For an employer, the process of negotiating or re-negotiating an enterprise agreement can give rise to a number of strategic challenges. This is especially true when an employer is required to deal with industrial action, or the threat of industrial action. In this article, we look at the steps that must be taken by employees (or their representatives) before employees can lawfully take industrial action in respect of a proposed enterprise agreement. We also highlight an employer’s legal options, in this context, for preventing or minimising any undue or unlawful disruptions to its business in response to proposed industrial action.

What is “industrial action”?

Industrial action is unlawful, unless it is “protected industrial action”. Under the Fair Work Act 2009 (Cth) (“the FW Act”), the term includes a stoppage of work (ie, a conventional “strike”) as well as a ban, limitation or restriction on the performance of work and/or the performance of work by an employee in a manner different from that in which it is customarily performed.

Industrial action does not include actions that are authorised by the employer or by the terms of the applicable enterprise agreement. For example, in a recent case, union officials would regularly conduct meetings at the employer’s work-site, which had the effect of delaying the start of work. Sometimes the meetings forced the cancellation of concrete pouring. The Court found that this action did not amount to “industrial action”, as the meetings were authorised by a clause in the relevant enterprise agreement.

When employees can take “employee claim action”?

This article focuses on the category of protected industrial action called “employee claim action”. This is where employees take industrial action in support of claims for a proposed enterprise agreement.

Employees may only take employee claim action in circumstances where:

• the existing enterprise agreement (if any) has passed its nominal expiry date;
• the parties have commenced bargaining for a new enterprise agreement; and
• the employees (or their union) are genuinely trying to reach an agreement with the employer.

If employees attempt to take industrial action in other circumstances, the employer may apply to the Federal Court or Federal Circuit Court for an injunction to stop or remedy the effects of the industrial action.

Protected action ballots

If a union wishes to initiate industrial action, it must first apply to the Fair Work Commission (“FWC”) for a “protected action ballot order”. The application must specify the group of employees who are to be balloted and the question (or questions) to be put to those employees, including the nature of the proposed industrial action.

A recent FWC decision has confirmed that the question put to employees in a protected action ballot can be framed permissively and give scope for a range of “proposed industrial action”. However, if the subsequent written notice of the action provided to the employer is insufficiently specific, this may enable the employer to apply successfully to the FWC for an order to stop the industrial action.

Responding to an application for a protected action ballot order

If a union makes an application to the FWC for a protected action ballot order, it must provide the employer with a copy of the application documents. This gives the employer an opportunity to consider how it wishes to respond to the application.

An employer may oppose an application for a protected action ballot order in circumstances where the application does not meet the requirements under the FW Act. For example, the employer may be able to oppose an application on the basis that:

• the employees (or union) have not been genuinely trying to reach an agreement regarding the matters in question;
• a question that is proposed to be put to the employees does not relate to “industrial action”, as defined by the FW Act (for example, where a question relates only to the wearing of union clothing); and
• the claims being supported by the proposed industrial action are not about “permitted matters” (eg, terms that do not relate to the relationship between the employer and its employees).

If the employer has grounds for opposing the application, it can make submissions when the application is heard before the FWC, or it can contact the union and require that the application be withdrawn or amended.

Conduct of a protected action ballot

If the FWC makes a protected action ballot order, the ballot must be conducted by a “protected action ballot agent”, as specified in the order. This will usually be the Australian Electoral Commission.

The ballot agent is required to work with the employer and employees to compile a “roll of voters”. This gives the employer an opportunity to ensure that it does not contain individuals who are not eligible to vote on the proposed industrial action. An employee will only be eligible to be included on the roll of voters if he or she will be covered by the proposed enterprise agreement and is included in the group of employees specified in the order.

After voting closes, the ballot agent must make a written declaration of the results and advise the parties (and the FWC) accordingly. If the proposed industrial action is approved (ie, if at least 50% of eligible employees cast a vote and more than 50% of those employees voted in favour of industrial action), the employees may (and may only) take the proposed industrial action during the 30-day period starting on the date of the declaration of the results of the ballot, unless this period is extended by the FWC.

Notice of industrial action

A union must provide the employer with three days’ notice in writing of any industrial action, including the nature of the action and the days on which the action will start and finish.

In another recent case, the union gave notice to the employer stating that employees would be taking industrial action that would involve “stopping work for up to ten minutes duration on each occasion to explain the campaign-related material to patients, their families and the public”.

The FWC found it was not strictly a requirement of the FW Act for a notice to prescribe the commencement and conclusion times of the industrial action, as generally the rationale for industrial action is to cause a degree of inconvenience and expense to the employer. However, there must be enough specificity to avoid legal uncertainty and litigation over whether the action taken subsequent to the notice is protected industrial action.

When assessing the adequacy of a notice, the FWC must consider all the circumstances, and examine the wording of the notice in its industrial context. The person receiving the notice must be able to understand what action is proposed, and when it will occur so that they have an opportunity to consider their position and respond appropriately. The adequacy of the notice may depend on the nature of the employer’s operations, including their size, the number of locations, the time at which the action is to occur, and the number of employees potentially taking the industrial action.

Depending on the type of industrial action, the employer may be prohibited from paying employees while they are taking industrial action.

Options for responding to industrial action

An employer may have a number of options in responding to protected industrial action by employees.

Employer response action

The employer may take its own industrial action against the employees, called “employer response action”. This is usually in the form of a “lockout”. This is where the employer prevents the relevant part of its workforce from attending work. If taking employer response action, the employer must provide written notice to the employee union, and take all reasonable steps to notify employees of the lock out. A recent FWC Full Bench decision held that employees do not need to be paid, and are not entitled to accrue annual or long service leave during a lockout.

Stand down

The employer may exercise its right under the FW Act to stand down employees in circumstances where employees cannot “usefully be employed” due to industrial action. The employees may be stood down without pay.

Reduce pay (if partial work ban)

The FW Act provides that, if an employee is engaged in industrial action that is a “partial work ban” (ie, industrial action that falls short of a total stoppage of work), the employer will have the option of reducing the employee’s rate of pay. This must be done in accordance with the requirements set out in the Act. For all other types of industrial action, the employer will be prohibited from paying the employees during the period of industrial action.

Dispute resolution

The employer may apply to the FWC to deal with the dispute. This application can be made by one union without the agreement of any other unions involved. However, for the FWC to arbitrate the dispute (i.e. make a binding determination on the dispute), the parties must agree on the terms on which the arbitration is to take place.

Seek an order to suspend or terminate industrial action

The employer may apply to the FWC for an order to suspend or terminate the protected industrial action. The FWC can make such an order if it is satisfied that:

• the industrial action is causing significant harm to the employer;
• the industrial action is creating a risk to health and safety or damaging the economy; or
• the suspension of the industrial action will assist in resolving the dispute.