Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Significant damage to the Australian economy or part thereof – s424(1)(d)

For arbitral intervention to occur under this provision, the industrial action must have threatened, is threatening, or would threaten to cause significant damage to the Australian economy or an important part of it.⁴⁵⁰

To date under the FW Act, only the 2011 Qantas lockout has led to a termination of industrial action and the commencement of arbitration proceedings in accordance with s424(1)(d) of the FW Act.

Section 424(1)(d) of the FW Act, is in almost identical terms to s170MW(3)(b) of the WR Act that was the focus of the AIRC Full Bench decision in the famous Hunter Valley coal miners dispute of the late 1990’s.

As has been observed by a major employer law firm, the “…bar is set very high for industrial action terminated on grounds of community or economic harm…”.⁴⁵¹ Indeed, that would appear something of an understatement, given the Full Bench determination in the Hunter Valley dispute and more immediately, the observations of the Full Bench in the Qantas decision of 31 October 2011. Particularly telling is the Qantas Full Bench’s finding that whilst the combined union industrial action (which Qantas had estimated had caused in excess of $70 million in lost production) did not meet the threshold required to invoke s424(1)(d); the Qantas lockout which would have led to $20 million per day in (self-inflicted) damage did meet the threshold.⁴⁵²

Clearly, the legislative test set out in s 424(1)(d) concerning the scale of industrial action justifying arbitral intervention can be met in only very rare and exceptional circumstances. In practice, the necessary preconditions could only be contrived by a major corporation with the resources and strategic location in the economy to inflict massive and immediate damage to the economy. This appears to be the reason why the few other cases which have led to a termination of industrial action under the FW Act have instead centred on the other available tests under the FW Act, namely “serious economic harm” to either party to the dispute⁴⁵³ or the test dealing with industrial action that is, or is threatening to “endanger the life, the personal safety or health, or the welfare, of the population or of part of it”.⁴⁵⁴

Harm to personal safety, or the welfare of the population – s424(1)(c)

For an order to be obtained under this section, the industrial action must have threatened, is threatening, or would threaten to endanger the life, the personal safety or health, or the welfare, of the population or of part of it. ⁴⁵⁵

In particular, there have been two significant decisions leading to the termination of industrial action, both in the health sector in Victoria and both relying upon the “endangering” personal safety, health or welfare test. The first involved the decision Ambulance Victoria v Liquor, Hospitality and Miscellaneous Workers’ Union.⁴⁵⁶ The decision in the Ambulance Officers’ case was granted in respect to proposed 4 hour stoppages which had not yet commenced but were merely threatened, in as much as the union had issued notices pursuant to s414 of the FW Act giving notice of its members intention to take industrial action.⁴⁵⁷

The other decision is more recent and concerned an industrial campaign of selective industrial action by Nurses employed by the Victorian Government. In granting the application to terminate the industrial action taken by members of the Australian Nurses Federation (‘ANF’), the Full Bench seemed to endorse a low threshold for the test of “endangering” personal safety, health or welfare, whilst acknowledging the efforts of the employer and union to minimise such effects.⁴⁵⁸ It has been observed that given the approach to the relevant test adopted by the Full Bench in the Nurses Case there is a strong prospect that practically any effective (as opposed to merely symbolic) industrial action taken by employees in the public health sector will be exposed to ready termination under s424(1)(c) of the FW Act.⁴⁵⁹

Significant economic harm to a bargaining party – s423

The criteria for an order under this power, is that the industrial action is causing, or threatening to cause, ‘significant economic harm’ to the employer or the employees covered by the proposed enterprise agreement.⁴⁶⁰ To satisfy this provision, the economic harm must be ‘imminent’⁴⁶¹ and the industrial action must be ‘protracted’.⁴⁶²
There has in addition been one successful application under s423(2) of the FW Act for termination of industrial action because of the significant economic harm it was causing employees, but interestingly, it was the employer who brought the application. The matter concerned an industrial dispute involving soft-drink manufacturer Schweppes and the union representing production employees, United Voice. The application to terminate the industrial action was founded upon the economic harm being incurred by employees as a result of an indefinite lockout their employer had imposed upon them. As observed by presiding member Senior Deputy President Kaufman, it was “…ironic that it is the action of Schweppes that Schweppes contends is causing, or is threatening to cause, serious economic harm to the Schweppes’ employees”.⁴⁶³

The first application by Schweppes for termination of all industrial action failed, primarily because FWA regarded the evidence of the key employee site representative opposing the termination as a “powerful” factor against the exercise of the discretion to terminate the industrial action.⁴⁶⁴ However, some six weeks after the initial decision of FWA under s423(2) both the employer and the union jointly argued for the termination of the industrial action in reliance upon the lockout imposed by Schweppes. By the time of this renewed application, 155 employees had sustained 58 days of lost wages as a result of the employer lockout.⁴⁶⁵

In acceding to the application to terminate the industrial action, FWA seemed to place particular importance upon the joint position of the parties that affected employees were suffering a degree of economic harm sufficient to justify intervention under s423(2).⁴⁶⁶

The decisions relating to the Schweppes industrial dispute suggests that the ‘serious economic harm’ test under s423(2) - whilst not practically unattainable in the same way as s 424(1)(d) - still represents a major challenge for applicants. First, the decisions stand for the proposition that evidence of ‘serious economic harm’ must be objectively ascertainable by reference to the situation of individual employees or employers affected. In other words, reliance by applicants upon material that is merely inferential and predictive in nature (such as that advanced by Schweppes in the form of the evidence of economist Ian Harper) is unlikely to meet the requisite evidentiary standard implied in the legislation.⁴⁶⁷

Second, whilst the criteria listed in ss 423(4),(5) and (6) guide FWA in the exercise of powers, a decision to terminate the industrial action is ultimately a discretionary exercise for the FWA member.⁴⁶⁸ In other words, the Schweppes case dispels the possibility that an application under s423(2) is simply a “tick the box” exercise. Indeed, it is likely that the motives and conduct of the party making an application will be a significant factor in whether the application is granted.