The Case

Esso and the AWU entered into bargaining for a new enterprise agreement. Members of the AWU organised and participated in industrial action against Esso. As part of this process, the AWU imposed a ban on the performance of equipment testing, air freeing and leak testing. Esso argued this did not form part of protected industrial action. The Fair Work Commission (FWC) agreed and Esso successfully obtained an order from the FWC that required the AWU to stop organising industrial action between 6pm on 6 March 2015 and 6pm on 20 March 2015.

The AWU contravened the FWC order, so Esso commenced proceedings in the Federal Court for an order under s413(5) of the Fair Work Act 2009 (Cth) (FW Act) that “no further industrial action organised by the AWU in relation to the proposed agreement could qualify as protected industrial action”.

Esso argued that s413(5) of the FW Act prevented the AWU from organising any further protected industrial action during the enterprise bargaining process, when it had contravened an order of the FWC.

The Verdict

The Federal Court held that the AWU only lost its entitlement to organise protected industrial action while the contravened FWC order remained in operation. Once the order ceased, the AWU could again organise protected industrial action. Esso appealed to the Full Federal Court, which dismissed Esso’s appeal, so Esso appealed to the High Court, which upheld Esso’s appeal against the decision.

The High Court held that having breached the FWC order, the AWU could not organise protected industrial action for the remainder of the enterprise bargaining period. The cessation of the FWC order did not affect this.

Lesson for You

This decision has powerful effects on the enterprise bargaining process. The removal of a union’s ability to engage in protected industrial action severely weakens a union’s bargaining position and limits its ability to obtain changes to enterprise agreement terms and conditions.

The case demonstrates the importance of employers applying to the FWC and seeking orders where employees engage in unprotected industrial action. This can assist an employer’s position in the enterprise bargaining process.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.