THE Hong Kong-based employers involved in the ‘Filipino painters’ case yesterday defended the employment conditions provided to foreign workers servicing an oil rig in Australia’s Exclusive Economic Zone (EEZ), after the Federal Court last week dismissed the Fair Work Ombudsman’s case against them.

The Fair Work Ombudsman (FWO) had been prosecuting a case against Hong Kong company Pocomwell Limited and its Philippine agent, Supply Oilfield and Marine Personnel Services, since 2010 for allegedly paying foreign maritime painters around $3 an hour.

The work was being undertaken on ships servicing Maersk Discoverer drilling rigs, situated within Australia’s EEZ.

Last week the Federal Court of Australia dismissed the case against the employers, finding that the FWO had failed to establish that the activities fell under the jurisdiction of Australia’s workplace legislation, the Fair Work Act (see decision summary below).

However in the latest twist to the ongoing saga, Pocomwell and Supply today provided a statement to the ABC defending their position and claiming the workers were being paid more than the prescribed minimum.

“In October 2009 these seafarers were being paid more than the Australian government prescribed three years later for seafarers working on foreign flagged vessels operating from its own ports,” the companies jointly stated to the ABC.

The companies insisted they had acted entirely lawfully and that claims from the Australian Workers Union (AWU) that the Filipino painters were being exploited were “misconceived” and “unfair”.

Decision Summary

The decision in Fair Work Ombudsman v Pocomwell Limited (No 2) [2013] FCA 1139 related to alleged contraventions of the Fair Work Act 2009 (Cth) arising from payment of Filipino nationals working on two drilling rigs in Australia’s EEZ.

Each of the rigs, operated by Maersk Drilling Australia Pty Ltd, was registered as a ship and flew the flag of a foreign country. Each painter was employed by Pocomwell, a corporation incorporated in Hong Kong.

The contract of employment was governed by the law of the Philippines. Survey Spec Pty Ltd (the third respondent, incorporated in Australia) had hired the painters from Pocomwell via the agency of Supply Oilfield and Marine Services Inc (the second respondent, incorporated in the Philippines).

In his ruling, Justice Barker found that:

• s. 33 of the Fair Work Act extends the application of the Act to Australia’s EEZ and waters above the continental shelf in specified circumstances.
• As provided for in s. 33(3), regulation 1.15E extends the application of the Fair Work Act to foreign-flagged ships in the EEZ; and reg. 1.15E does not contravene international law as a coastal state’s sovereign rights encompass the right to regulate labour relations on board foreign-flagged ships engaged in the exploration and exploitation of natural resources in its EEZ.
• Under s. 33, the Act relevantly applied to any “fixed platform in the exclusive economic zone”, which means a platform “permanently attached to the sea-bed for the purpose of exploration for, or exploitation of, resources …” However, on the facts, drilling rigs were found not to be fixed platforms.
• Under reg. 1.15E, the Act relevantly applied to a “majority Australian-crewed ship”, a term defined in reg. 1.15B. The Fair Work Act adopts a broad definition of “ship” (s. 12) which included both rigs. As there is no warrant for adopting a narrow view of “crew”, the Act will apply if it is shown that at material times, the majority of the crew of persons ordinarily on board (not including the master or pilot or other persons temporarily on board who should not be considered part of the crew) were “residents of Australia”. However, for the purposes of reg. 1.15E, the Fair Work Ombudsman had not established on the evidence that a majority of persons on board either of the rigs were Australian residents.
• Although not required for the decision, if it had been necessary, Barker J would have found that the Hydrocarbons Industry (Upstream) Award 2010 covered the employer of the Filipino painters, Pocomwell Limited.

More information for AREEA members

This case deals with a highly technical and often ambiguous area of Australia’s maritime laws, namely under what circumstances the jurisdiction of Australia’s employment legislation, the Fair Work Act, extends to cover offshore resources activity in Australia’s Economic Exclusive Zone.

While the reasoning on the facts of this case was clear, the advent of the Migration Amendment (Offshore Resources Activity) Act 2013, which extends Australia’s migration zone to cover the EEZ, will add further ambiguity to these employment regulatory matters.

For a confidential discussion on the implications of this case for your commercial or employment arrangements in Australia’s offshore resource industry, contact AREEA director of legal and migration services, Amanda Mansini, via (03) 9614 4777(03) 9614 4777 or email [email protected].