Lights, camera, action: lawful industrial action and how employers can respond

Sam Cahill, Associate and Rohan Burn, Graduate Associate

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 the recent case of ABCC v CFMMEU (The Nine Brisbane Sites Case) (No 3)1, 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 the recent case of National Patient Transport Pty Ltd T/A National Patient Transport v United Voice; Australian Nursing and Midwifery Federation 2, 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.

Key takeaways

  • Any industrial action and any responsive action must comply with the legal technicalities of the FW Act.
  •  Employers have a range of options to consider in responding to industrial action (or threatened industrial action), and should utilise these options to minimise unnecessary disruption to their workforce and to support their commercial objectives.
  • The most appropriate action for an employer to take will depend on the employer’s overall strategy, and should take into account range of factors beyond the legal technicalities of the FW Act (such as the impact of any industrial action or responsive action on the reputation of the organisation).

1   [2018] FCA 564.
2   [2018] FWC 2068.

Minimum wage up by 3.5% from 1 July 2018

On 1 June 2018, the Fair Work Commission (the “FWC”) handed down the decision in its annual wage review.

From the full pay period on or after 1 July 2018, the national minimum wage will be $719.20 per week (or $18.93 per hour). This represents an increase of $24.30 per week.

Following the decision, minimum wage rates in modern awards will be increased by 3.5% and a new national minimum wage order will be made with respect to award free employees.

What does this mean for employers?

  • Subject to the requirements of relevant modern awards, enterprise agreements and employment contracts, from 1 July 2018, employers must ensure that their full-time employees are paid at least $719.20 per week (or $18.93 per hour).
  • Employers must be aware of the award or agreement (if any) that applies to their employees and ensure wages are paid pursuant to it, noting that minimum wage rates in modern awards will be increased by 3.5%.
  • An employer who fails to pay wages in accordance with the national minimum wage order or requirements of a relevant award or agreement will be exposed to liability for breach of the Fair Work Act 2009 (Cth).

 

 

FWC decides on Family or Domestic Violence

 

Rohan Burn, Graduate Associate

The Fair Work Commission decision in March 2018 recognised that family and domestic violence “is an issue that impacts on workplaces and…requires specific action.”

As part of the four yearly review of modern awards, in July 2017 the Full Bench of the Fair Work Commission (“FWC”) formed the preliminary view that it was necessary to make provision for family and domestic violence leave, but that they were not satisfied that it was to include in all modern awards an entitlement to 10 days’ paid leave. However, the FWC did express the preliminary views that all employees experiencing family or domestic violence should have access to unpaid leave and that employees should be able to access personal/carer’s leave for the purpose of taking family and domestic leave.

Parties were then provided with the opportunity to make submissions before the decision was finalised. In March 2018 the Full Bench reconvened, and decided to provide five days unpaid leave per annum to all employees (including casuals). However, it deferred consideration of whether employees should be able to access personal/carer’s leave for the purpose of taking family and domestic violence leave.

While the exact wording of the new model term has not been finalised, the March 2018 Full Bench decision gives a good indication of the scope of the obligations.

Proposed model term

As it is currently framed, the model term will allow an employee experiencing family or domestic violence to take five days’ unpaid leave per annum if:

  • the employee needs to take some action to deal with the impact of family or domestic violence; and
  • it is impractical for the employee to do that outside their ordinary hours of work.

The leave will be available for full-time, part-time, and casual employees. Eligible employees will be entitled to the full five days’ leave from the start of each year, but the leave will not accumulate.

In applying for the new entitlement:

  • an employee will need to give notice to their employer as soon as practicable (which may be a time after the leave has started) advising the employer of the expected period of the leave;
  • an employee, if required by the employer, will need to provide evidence that would satisfy a reasonable person that the leave is taken for the specified purpose; and
  • employers will need to take steps to ensure that the employee’s information is treated confidentially (as far as it is reasonably practicable to do so).

How this entitlement will fit in with other rights and obligations

Once the drafting of the model term has been finalised, employers will need to amend their policies accordingly. Many employers may have been dealing with this type of leave entitlement already, as it has been incorporated in a range of enterprise agreements for some time, and often on more generous terms, including paid leave entitlements. There is also an existing obligation under the Fair Work Act 2009 (Cth) to consider requests for flexible work arrangements for those experiencing family or domestic violence, and those supporting someone in this situation.

Key takeaways

  • Once the term has been finalised, employers will need to review their existing policies to ensure it meets the new minimum set by the model award term.
  •  The inclusion of casuals within the scope of this new entitlement needs to be taken into account.
  • Whether employees dealing with family or domestic violence can avail themselves of forms of paid leave, such as personal or carer’s leave, remains to be determined.

 

When is the ordinary turnover of labour an exception to the obligation to pay redundancy entitlements?

Daniel McNamara, Graduate Associate

In the recent case of United Voice v Berkeley Challenge Pty Ltd,1 the Federal Court found that a contracting business was not exempt from the redundancy pay obligations under the National Employment Standards (“NES”) in the Fair Work Act 2009 (Cth) (“FW Act”).

Background

  • The NES provides redundancy pay entitlements, but these are stated not to apply in circumstances where the employee’s employment is terminated due to the “ordinary and customary turnover of labour”.
  • In this case, the employer, Berkeley Challenge Pty Ltd (“Berkeley”), a part of the Spotless Group, conducted a contracting business that provided various services to its client, including cleaning and security services.
  • In 2014, Berkeley lost a contract that it had held for over 20 years with a Queensland shopping centre, and as a consequence decided to terminate the employment of 21 employees.
  • When the company declined to provide the affected employees with redundancy pay on the basis that the terminations were due to the “ordinary and customary turnover of labour”, the union representing the affected employees (United Voice) brought an action against Berkeley in the Federal Court seeking payment of the redundancy entitlements, among other things.

The Decision

During the proceedings, Berkeley claimed that it was an “ordinary and customary” practice within the Spotless Group to terminate the employment of employees in circumstances where the employing entity had lost a major contract.

The Federal Court rejected this argument on the basis that:

  • the exception only applies in circumstances where termination of employment is “both common, or usual, and a matter of long-continued practice”;2
  • in determining whether the exception applies, a Court will have regard to the established practices of the employer in question, which in this case was Berkeley, rather than the practices within the broader Spotless Group;
  • while it may have been customary for other entities in the Spotless Group to dismiss employees in circumstances where the employer lost a services contract, this was not the case for Berkeley; and
  • the terminations and redundancies were “uncommon and extraordinary” for Berkeley and not a matter of long-standing practice.

In coming to this conclusion, the Court considered the long-term employment of the affected employees, some of whom had worked for Berkeley for 21 years, and the 20 years that Berkeley had held this specific contract. As a result, the Court ordered that Berkeley provide the affected employees with redundancy pay in accordance with the NES.

Key takeaways 

  • The “ordinary and customary turnover of labour” does not operate as a blanket exception where on-going employment is dependent on the renewal of contracting arrangements.
  • The primary consideration is what has been the practices of the employer in question, rather than what has occurred within a broader group of related companies.
  • If an employer regards a redundancy situation as potentially coming within the “ordinary and customary turnover of labour”, legal advice should be sought to confirm that the established practices correspond to the requirements of the exception.

 

The Weinstein Effect: stepping up to the challenge in your workplace

 

Roseanna Smith, Graduate Associate

Following the Weinstein scandal and the highly publicised #MeToo and #TimesUp campaigns, many organisations are asking, what does this mean for my workplace?

It is a fairly accurate observation to make that there has been a rise in workplace sexual harassment complaints since various scandals have been exposed. This isn’t a coincidence. People are now feeling more empowered to call out sexual harassment, and other unacceptable behaviour in the workplace, and to recount experiences that may have occurred some time ago that they feel should be aired publicly.

The conduct that is coming to light in organisations is not necessarily new, although social media has provided new avenues to engage in such behaviour. It is often behaviour that was once accepted as a workplace norm, ignored or even concealed.

In a workplace setting there is enormous diversity of human interactions and relationships, and an organisation cannot control every aspect of its employees conduct in this regard. However, organisations can and must explain and detail what acceptable conduct in their workplace looks like, and need to be clear and unambiguous in their messaging with respect to sexual harassment. In addition, the behavioural standard that organisations set, and an organisation’s reaction to behaviour that falls outside of this standard, must not create a workplace culture that tolerates or perpetrates sexual harassment.

Our observation is that workplace policies and education on workplace harassment are largely inadequate because they tend to stick to the black and white issues. The majority of workplace policies and employee induction sessions only cover the obvious, that is, what is already fairly well known to be right and wrong. Few organisations step up to the challenge of dealing with the more nuanced behaviour or the “grey” areas.

The “grey” areas concern the conduct that, in the extreme, to one person may constitute outright harassment but to another is acceptable behaviour. For example, the banter that occurs in many workplaces, nicknames between co-workers, and the language used around the lunch table are all examples of everyday areas where organisations need to refocus and reassess their approach.

It is the responsibility of an organisation to develop and foster the culture they envision for their workplace. This may mean having somewhat awkward conversations, for example, around initiating and developing romantic relationships with coworkers. There is no doubt that consensual relationships in the workplace exist, as 52% of workers have developed a romantic relationship with a co-worker.1 Recent events in parliamentary circles have raised the question of whether organisations should ban relationships that involve at least the perception of a power imbalance.

Interestingly, as a result of the recent exposure of sexual harassment claims against prominent public figures, more than one in four workers reported that they now less likely to think it is acceptable to engage in romantic relationships with office colleagues.2

The positive duty of an organisation to provide a healthy and safe workplace free from sexual harassment includes a culture that does not ignore information about sexual harassment that is brought forward explicitly by a complainant, or gleaned from gossip in the workplace. Changing the workplace culture around sexual harassment goes further than adopting prescriptive policies, as real difference comes from an organisation’s commitment to change. The consequences of engaging in harassment in the workplace must be feared more than the risk of speaking out. In the current climate, the starting point for organisations is to reassess the way they have handled previous complaints and question why people in their workplace are only starting to come forward now.

Our perceptions around workplace harassment will continue to shift, depending on the changing social and cultural expectations. Organisations need to be at the forefront of this so they are not on the back foot when a harassment claim is lodged. If there is a silver lining to the Weinstein scandal, it is the insight that organisations now have that prevention through culture change is a better option for creating a healthy and safe work environment.

Key takeaways

  • Organisations need to develop and convey a clear and unambiguous set of values based on respect, and reflect this in their policies and procedures.
  • What is unacceptable behaviour in the workplace must be clearly detailed.
  • The processes that allow people to bring to light such conduct and for dealing with complaints must be robust enough to ensure that unacceptable behaviour does not become entrenched or tolerated in the workplace.

The Journey to High Performance

Sam Cahill, Associate

This article is based on a webinar presented by Joydeep Hor on 14 February 2018

The majority of business leaders aspire to instil a culture of high performance. However, the notion of organisational culture, and especially high-performance culture, can be difficult to define, let alone apply to the running of an organisation. In this article, we look at the key components of high-performance culture and how business leaders can assess and improve the performance culture in their organisation. This is the beginning of the journey to high performance.

High-performance culture

It is tempting to assess an organisation’s culture by reference to incidents or themes that recur within the organisation. For example, an organisation may spend a great deal of time dealing with disciplinary issues or instigating performance management. This approach is problematic, as it can lead to an undue focus on these negative aspects of people management, rather than the creation of a high-performance culture.

Instead, we advocate a more proactive and holistic approach, which involves a structured framework for assessing and improving an organisation’s performance culture. An example is the “V-S-C” framework, where performance culture is measured against three key metrics:

  • “Vision and Values”
  • “Systems and Structures” and
  • “Capability and Credibility”.

What follows is an analysis of each of these metrics of performance culture, in order to give a clearer picture of the practical steps that business leaders can take to develop and maintain a high-performance culture.

Vision and Values

A good starting point for assessing an organisation’s culture is to start with some simple questions:

  • What is the organisation’s vision or over-riding objective? What is it trying to achieve?
  • What are the values of the organisation? What are the things that management “stands for” or “stands against”?
  • How does the organisation articulate its vision and values? Are employees aware of the organisation’s vision and values? Do they share them?

For performance culture to be given the weight that it warrants, it is essential for an organisation to have a clearly-articulated commitment to high performance as part of its mission statement (or vision). It enables an organisation to articulate its aspirations in terms of a commitment to high performance, and to not limit this simply to the meeting of basic targets or revenue benchmarks.

It is essential for an organisation to spend time in articulating its vision in terms of performance. If time is spent on articulating and formalising vision and values, it makes it easier to communicate this to employees and ensure their performance is in sync. It is also important for the values of the organisation to be embraced and reinforced by individual managers, as this will enhance buy-in from employees.

However, organisations must also recognise that, at best, vision and values are only the beginning. Once an organisation’s vision and values have been articulated, they need to be actioned by management and continuously reinforced. The “lived experience” of the vision means that employees are more likely to adhere to it, and also facilitates the achievement of high performance. Finally, an organisation’s vision and values are not set in stone. Constant reflection on an organisation’s vision and values is an important part of a high-performance culture.

Systems and Structures

An organisation’s systems and structures are the building blocks of its approach to human resources and people management. The articulation of the organisation’s vision and values must be carried through in its systems and structures. When assessing an organisation against this metric, it is important to ask:

  • How does the organisation recruit and induct new employees?
  • Does the organisation have written employment contracts, position descriptions and internal policies? What do these documents say about working for the organisation?
  • What is the organisation’s reporting structure? What are the opportunities for career progression?
  • How does the organisation provide employees with feedback on their performance? Does it have a system of performance appraisal?

By way of example, staff inductions provide an opportunity to explain the rights and responsibilities of employees and the organisation, promote an understanding of the organisation and its history, inform employees about points of contact within the organisation and communicate policies and procedures.

One aspect of staff inductions that some organisations may overlook is scheduling a conversation between a valued and successful employee and a new employee or employees. This discussion is an authentic and powerful tool designed to promote not only individual success, but also instil a sense of drive to achieve the organisation’s desired outcome.

Similarly, an organisation’s employment contracts, position descriptions and internal policies provide an opportunity for an organisation to infuse its systems and structures with its vision and values. Employment contracts and position descriptions can be used to set clear expectations regarding performance, while policies can be used to articulate what it means to work for the organisation and what is required of employees. The framing of the vision and values in such documentation ensures that they have been formally recorded and that staff understand what it is the business aspires to achieve.

Credibility and Capability

The best systems and structures will only be as good as the leaders who are responsible for implementing them. This means that, in order to have a high-performance culture, an organisation must have managers and supervisors with the capacity to lead and inspire high performance.

When assessing an organisation against this metric, it is important to ask:

  • Do managers and supervisors espouse and uphold the values of the organisation? Do they talk the talk? Do they walk the talk?
  • Do managers and supervisors conduct themselves in a manner that resonates with the organisation’s high-performance mantra?
  • Do leaders have the necessary “credibility” to execute the organisation’s vision and values?
  • Does the organisation take steps to monitor its leaders to ensure that this is the case?

A good leader will have traits and values that reflect the broader vision and values of the organisation. Moreover, a good leader will be able to build rapport with employees and encourage them to adopt those same traits and values. This enables and promotes a strong alignment between the objectives and values of the organisation and the personal aspirations of employees.

To build rapport and inspire employees, leaders must have credibility. One way of testing against this metric is to gain an understanding of how the organisation’s leaders are perceived by employees, either through dedicated group discussion sessions or using survey tools. If employees see that leaders are walking the talk, this can enhance the performance culture within the organisation.

Culture audits

An effective starting point in the journey to high performance is to conduct a culture audit. This enables an organisation to gain an understanding of its performance culture as its stands. It can help an organisation understand the strengths and weaknesses of its performance culture and the areas in which there is scope for improvement. Using the simple V-S-C framework, an organisation can use the findings of an audit to embark on a journey towards a culture of high performance. At the same time, this approach can highlight where problems exist, and therefore prevent costly and time-consuming people management issues that can impact on the effective and productive functioning of the organisation.

PCS regularly conducts culture audits and works with organisations nationally and globally to implement a high-performance culture in their organisations. Please contact info@peopleculture.com.au or any of the PCS Directors for further information.