In Australian Workers’ Union v Chevron Australia Pty Ltd [2026] FCA 1492 (AWU v Chevron), the Federal Court held that a deduction of a remote-site field loading allowance during protected industrial action (PIA) was permitted, but the deduction of a transport allowance was not. In doing so, the Court clarified what payments an employer can and cannot withhold during periods of protected industrial action under section 470 of the Fair Work Act 2009 (Cth) (FW Act). The decision determined liability only, with remedies yet to be determined.
Introduction
It has been a longstanding feature of Australian industrial experience that unions who prevail in dispute situations demand ‘strike pay’. That is, full recompense in respect of any losses incurred through industrial action taken to press their position in the dispute. Historically, the defeated employer made such payments in order to move past the dispute.
However, in this era of extreme statutory regulation, strike pay has been outlawed – at least to a degree - with employers risking increasingly prohibitive penalties if they withhold payment in the wrong circumstance.
Like most other areas of industrial relations, the prohibition on strike pay sits in a complex statutory environment where PIA is taken in increasingly novel ways to apply maximum pressure to employers, for minimum cost to the employees taking the action. There are ever increasing penalties for contraventions.
Section 470 is the key section – and it is cast in deceptively simple terms - an employer must not make a payment to an employee in relation to the total duration of the industrial action on that day.
But in the modern world, payments are made on many different bases and can be characterised in different ways. The period of PIA itself can be difficult to discern, for example, where employees take a series of short or rolling stoppages across a shift and the employer must calculate the “total duration” of industrial action each day. Adding to that complexity is remote work performed on rotating shifts and involving extensive travel, including air travel, and the provision of accommodation and other benefits. It is no surprise that the leading High Court authority on section 470 involved a deduction of benefits provided to fly-in-fly-out (FIFO) workers whilst they were engaging in PIA. The employer believed the law required it to do so.
In the period since, several interesting circumstances have arisen. This is another one which highlights the difficulty employers face in making these decisions.
What happened?
AWU v Chevron concerned two allowances paid to rotational employees under Chevron’s Rotational Benefits Policy:
- a Field Loading Allowance, paid to employees assigned to a remote work location for three months or more; and
- a Transport Allowance, which assists with the cost of travel between an employee’s usual place of residence and a designated point of assembly,
(together, the Allowances).
Employees took PIA, including work stoppages, between 8 and 21 September 2023. Seeking to comply with section 470, Chevron made proportionate deductions from the Allowances by reference to the time each employee spent on the work stoppages.
The Australian Workers’ Union (AWU) argued that the deductions contravened section 323(1) of the FW Act, which requires an employer to pay “amounts payable to the employee in relation to the performance of work” in full.[1] Chevron argued that section 470 prohibited the payments, so no obligation to pay arose.[2] In the alternative, it argued that the deductions were authorised under section 324(1)(d) of the FW Act.[3]
The legal test
When does the payment in question cross the line into prohibited strike pay?
Justice Lenehan observed that for section 470 to apply, there must be a connection between the entitlement to a relevant payment and an employee’s performance of work (or availability for work) during the industrial action. That approach draws on the High Court’s reasoning in Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd[4] and was applied by a majority of the Full Federal Court in Construction, Forestry and Maritime Employees Union v Sydney International Container Terminals Pty Ltd.[5]
Critically for employers, the connection does not need to be a close one. The Court rejected the AWU’s argument that section 470 ought to be interpreted narrowly to capture only “direct time earnings", meaning payments directly attributable to the actual hours an employee would have worked but for the industrial action.[6] The Court said it was a “distraction from the correct approach” to label the test "temporal" and then read it in an "artificially narrow fashion".[7]
The earlier cases demonstrate where the line falls:
- Non-monetary benefits generally sit outside section 470. In Mammoet, free on-site accommodation was neither a "payment" nor provided in relation to the performance of work.
- How a payment is calculated doesn't matter. In Community and Public Sector Union v Commonwealth[8], a seagoing allowance paid as a percentage of annual salary, regardless of the days of sea duty actually performed, was still caught by the prohibition. This was because it compensated for the special duties of the role and replaced the overtime, shift and disability payments that would otherwise apply.
- What matters is the condition, not the characterisation. In Sydney International, the union argued that a weekly ordinary-rate payment to employees who had already reached their annual hours was really payment for work already done. The majority of the Full Court disagreed. As the entitlement still depended on employees working their allocated shifts, section 470 applied.
The practical result is that so long as the requisite connection exists, fixed or annualised entitlements can be caught by section 470 even if they aren't calculated by the hour. In a FIFO context, this could extend to payments such as remote, isolation or offshore loadings, industry-type allowances (for example, heat, height or confined spaces allowances), on-call or standby allowances or site or roster bonuses. Each will turn on its own terms.
The decision
Applying that test, the Court reached different conclusions on the two allowances in question, namely the Field Loading Allowance and the Transport Allowance:
AWU v Chevron [2026] FCA 1492, [21].
Ibid [23].
Ibid [24].
(2013) 248 CLR 619.
(2025) 307 FCR 478.
AWU v Chevron [2026] FCA 1492, [36].
Ibid [38].
[2019] FCA 975.
|
Allowance
|
Application of s 470
|
Determination
|
|
Field Loading Allowance
AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
The allowance formed part of (in the sense that it compensated for) the performance of the eligible employees’ duties as it was paid to compensate for “all aspects of work in the industry” notwithstanding that it was not paid by reference to any particular period of work.[9] AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
Requisite connection between payment and performance of the employees’ duties. Payment captured by s 470; the deductions were lawful and there was no contravention of section 323. AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
|
Transport Allowance
AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
The allowance compensated employees for costs incurred in making travel arrangements to their point of engagement. The entitlement had therefore arisen prior to the relevant period of PIA.[10] AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
No connection between the entitlement and the performance of work during the period of industrial action. Payment not captured by s 470; the Court found a contravention of section 323. AWU v Chevron [2026] FCA 1492, [171]. Ibid [192]-[193]. |
The fine print matters: it’s the policy, not the label
The decision shows that the documents setting out the terms of an entitlement are central to how it is characterised. Descriptions of payments as ‘remuneration’ in remuneration statements were held to be of limited assistance. The Court instead looked to the Rotational Benefits Policy, at least some provisions of which it found were intended to have contractual effect. Employers should therefore ensure that contracts, policies and enterprise agreements clearly state the basis on which an entitlement arises and is paid, including whether it depends on the employee performing their duties.
What does this mean for employers?
AWU v Chevron highlights the dual compliance risk that section 470 presents for employers during a period of PIA. Making a payment prohibited by section 470 contravenes a provision sanctioned by a penalty. Withholding a payment that falls outside section 470 risks contravening section 323, which is itself a civil remedy provision. More generally, withholding amounts without a lawful basis because employees have engaged in PIA may also expose an employer to general protections claims.
Accordingly, there is no safe default position: neither continuing to make all payments nor applying a blanket deduction will insulate an employer from risk. The decision shows that the line can fall differently for benefits paid under the same instrument and hence the characterisation of each payment needs careful analysis. Employers are encouraged to review their remuneration arrangements and supporting documentation in advance of any bargaining period to best mitigate this risk.
