FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v Director of Fair Work Building Industry Inspectorate [2013] FCAFC 53

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1    In September 2008, construction workers gathered on site at Burswood near Perth to start their working day. It was a Friday. The day started with a toolbox meeting at which they discussed with management the day’s work and safety issues. The meeting was joined by Mr Jo McDonald a well known union official. Immediately following this discussion in the toolbox meeting Mr McDonald raised some union matters with the workers. This did not take long but during that discussion, one of the workers raised the question of whether they would be docked pay as a result of that part of the meeting. Mr McDonald then checked on this with their employer and was informed that they would all be docked four hours pay as a result of the participation in the discussion he had led. The employer (Mirvac) it seems was under the mistaken impression that it was obliged to dock the pay as the latter part of the meeting convened by Mr McDonald constituted ‘industrial action’. Mr McDonald reported Mirvac’s intentions to the workers who were both angry and astounded. They voted to walk off the site for the day. Most of them did so. Better mutual communication on the day may have saved a lot of time and costs in this litigation. This was not to be.

2    In October 2012, the appellants were found to have organised industrial action contrary to s 494(1) of the Workplace Relations Act 1996 (Cth) (the WR Act): Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors [2012] FMCA 946. Following argument on the appeal from that decision we dismissed the appeal indicating these reasons would follow.

3    Although the decision under appeal involved a number of other issues on which the appellants succeeded, there was no cross-appeal. A Notice of Contention was filed by the Director but in light of the dismissal of the appeal, it is unnecessary to consider the Notice of Contention.

Industrial action after 1.00 pm

4    His Honour concluded that there was nothing unlawful about the activities of the morning. The meeting at which industrial matters were discussed was not made unlawful because it turned to non-safety matters following the conclusion of the discussion about safety issues.

5    While his Honour held that the meeting in the morning was not ‘industrial action’ or ‘building industrial action’, either under the WR Act or the Building and Construction Industry Improvement Act 2005 (Cth) (the BCII Act) respectively, he concluded that the failure to return to work on that day, at least after 1 pm, did constitute industrial action. His Honour noted that the docking as it related to the conduct of the meeting would on any version of the evidence, have expired by 1 pm on 12 September 2008 at the latest. His Honour said (at [96]) that whether or not the docking of the workers’ wages was lawful in the circumstances prevailing prior to the stoppage was a matter not presently necessary for him to determine.

6    His Honour noted that there was no suggestion that the stoppage was authorised or agreed to by the employer and observed (at [96]) that the stoppage constituted ‘industrial action’ for the purposes of s 420(1)(c) of the WR Act because it was a failure by the employees to attend for work at a time when they were contracted to attend for work, that is, the time after the expiry of the four hours for which wages were to be docked.

7    Whether this conclusion was correct is the only point in issue on the appeal. Specifically not in issue is the conclusion that the appellants are liable for the employees’ actions if those actions constituted ‘industrial action’.

What is industrial action under the WR Act?

8    The key statutory provision arising is s 420 of the WR Act which relevantly to this case provides as follows:

420    Meaning of industrial action

(1)    For the purposes of this Act, industrial action means any action of the following kinds:

…

(c)    a failure or refusal by employees to attend for work …

…

but does not include the following:

(e)    action by employees that is authorised or agreed to by the employer of the employees;

9    Section 507 of the WR Act is also relevant as it explains the purported basis on which Mirvac ‘docked’ the employees’ wages. It provides, relevantly:

507    Payments not to be made or accepted in relation to periods of industrial action

(1)    This section applies if an employee engaged, or engages, in industrial action (whether or not protected action) in relation to an employer on a day.

(2)    The employer must not make a payment to an employee in relation to:

(a)    if the total duration of the industrial action on that day is less than 4 hours—4 hours of that day; or …

GROUNDS OF APPEAL

10    The grounds of appeal were expressed in a number of ways following amendment. The appeal grounds as amended were as follows:

1.    The learned Magistrate erred in fact and law in concluding that the failure to return to the workplace, following a 4 hour period in which the workforce would not be paid, was unlawful industrial action contrary to section 494 of the Workplace Relations Act 1996 (Cth).

Particulars

1.1    On a true construction of s420(1)(c)

(a)    the section had no application to circumstances where there was a failure or a refusal by employees to attend to work where the employees exercised their common law right not to work because the employer had indicated an intention not to pay the employees for the work performed.

(b)    the section only applied to employees who refused to work when contractually bound to do so.

1.2    The learned Magistrate failed to properly consider the requirement that a failure to return to the workplace must have an industrial character in order to constitute industrial action.

1.3    After having accepted that the workforce had not engaged in industrial action prior to [the] decision to dock their wages the learned Magistrate has conflated the concept that the failure to return to work involved matters relevant to the employment relationship with the requirement that the failure to return to the workplace have an industrial character.

1.4    The conduct did not constitute ‘industrial action’ because the conduct was agreed to by the employer under the terms of the contract of employment, namely, it was an implied term of the employment contract that the employer was not required to pay wages if the employee did not work and the employee was not required to work without pay.

11    In support of the Grounds of Appeal, the appellants made the following submissions amongst others:

    In construing the meaning of a particular legislative provision, the court is entitled to take into account the consequences of a particular meaning. For example, if a particular construction leads to an absurd extraordinary capricious irrational consequence, an open alternative meaning should be preferred, or, of a particular interpretation results in an injustice.

    Furthermore, the court will resist an interpretation that permits a party to rely on their own wrongful conduct or to bring about an injustice.

    Further, there is a presumption in construing legislation that the legislation will not alter common law rights or remove common law rights.

    Section 15AB of the Acts Interpretation Act 1901 (Cth), authorises the use of particular extrinsic material in interpretation of an Act as set out in that section.

    A literal interpretation of s 420(1)(c) would result in employees being subject to civil penalties when they declined to work in circumstances where the employer had indicated unequivocally that the employees would not be paid for the work performed by them.

    The same absurd and unjust result would occur if the employer stated that the employees would only be paid half of their contractual entitlements for the work they performed.

    A literal interpretation would also abrogate the entrenched common law principle that ‘promises’ in an employment contract are dependent, that is, if the employer declines to pay, the worker need not work. If the worker declines to work, the employer need not pay.

    Applying the principle enunciated by the majority in Coal & Allied Mining Services Pty Ltd v MacPherson (2010) 185 FCR 383, if s 420(1)(c) had intended to remove from the employee a common law right to refuse to work when the employer had indicated it would not pay for the work in accordance with its contractual obligations, it would have made it very clear. Parliament has not expressed such an intention, nor can such an intention be found by resort to a consideration of the context of the section within the Act or the Act’s objects or by reference to extrinsic material.

    The common law right not to work for no pay extends to partial performance by part-payment by the employer. The appellants quote from Carter, Breach of Contract, 1984 (at [1249]) as follows:

Where a contract states dependent obligations of performance, partial performance by the promissee prior to termination will not give rise to an accrued right to receive any performance from the promissor.

    Section 420(1)(c) of the Act should be construed to be limited to a failure or refusal to attend for work when contractually bound to do so. On that construction, the Mirvac employees were not contractually bound to work in circumstances where Mirvac had indicated an intention not to substantially perform its obligations under the contract of employment to pay for the work performed, that is, the employees were not contractually bound to perform any work that day following the meeting. The learned Magistrate erred in finding that they were obliged to return to work following the four hour period.

CONSIDERATION

12    All of the appellants’ contentions are based on a premise which challenges (in the absence of any ground of appeal challenging) his Honour’s conclusion that the four hour period in respect of which wages were to be docked concluded at 1.00 pm. All of the grounds of appeal appear to assume, contrary to that which the employees were expressly told, that they were to be paid for the full day but at half pay or that they may have been paid for the morning but not for the afternoon or a various combination of possibilities. It was contended that the employees could not be assured of payment after 1.00 pm. While the appellants suggested that the case below was never advanced on the premise that the workers should return to work after the four hour period, this submission was not correct. Paragraphs 17 and 18 of the points of claim were in the following terms:

17.    At or shortly prior to the conclusion of the Unauthorised Meeting:

(a)    McDonald, in Pallot’s presence, said to those present, words to the effect that:

(i)    they would be docked four hours’ pay on account of having attended it;

(ii)    as a consequence of being so docked, they should – or, alternatively, ‘may as well’ – go home for the day (the Strike Proposal); and

(iii)    as a consequence of being so docked, they should collectively choose between either waiting until four hours passed before returning to work (Option One), or leaving the Site immediately and not working at all for the remainder of the day (Option Two);

(b)    McDonald, in Pallot’s presence, conducted, oversaw, organised, coordinated and/or facilitated a ballot of those present as to which of Option One or Option Two they collectively favoured (the Ballot);

(c)    those present, or, alternatively, those of them who participated in the Ballot, subsequently voted by a show of hands, in support of Option Two (the Vote); and

(d)    McDonald, immediately after the Ballot and in Pallot’s presence, said to those present words to the effect that:

(i)    the result of the Ballot was that Option Two had majority support (the Ballot Declaration); and

(ii)    as a consequence, they should all immediately leave the Site (the Strike Direction).

18.    Immediately following the Unauthorised Meeting and as a consequence of it, the Strike Proposal, the Ballot, the Vote, the Ballot Declaration and/or the Strike Direction, each – or, alternatively, most or some – of the Workers:

(a)    left the Site; and

(b)    for the remainder – or, alternatively, for the majority of the remainder – of that day, did not perform any work that they were employed or engaged to perform in connection with the Construction Works (the Strike).

(emphasis added)

13    The reference at 17(a)(iii) to ‘Option One’ is one of choosing whether to wait until four hours had passed before returning to work clearly related to the four hours from commencement of that part of the meeting addressed by Mr McDonald. There was no suggestion in the points of defence that the four hours was to apply at some other time or that the employees were concerned that they could work for four hours in the afternoon but not be paid.

14    In our view, his Honour was correct. To the extent that there was a mistaken belief by Mirvac that it was not only entitled to but in fact, obliged by s 507 of the WR Act to decline to make payments to employees for four hours of the day on which the industrial action occurred, it was clearly the first four hours of the day which were to be affected. The perceived industrial action took place early in the morning. As it transpired, it was not industrial action and the docking as such was not authorised or required by s 507 of the WR Act. However, there was no basis for any inference to be drawn that the workers would not be paid for work after the four hour period or at the very latest from 1.00 pm.

15    As noted by Moore J in Qantas Airways Limited v Transport Workers’ Union of Australia (2011) 280 ALR 503 (at [345]), the four hour period in respect of which s 507 operates is to a period of time contiguous with the time at which industrial action takes place. There is sound reason to think that the four hour period is contiguous to the perceived industrial action for the simple reason that absent some other express justification, the company has no power to ‘dock’ pay at any other time.

16    There was no suggestion on the evidence that the workers would not be paid on their return to work in the afternoon. Indeed the company wanted the workers to work for the full day, as counsel for the appellants accepted and indeed argued.

17    There was no basis and no requirement for any express evidence that the company intended to pay workers in the afternoon. It was legally obliged to do so. There was no entitlement for the company not to pay the workers for any period outside the four hours in respect of which their pay was to be docked.

18    The reality of this situation was that the workers were justifiably indignant (to put it mildly) at the way they had been treated. They were so upset that they had no intention of returning to work that day. While the appellants argue that there was no industrial action because they simply exercised their contractual right not to work for no pay or for reduced pay, there was no evidence that this reasoning could be applied to the hours after 1.00 pm.

19    As to the argument that the action of not working was ‘agreed’ to by the employer, again this argument turns on a contention that it was an implied term of the contract of employment that the employer was not obliged to pay wages if the employee did not work and the employee was not obliged to work without being paid. So much may be accepted but the flaw in the argument remains the same. There was no suggestion in this instance that the workers would not be paid for working after expiry of the four hour period in respect of which wages were to be docked.

CONCLUSION

20    For these reasons, the appeal was dismissed. It would be appropriate, however, to note that in the circumstances of the conclusions reached by his Honour, the employees’ concern in being notified that their wages would be docked for four hours was justified as there was no proper basis for their pay to be docked. Given that the action to which they responded was not lawfully authorised, their response is perhaps understandable. In those circumstances the consequence as far as the appellants are concerned is somewhat unfortunate. These considerations, however, are not relevant so much to liability as to considerations of penalty, if any. In the peculiar circumstances of this case, the infractions would appear to be relatively minor.

Associate:

Dated:    24 May 2013