In Esso Australia Pty Ltd v Australian Workers’ Union [2017] HCA 54, the High Court held that a union, which had been engaged in bargaining for an enterprise agreement with an employer, did not have the capacity to engage in protected industrial action because it had previously breached an order of the Fair Work Commission relating to the bargaining.
Background

From about June 2014, Esso Australia Pty Ltd (Esso) was engaged in bargaining with unions representing its employees, including the Australia Workers Union (AWU), to replace two enterprise agreements which nominally expired on 1 October 2014. The agreements covered Esso’s employees at its offshore oil and gas platforms in the Bass Strait, onshore processing plants at Longford and Long Island Point, and marine terminal at Barry Beach.

In February and March 2015 employees at the Longford plant took industrial action, in the form of various bans and stoppages, organised by the AWU and purportedly pursuant to notices of industrial action issued by the AWU under s 414 of the Fair Work Act 2009 (Cth) (FW Act).

On 6 March 2015, Esso obtained an order from the Fair Work Commission under s 418 of the FW Act requiring the AWU to, amongst other things, stop organising bans on the performance of equipment testing, air freeing, and leak testing. Those activities were found to be outside the scope of any of the s 414 notices issued by the AWU, and therefore constituted unprotected industrial action. The order came into effect 6 March 2015 and ceased 20 March 2015.

The AWU contravened this order by continuing to organise a ban on air freeing and leak testing, and a ban on the manipulation of bleeder valves to facilitate air freeing and leak testing, over the period from 6 to 17 March 2015.

Esso sought a declaration from the Federal Court of Australia (FCA) that, due to the AWU’s breach of the s 418 order, industrial action organised thereafter by the AWU in relation to the proposed enterprise agreement(s) was not protected industrial action, because the AWU was incapable of satisfying the requirement of s 413(5) of the FW Act. Esso further contended that such action also amounted to unlawful coercion in breach of ss 343 and 348 of the FW Act.

The AWU argued that the requirements of s 413(5) only extend to orders that apply at the time of commencement of proposed protected industrial action. Essentially, the AWU contention was that the s 418 order issued by DP Hamilton on 6 March 2015 could only prevent protected industrial action being taken until the date of cessation of that order, and so no order applied to industrial action taken after 20 March 2015. In response to the coercion allegations, the AWU argued that Esso must demonstrate that the AWU knew or intended that its conduct was unlawful, illegitimate or unconscionable at the time of engaging in such conduct, and that this requirement could not be established because the union genuinely believed at the relevant time that it was organising lawful industrial action.

The FCA rejected Esso’s application for a declaration, but held that the AWU had breached the coercion provisions under the FW Act. On appeal, the Full Court of the FCA accepted the AWU’s argument that s 413(5) is only concerned with contravention(s) of orders applying at the time of taking or organising the industrial action, but did not disturb the FCA’s findings in relation to coercion.

Both Esso and the AWU appealed to the High Court of Australia against the Full Court’s decisions on the construction of s 413(5), and the contraventions of ss 343 and 348 (coercion), respectively.

Decision

The High Court allowed Esso’s appeal (by a 4:1 majority) and dismissed (unanimously) the AWU’s appeal.

The High Court majority concluded that, as a result of the AWU’s contravention of the s 418 order issued by the Fair Work Commission on 6 March 2015, the AWU was a person who had contravened an order which applies to it in relation to the proposed agreement and, therefore, by reason of the AWU’s failure to meet the common requirements specified in s 413(5) of the FW Act, industrial action thereafter organised by the AWU in relation to the proposed agreement was not protected industrial action.

The High Court found no basis for the AWU’s argument that s 413(5) should be limited in the manner found by the FCA and the Full Court of the FCA. In preferring a broader construction of s 413 (5), the High Court:

• rejected the AWU’s argument that this would produce “capricious, unjust results”, including for the reason that the Fair Work Commission has broad powers to vary or revoke orders retrospectively;
• noted that this may indeed result in a “past venial breach of a minor order, or a past unintended breach of an order about which no issue was taken until much later” having “unintended consequences” – but concluded that it is not the Court’s function to attempt to overcome such unintended consequences by construing a legislative provision as if it has a meaning different to that which the Parliament intended;
• did not accept the AWU’s contention that this would result in “double punishment” of those who contravene the relevant order, by removing their “right” to take industrial action as well as attracting a civil penalty.

The High Court remitted the matter to a single judge of the FCA for the hearing and determination of Esso’s claims for pecuniary penalties and compensation.

In relation to the coercion question, the High Court held (unanimously) that a person taking coercive action need not have an accurate appreciation of the legal nature of the action. Rather, it is sufficient to establish that a person intends to negate the other person’s choice.

Implications

The High Court has overturned the previous approach taken by the courts in construing s 413(5) of the FW Act. A breach of an order may impact on a person’s capacity to organise and take protected industrial action.

Bargaining-related orders may emerge as a more powerful tool to encourage or require unions and employees to “play by the rules” in the bargaining process. To quote the High Court:

“…the scheme of s 413 is that the ability to engage in industrial action in relation to an agreement under the immunity from civil suit provided by s 415 is a privilege that … is conditioned upon the absence of past contraventions … [and] persons who have shown that they cannot be trusted to comply with orders relating to the agreement or matters arising from bargaining are not to be trusted with the immunity afforded in relation to protected industrial action.”