Insights

Union's demand for a ladies' loo not "industrial activity" under the Fair Work Act

Workplace Relations & Safety
Union's demand for a ladies' loo not "industrial activity" under the Fair Work Act

Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Bay Street Appeal) [2020] FCAFC 192 (The Bay Street Appeal)

A Full Court of the Federal Court1 has allowed an appeal by the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) against a decision imposing a total of $50,000 in penalties against the CFMMEU and two officials2 for organising a stoppage of work at a Brighton construction site after the head contractor, BPM Built, refused a request to provide dedicated female toilet facilities and a larger site shed (Request).

A key issue on appeal was the construction of section 347 of the Fair Work Act 2009 (Cth) (Fair Work Act), which determines what constitutes "industrial activity" and informs many of the substantive penalty provisions of the Fair Work Act, such as sections 346, 348 and 349.

This boiled down to whether the correct interpretation of a "request" made by or a "requirement" of an industrial association as referred to in section 347(b)(iv) of the Fair Work Act:

  1. is confined to a "request made by, or requirement of, an industrial association directed to another person as a condition of their participation in the activities of the industrial association"; or
  2. is not confined to matters of participation in the affairs of the requesting industrial association and extends to the making of a "request" or "requirement" of the kind made by, or on behalf of, the CFMMEU of BPM Built.

Ultimately, the Full Court accepted the CFMMEU's submissions regarding the proper interpretation of a "lawful request...or requirement" for the purposes of engaging or not engaging in "industrial activity" under section 347(b)(iv); and found that "industrial activity" for the purposes of section 347(b)(iv) is limited to protecting a person's freedom of association and participation (or right not to associate or participate) in the lawful activities of unions, and does not extend to a union's request to an employer to improve site amenities.

In doing so, the Court overturned the first instance decision of Justice Bromberg3, in which his Honour had applied previous authority established by Justice Jessup in two prominent judgments4.

The Full Court's conclusion regarding the correct interpretation of section 347(b)(iv) had a number of significant consequences that ultimately resulted in the dismissal of the proceedings against the CFMMEU and the officials.

First, as the Request was not related to freedom of association or union activity, BPM Built's refusal to comply with the Request was not within the definition of "industrial activity".

Second, as BPM Built's non-compliance with the Request was not "industrial activity", the claims that the CFMMEU had contravened sections 346 and 348 of the Fair Work Act (by taking adverse action against BPM Built because of the "industrial activity"; and taking action with the intent to coerce BPM Built to engage in "industrial activity") could not succeed.

Relevant legislative provisions

The Federal Court's decision in The Bay Street Appeal focussed on a handful of sections in the Fair Work Act, being sections 346, 347, 348 and 349, as summarised below.

Section 346

Section 346 prohibits a person taking adverse action against another person because the other person:

  • engages, has engaged or proposes to engage in "industrial activity"; or
  • does not engage, has not engaged or proposes not to engage in "industrial activity".

Sections 348 and 349

Section 348 makes it unlawful for a person to organise or take (or threaten to take) any action against another person with the intention of coercing the other person or a third party to engage in "industrial activity".

Section 349 prohibits a person from making false or misleading representations regarding another person's obligation to:

  • engage in industrial activity; or
  • disclose whether the other person, or a third party, is or is not engaging in or has or has not engaged in, "industrial activity".

Section 347

As is apparent from the above, these provisions all turn on the meaning of "engages in industrial activity", as defined by section 347.

Section 347 lists a number of activities which amount to "industrial activity". Relevantly, section 347(b)(iv) provides that "[a] person engages in industrial activity if the person...does, or does not...comply with a lawful request made by, or requirement of, an industrial association".

The significance of section 347 was highlighted in The Bay Street Appeal by Chief Justice Allsop, who characterised the section as "definitional" and having the important function of supplying "ss 346, 348 and 349 with subject matter upon which to operate".

First instance: The Bay Street Decision

At first instance, Justice Bromberg held that the CFMMEU had contravened the following provisions of the Fair Work Act:

  • Section 346 – by taking adverse action (in organising the stoppage of work) against BPM Built because BPM Built had engaged in "industrial activity" by refusing to comply with the Request; and
  • Section 348 – by organising the stoppage of work with an intent to coerce BPM Built to engage in "industrial activity" by agreeing to the Request.

Justice Bromberg was satisfied that these contraventions were made out by applying an interpretation of "industrial activity" in section 347(b)(iv) as extending to lawful requests or directions by unions which are unrelated to freedom of association.

This was the interpretation that had been adopted by Justice Jessup in two notable cases, Esso Australia Pty Ltd v Australian Workers' Union [2015] FCA 758 (Esso) and Australian Building and Construction Commissioner v Australian Manufacturing Workers' Union [2017] FCA 167 (The Australian Paper Case).


1. Esso

The Australian Workers' Union (AWU) had requested that Esso make an enterprise agreement in relation to an oil refinery in Longford, Victoria. Esso refused to comply with the request. The AWU subsequently organised a series of work bans and stoppages of work by employees.

Esso commenced proceedings alleging (amongst other things) that the AWU had breached sections 346 and 348 of the Fair Work Act, on the basis that Esso's refusal to comply with the AWU's request to make an enterprise agreement was "industrial activity."

Justice Jessup held that section 347(b)(iv) of the Fair Work Act broadened the scope of the protections regarding industrial activities, to afford protection to an employer engaging in industrial activities (with such protection not having existed under the Workplace Relations Act 1996 (Cth)).

His Honour held that as a result of section 347(b)(iv), it is now recognised that any person could engage in "industrial activity" if they did not comply with a request by a union, and saw no reason this would not capture a union's request to make an enterprise agreement. In doing so, his Honour referred to various decisions where section 347(b)(iv) had been applied to requests by a union which went beyond matters of participation in the union's affairs.5


2. The Australian Paper Case

The Australian Paper Case concerned a meeting conducted by three union organisers and the employees of two contractors to Australian Paper to discuss health and safety concerns after a contract worker required stitches in his hand from a workplace injury.

After meeting with the union, the contractors' employees stopped work for three days, with the union demanding that the first aid facility be permanently staffed by a dedicated, level-3 first-aider.

The Australian Building and Construction Commissioner argued that the employees' stoppage of work was adverse action and coercion in breach of sections 346 and 348, in response to Australian Paper's refusal to comply with the union's request for provision of an adequately staffed first aid facility.

Justice Jessup accepted that Australian Paper's refusal to comply with the union's request was "industrial activity", in that the union's request for a staffed first aid facility was "a lawful request made by, or requirement of, an industrial association".

Simply put, Justice Jessup found that section 347(b)(iv) is broad enough to capture activity by unions which does not strictly relate to union participation or membership.

However, despite his finding regarding section 347(b)(iv), Justice Jessup found that the employees had stopped work prior to Australian Paper's refusal to comply with the union's request, such that the union officials did not engage in unlawful adverse action or coercion under section 346 and 348.



Although Justice Bromberg followed the interpretation established in Esso and The Australian Paper Case, his Honour expressed reservations about doing so.

Relevantly, Justice Bromberg stated that "the better view is that the request or requirement of which s 347(b)(iv) speaks is a request or requirement made by an industrial association of another person to participate in the activities of the industrial association", being a far more limited construction of s 347(b)(iv) (which would have the potential to absolve the CFMMEU and the officials from liability).

However, his Honour ultimately considered that Esso and The Australian Paper Case were not distinguishable and that the construction adopted by Justice Jessup was not plainly wrong, such that he was unable to depart from these decisions.

Justice Bromberg's alternate construction of section 347(b)(iv) formed the foundation of the CFMMEU's arguments in The Bay Street Appeal. The CFMMEU argued that Justice Bromberg's construction was in fact the correct one based on various principles of statutory interpretation.

The Bay Street appeal

Chief Justice Allsop held that the meaning of section 347 must be taken from its terms, read and understood from its context and purpose, being an understanding gained from the terms of the Fair Work Act and its enactment history, including the Explanatory Memorandum.

In doing so, his Honour considered the question of whether engaging in industrial activity under section 347(b)(iv) refers to "any request by or requirement of an industrial association to any person in the world for any reason whatsoever?", answering that "[s]uch a broad and unqualified scope would appear to travel far beyond the intended subject matter and object or purpose of the Part given by the Act itself...".6

His Honour found that "...there is no call from the expressly stated purposes of the Part for s 347(b)(iv) to travel beyond protecting freedom of association by ensuring people are free to participate (or not) in the lawful activities of or concerning industrial associations".7

Further, said the Chief Justice "[i]n particular, there is no call to construe s 347(b)(iv) as extending to a party complying or not with a lawful request by or requirement of an association not about activities of or concerning the association, but about working conditions on a building site...Such subjects of requests fall within the literal words of s 347(b)(iv), but have nothing to do with participation in the activities of or concerning the association, though each may, or may not, have some connection with industrial activity...".8

The view of his Honour was that such a construction does not involve reading words of limitation into the section, but rather involves a process of identifying how the use of general words relates to the subject matter of the provision.

Namely, this was protection of freedom of association by ensuring people are free to participate (or not) in lawful activities of or concerning unions. This was a construction found to be consistent with and supported by the Explanatory Memorandum to the Fair Work Bill 2008 (Cth).9

Chief Justice Allsop's conclusion on the preferred construction of section 347(b)(iv) was quite forceful, his Honour reasoning that:

"The breadth of the words in s 347(b)(iv) if read literally, without regard to context, have the capacity to apply to circumstances unconnected with industrial affairs or activity of any kind...If there is to be no limit on the provision, its operation has the capacity to be capricious, and unconnected in rational terms to the subject of the legislation".10

Justice Flick, largely concurring with Chief Justice Allsop, concluded "that the construction given to s 347(b)(iv) by Jessup J in Esso should now be departed from".

Bottom line for employers

Previously, compliance (or not) by any person with any request of a union was sufficient to amount to engaging in "industrial activity" for the purposes of s 347(b)(iv), thereby enlivening the various protections in Part 3-1 of the Fair Work Act.

The Bay Street Appeal makes clear that "industrial activity" under the Fair Work Act, insofar as it relates to complying (or not complying) with a request or requirement of a union, is a far narrower concept than what was previously thought and what a literal reading of section 347(b)(iv) would suggest.

The decision limits the reach of the prohibitions in sections 346, 348 and 349 of the Fair Work Act with respect to issues that do not strictly relate to the activities of or concerning a union, such as working conditions on-site – even if those issues are being raised by the union.

The approach to interpretation of section 347(b)(iv) adopted by the Full Court is likely to be applied to other subsections of section 347 relating to the views, claims, interests or activities of unions.

An application has been filed for special leave to appeal the decision to the High Court of Australia – watch this space!



[1] Chief Justice Allsop, Justice Flick and Justice White.

[2] $38,000 against the CFMMEU and $12,500 against the two officials: Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (The Bay Street Case) (No 2) [2019] FCA 1859.

[3] Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (The Bay Street Case) [2018] FCA 83 (The Bay Street Decision).

[4] Australian Building and Construction Commissioner v Australian Manufacturing Workers' Union (The Australian Paper Case) [2017] FCA 167; Esso Australia Pty Ltd v The Australian Workers’ Union [2015] FCA 758.

[5] While Esso was the subject of an appeal to the Full Court (Esso Australia Pty Ltd v Australian Workers’ Union (2016) 245 FCR 39 and a further appeal to the High Court (Esso Australia Pty Ltd v Australian Workers’ Union [2017] HCA 54), the proper construction of section 347(b)(iv) was not in contest.

[6] The Bay Street Appeal at [28].

[7] The Bay Street Appeal at [29].

[8] The Bay Street Appeal at [30].

[9] See the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) at [1338], [1400] and [1402].

[10] The Bay Street Appeal at [37].

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Key
Contacts

George Kanaan

George Kanaan

Lawyer