The CFMEU continues to dominate headlines in workplace relations news over the last fortnight. The Fair Work Commission has taken a number of steps in relation to the CFMEU matters, including applying for an administrator to be appointed. There is also much more to update you on. In this edition of the KHQ Workplace Watch, we cover updates on a recent Federal Court decision concerning principles of setting-off, the record-breaking penalties that the Fair Work Ombudsman recently obtained, the recent decision to suspend protected industrial action at Transgrid and new Fair Work Commission updates regarding independent contractors and unfair contract terms as well as enterprise bargaining and agreement-making.
Don’t forget that in just two weeks’ time the next batch of workplace relations reforms will take effect, including changes to casual employment, the new right to disconnect, a new definition of ‘employee’, reforms for independent contractors, and the new regime for ‘employee-like’ workers and the road transport industry.
The Fair Work Commission and the CFMEU
Proceedings to appoint an administrator
The General Manager of the Fair Work Commission has applied to the Federal Court seeking declarations to appoint Mark Irving KC as an independent administrator of four CFMEU Construction and General Divisional Branches. The Minister for Employment and Workplace Relations, Murray Watt, has also intervened.
Developments concerning these proceedings can be viewed via the Commonwealth Courts Portal here. The Federal Court has foreshadowed that it will set up a dedicated file on its website for the case to make documents available to the public and media. The Fair Work Commission’s publication regarding this application can be seen here.
Calling for further information
Separately, the Commission is also seeking information from any person, worker, company or organisation that may have knowledge of or have witnessed conduct or activity involving possible contraventions of the law by the CFMEU Construction and General Division officials or their representatives.
See further information here.
New processes concerning CFMEU agreement matters
The President of the Fair Work Commission, Justice Hatcher, issued a statement regarding the processing of enterprise agreement approval applications where the CFMEU is involved as an applicant, bargaining representative or signatory to the agreement. In light of recent media reports concerning the CFMEU, the Commission will be taking additional steps in relation to the processing of agreement applications involving the CFMEU.
For agreement approval applications lodged on or after 10 July 2024, the Commission will invite the parties to provide documentary evidence in relation to the agreement-making steps (usually within 3 business days).
The Commission will also maintain a dedicated ‘CFMEU constructive agreements in process’ webpage to track current applications.
See a copy of the President’s statement here.
Set-off and underpayments
The Federal Court has issued a decision regarding ‘set-off’ principles and the appropriateness of orders under s 545 of the Fair Work Act 2009 (Cth) (Fair Work Act).
In CFMEU v Fremantle Port Authority [2024] FCA 848, employees worked a rotating shift structure where ordinary hours of work in any given fortnight would fluctuate between 72, 84 or 96. The employer paid an average fortnightly amount. This meant that there were pay periods where employees received more pay than they worked, and others where they received less.
The union claimed that this averaging arrangement had not been implemented in accordance with the enterprise agreement. The union claimed compensation for employees in each pay period where the fortnightly pay was less than the amount owed for work done in that period.
However, Justice Colvin found that the averaging arrangement had indeed been implemented in accordance with the enterprise agreement. This defeated the union’s argument.
His Honour also addressed, and accepted, the employer’s other defences – namely, that there was no compensable loss applying principles of ‘set-off’ and that an order for compensation was not appropriate under s 545.
- In relation to the ‘set-off’ argument:
[121] As has been explained, the character of the contractual payments actually made was to remunerate the employee for the work undertaken according to a particular rostering arrangement. The contractual payments were not properly viewed as payments for work done in the payment fortnight. Rather, the fortnightly contractual payments actually made by the Authority were intended to remunerate the employee for the hours worked according to a roster which would cause the hours worked in any fortnight to fluctuate. In those circumstances, the purpose or character of the fortnightly contractual payments actually made to each of the Selected Employees was to remunerate the employee for working the hours required by the rostering arrangement. It follows that, the fortnightly payments actually made under the contracts of employment were not confined to payment for work done in the payment fortnight. Rather, there were unders and overs as to payment for the work done.
[122] Therefore, it is not correct in the circumstances of the present case to attribute the fortnightly payments made under the terms of the contract to payment for work done in the payment fortnight. Once those payments are properly attributed, it is clear that in the fortnights in which there was more work done, the contractual payment was insufficient payment for that work. Further in those fortnights when less work was done, the contractual payment was partly attributable to the work done in that fortnight and partly attributable to work done when there was insufficient payment. It follows that the contractual payments made in each fortnight are properly attributable to the obligation under the enterprise agreements to pay for work done according to hours worked according to the applicable roster.
- In relation to s 545 of the Fair Work Act:
[141] Applying my reasoning in dealing with Issue (4), I would conclude that an assessment whether the Selected Employees had suffered loss because of the contravention would have to bring to account the payments made in all fortnights. That is because, as has been explained, payments made in ‘over-award’ fortnights included payments for work done in ‘under-award’ fortnights. It does not matter whether that conclusion is reached on the basis that it could be said that the Selected Employees had suffered loss ‘because of’ the contravention or whether it is reached on the basis that it is not appropriate to make the order.
The decision can be found here.
Fair Work Ombudsman secures record breaking penalties
It has been a busy fortnight for the Fair Work Ombudsman, having announced a number of new investigations and securing court orders against employers in a range of industries.
Most notably, however, was the record penalties of $15.3 million against former operators of Sushi Bay outlets in NSW, Darwin and Canberra. The Ombudsman obtained court ordered penalties ranging between $2.3 to $5.8 million against the various operators and $1.6 million against the owner and sole director of the companies.
Together, the companies underpaid 163 workers by a total of over $650,000 over a 4 year period, and falsified records in an effort to cover it up.
These are the highest penalties that the Ombudsman has ever secured.
“Most of the underpayments relate to the failure by the companies to pay adequate overtime rates, due to a practice of paying flat cash rates of between $14 and $18.50 an hour for some overtime hours worked, despite workers being entitled to overtime rates of between $25.94 and $48.24 an hour, under the Restaurant Industry Award 2010”.
All Sushi Bay outlets have now closed, except for one, which is under the liquidator’s control.
See report here.
See further information about the Fair Work Ombudsman’s updates at its online Newsroom here.
Protected industrial action suspended for Transgrid
On 24 July 2024, Deputy President Cross issued rare orders under s 424 of the Fair Work Act to suspend protected industrial action for three weeks. The reasons for that decision have now been published.
The Deputy President’s decision addresses several issues, including where some (but not all) of the protected industrial action is causing the requisite harm and the way in which the discretion to suspend or terminate industrial action may be exercised now in circumstances where the intractable bargaining regime is in place. See relevant extract from the decision below:
[55] The evidence regarding the six incidents that have occurred where protected industrial action has threatened blackout and/or load shedding was compelling, and clearly established that protected industrial action engaged in has threatened to endanger the life, the personal safety or health, or the welfare, of the population or of part of it. The most severe example would involve persons on life support equipment but would also involve multiple hospitals and nursing homes left with an electricity network that was not secure.
[56] The actions of the CEPU in the two particular examples of such incidents, and the balance of the six incidents, disclosed impermissible attempts to block and/or delay Declared Incidents and Emergency Work sought to be dealt with by Transgrid pursuant to the Extended Safety Commitment.
[57] The protected industrial action insofar as it affected maintenance within Transgrid did not on the evidence before the Commission, however, threaten to endanger the life, the personal safety or health, or the welfare, of the population or of part of it. That it has resulted in mounting delays in maintenance is undoubted, but such an effect is not proscribed, and is in reality a usual consequence of protracted industrial action.
[58] Upon my conclusion that the s.424(1)(c) criterion has been satisfied in some, but not all, respects, I was required by the Act to make an order suspending or terminating protected industrial action. The only protected industrial action to which the required order could apply was that which I found satisfied the s.424(1)(c) criterion relating to Declared Incidents and Emergency Work, and the operation of the Extended Safety Commitment.
[59] As to the discretion as to whether to make a suspension or termination order, I determined to make a suspension order as, notwithstanding submissions by Transgrid that bargaining was at an impasse, I considered that, particularly where the parties would not be able to access the intractable bargaining provisions of the Act until September 2024, termination would be premature.
The Deputy President’s decision in Transgrid v CEPU [2024] FWC 1914 is here.
Fair Work Commission updates
Information about new functions: unfair contract terms
In preparation for the new reforms that take effect from 26 August 2024, the Fair Work Commission has published new content regarding independent contractor disputes about unfair contract terms. This new content includes:
- new website content about independent contractor disputes; and
- a video presentation about unfair contracts jurisdiction for independent contractors by Deputy President Saunders providing an overview of the new provisions.
A link to the new website is here, and the video presentation can be viewed here.
Bargaining Discovery Research Report
In October 2023, the Fair Work Commission set up a Bargaining Discovery Project. Its purpose was to better understand the needs of inexperienced employers and employee bargaining representatives in relation to enterprise bargaining and agreement making.
On 9 August 2024, the Fair Work Commission published a report outlining the findings of the qualitative discovery research project.
The key findings were as follows:
- Participants had low comprehension of the fundamentals of bargaining and agreement-making.
- Participants reported heavy reliance upon external support.
- Participants reported that being a bargaining representative is a highly challenging role.
- There is a significant under-utilisation of existing Commission resources.
- There is a need for introductory resources.
- Resources should be user friendly.
Expect to see the Fair Work Commission develop and publish a range of new materials in relation to enterprise bargaining and agreement-making as it works to action the various recommendations outlined in this report.
See the Bargaining Discovery Research Report here, and the Fair Work Commission’s response to the Report here.
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