the FW Act.
  • The Fair Work Regulations 2009 sets out the steps that employer’s need to take when determining the proportion of wages that will be deducted.
  • The FWC may reduce the proportion of wages deducted from an employee upon application and will consider both the reasonableness of the proportion and the fairness between the parties.

People + Culture Strategies