The Federal Magistrates’ Court has dismissed a claim by the CFMEU that the withdrawal of employee accommodation during protected industrial action constituted adverse action in breach of the general protections provisions in Part 3-1 of the Fair Work Act 2009 (Cth) (FW Act).
Implications for employers
There are three key messages for employers from this case.
First, an employee’s remuneration is not confined to cash benefits and may include non-salary benefits. Further, the provision of accommodation will be a payment to the employee where it is directly related to the work performed and the employee’s capacity to earn remuneration from that work. Accordingly, as employers are generally prohibited by the FW Act from making payments to employees who take industrial action, when industrial action is taken the employer may be legally obliged to withhold accommodation or other non-salary benefits.
Secondly, actions authorised by the FW Act cannot constitute adverse action. In particular, withholding pay when employees take unprotected industrial action cannot constitute adverse action.
Thirdly, where the FW Act prohibits payment during a period of industrial action, withholding payment will not render the employer in breach of a collective agreement which would otherwise require payments to be made.
Background
The employer, Mammoet Australia Pty Ltd (Mammoet), was engaged to perform construction work for the Pluto Project at Karratha in the north-west of Western Australia. Mammoet’s employees were employed under the Mammoet Australia Pty Ltd Pluto Project Greenfields Agreement (Greenfields Agreement). In December 2009, the parties commenced bargaining in relation to a proposed new enterprise agreement.
In April 2010, Mammoet received notice that crane and forklift operators intended to take protected industrial action by stopping work for a period of 28 days. In response, Mammoet threatened to impose a 28 day lockout following the stop work period, and withdraw the provision of camp accommodation to crane and forklift employees.
The Construction Forestry Mining and Energy Union (CFMEU) brought a claim against Mammoet on behalf of the crane and forklift employees, alleging that:
the threat to remove, and the removal of, employee accommodation in response to the protected industrial action constituted adverse action; and
a failure by Mammoet to provide the accommodation was a breach of the Greenfields Agreement.
Mammoet submitted that the provision of accommodation to the crane and forklift employees was payment for the performance of work. Accordingly, the withdrawal of accommodation:
could not constitute adverse action as it was a required and authorised action under the FW Act, given that the FW Act prohibits an employer from making payment to employees during a period of industrial action; and
would not be a breach of the Greenfields Agreement as the Greenfields Agreement provided that Mammoet was not required to pay employees for any day on which work was not performed.
The Court’s decision
Lucev FM dismissed the CFMEU’s application, finding that Mammoet had no case to answer in relation to the allegations of adverse action and breach of the Greenfields Agreement.
Was the provision of accommodation a “payment”?
The CFMEU argued that the provision of accommodation was not a “payment” to its employees within the meaning of the FW Act, as it did not form part of the remuneration arrangements for the crane and forklift employees.
Lucev FM preferred Mammoet’s position, finding that:
there was existing case law which demonstrated that the provision of accommodation is to be classified as remuneration;
there was nothing in the CFMEU’s evidence to suggest that the crane and forklift employees would not have accepted employment with Mammoet without the provision of camp accommodation;
the Greenfields Agreement provided that employees provided with accommodation could request to be paid a living away from home allowance (LAFHA) instead; and
under the Greenfields Agreement, Mammoet had the choice whether to provide accommodation or LAFHA to employees, with that decision being revocable (e.g. at the request of an employee or in circumstances where accommodation was not available).
As the alternative to the provision of accommodation was the payment of LAFHA, Lucev FM held it would be illogical to find one was remuneration and the other was not. Instead, Lucev FM found that the LAFHA and accommodation were alternative forms of entitlement provided to employees working away from home.
Withdrawal of accommodation authorised under the FW Act
Lucev FM found that during the period of industrial action, the FW Act prohibited Mammoet from providing accommodation to the crane and forklift employees and effectively authorised the withdrawal of accommodation. Accordingly, a failure to provide the accommodation could not constitute adverse action, as actions authorised under the FW Act cannot constitute adverse action.
No breach of Greenfields Agreement
Lucev FM found that the FW Act prohibited payment to employees during a period of protected industrial action and the employer withheld payment, the employer could not then be found to be in breach of its obligations to make payments to employees under a collective agreement. Accordingly, as Mammoet was not lawfully able to provide accommodation to the crane and forklift employees during the period of protected industrial action, the CFMEU’s claim for breach of the Greenfields Agreement failed.