In Nyrtstar v CFMEU and others the employer, a smelting operator, was successful in an application to suspend industrial action to permit sensible negotiation.
The employer had reached an impasse with a union in the negotiations of an enterprise agreement. The employees threatened protected industrial action in the form of overtime and other work bans. The employer brought two separate applications to Fair Work Australia to suspend protected industrial action, one under s423 and the other application under s425, made four days later.
There is a very high threshold to be successful in applications to suspend or terminate protected industrial action. The rationale behind taking protected action is to place the company and employees under enough pressure to be in a position to compromise and make a deal. The company believed the bans would prevent the company from addressing mechanical problems it was facing along with problems relating to a shortage of sinter, an integral fuel to operate the smelter, and would lead to a shutdown of the plant.
The first application to suspend the protected action for economic harm was unsuccessful as it was found the employees were yet to undertake the protected action. S423 requires the protected action to be for a protracted period and for the dispute not to be resolved in the foreseeable future. While the action may well have led to the closure of the plant which would inflict significant economic harm on the employer, the bans were yet to commence and could therefore not meet the requirements of s423. Further, negotiations were continuing, there was a prospect the dispute could be resolved in the future.
The s425 cooling off application made after employees had engaged in protected industrial action was successful, as SDP O’Callaghan found the cooling off period would assist the parties to resolve the dispute. The parties had become entrenched in their respective positions since the bans took place. The suspension would allow the parties to focus on making a deal, the employer had been preoccupied with closing down and the union with how the bans were to be applied. It was also in the public interest to suspend the protected action, as if the plant was to close it would impact on the local community as well as the employees.
An application for the suspension or termination of protected industrial action will not be granted easily by Fair Work Australia. For an economic harm application to be successful, the protected action is required to be protracted without foreseeable resolution. The economic harm suffered needs to be significant, and not only effect the employer and the employee, but the community and other parties as well. The s425 application to suspend the action still has a high threshold to meet; however, the cooling off of the industrial action for 6 days would assist the parties to negotiate further and prevent the potential effects on the community and employees of a plant shutdown.
SDP O’Callaghan’s decision opens the door for s425 cooling off orders under the FWA. It is both a courageous and necessary decision to prevent the entrenching bargaining processes adopted by the unions. Unfortunately, it is not cheap to make the application. The quality of evidence and the quantity of evidence is high. It must be properly run.
As an employer you must balance the non-recoverable legal cost against the risk of damaging industrial action. Part of the cost is – what message does it send by not making the application to your workforce.