The grounding of the Qantas fleet, and the lockout of employees at Schweppes in recent times, has highlighted one of the less utilised bargaining strategies that employers can use in countering employee industrial action during enterprise bargaining.

A lockout is considered by many employers as a last resort which can result in significant losses to profitability, negative publicity and the disturbance to relationships with customers and suppliers. Below we examine other options employers can consider when they are not willing to concede to union demands.

1. Withholding Wages

The Fair Work Act 2009 (Cth) (“FW Act”) prohibits employers from making wage payments to employees while they are taking protected industrial action. This obligation applies if an employee refuses to attend for work or refuses to perform any work at all. Prohibition on paying wages during the strike period has often been a disincentive for employees to take strike action. However, more employee organisations are organising industrial action which falls short of a full scale strike. This is known as a partial work ban in which employees stop performing their full range of duties for a short period of time. When employees take part in a partial work ban, an employer has the option to:

• pay employees in full;
• withhold a portion of the employees pay; or
• not pay the employees at all.

Providing employees with partial pay, however, can mean that employees who refuse to do crucial tasks, but which take a short amount of time, will not suffer a significant wage penalty by engaging in industrial action. Employers will therefore need to consider whether it is more appropriate to pay employees partially or not at all during partial work bans.

2. Payments in Kind

As well as withholding wages during industrial action, an employer can withhold various payments in kind. This can be a useful bargaining tool during negotiations. In the recent case of CFMEU v Mammoet Australia Pty Limited [2011] FMCA 802 Fair Work Australia (“FWA”) ruled that employer-provided accommodation was a form of payment which the employer was prohibited from making while the workers were on strike. Employers should carefully review any additional payments in kind they make to employees and consider whether they should be withheld during industrial action.

3. Standing Down Provisions

In addition to the above provisions, the FW Act also allows employers to stand down employees in circumstances where they cannot be usefully employed. In particular, these provisions allow employers to stand down an employee during a period of industrial action. Employers need to ensure that if their workforce is covered by an enterprise agreement they review any stand down provisions contained in it and comply with those provisions instead. In particular, an enterprise agreement may impose more obligations on an employer in relation to consultation and notice prior to a stand down occurring.

4. Fair Work Australia orders

An employer who is faced with ongoing industrial action during a bargaining period can also apply to FWA to suspend or terminate the industrial action. However, recent cases suggest that FWA is reluctant to issue such an order unless there are exceptional circumstances.

Qantas grounded its eet in preparation for a full scale lockout in response to industrial action taken by three trade unions representing licensed aircraft maintenance engineers, baggage handlers and pilots. Partial work bans had been taking place for some time which delayed flights, and due to the lockout, the Federal Government applied to FWA to terminate the industrial action engaged in by Qantas. The Federal Government argued that Qantas’ response threatened to cause significant damage to the Australian economy. It was held that Qantas’ action did not have to be reasonable, proportionate or rational – the only requirement was that it had a causal link to the employee action.

A decision to lock out employees does have significant legal consequences, including the risk that FWA will move to compulsory arbitration of the industrial dispute and make a workplace determination binding on the parties. Full scale lockouts also cause disruption and attract negative publicity. Most employers consider the lock out provisions a last resort when bargaining has completely stalled and employee industrial action is already disrupting the business.

Dealing with industrial action can be difficult and challenging, and an employer’s response to such action should always be carefully considered.