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Union ordered to pay $3 million for spurious safety claims

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The regulation of industrial action in Australia is complex. Whilst there is a need to acknowledge the rights of employees to engage in industrial action, the overall effect of industrial action on an employer’s business operations cannot be understated. Strikes or work stoppages and delays can have serious financial and reputational consequences for a business.

The regulation of industrial action in Australia is complex. Whilst there is a need to acknowledge the rights of employees to engage in industrial action, the overall effect of industrial action on an employer’s business operations cannot be understated. Strikes or work stoppages and delays can have serious financial and reputational consequences for a business.

It is for this reason that the provisions of the Fair Work Act 2009 (Cth) (FW Act) impose a number of requirements on employees and unions who intend to take industrial action, and emphasise the importance of engaging in such action for a legitimate purpose.

In a recent decision, the Federal Court of Australia (the Court) has issued a strong warning to employees and unions who misuse the entitlement to engage in industrial action for improper purposes. The Court ordered the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) to pay an employer over $3 million for engaging in industrial action in contravention of the FW Act.

In Chevron Australia Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2020] FCA 451, the Court was required to consider an appropriate penalty to be imposed on the CFMMEU in relation to unprotected industrial action taken by members of the (then) Maritime Union of Australia (MUA) at a shipping port in Western Australia in 2012.

The ship, known as the RockDoll Sun, was operated by a foreign crew and was tasked with transporting critical freight to an island off the coast of Western Australia for what was known as the Gorgon Project.

The MUA opposed the use of the foreign crew and, under the guise of safety concerns, arranged for its members to engage in industrial action by delaying the commencement of work, and conducting pre-start safety procedures slowly over the course of two days. The result was that the ship left the port late and with only half of the freight loaded.

The Court found that the alleged safety concerns were insubstantial and served as a pre-text. The CFMMEU was therefore found to have breached s 417 of the FW Act, which prevents employees engaging in industrial action while an enterprise agreement is in place.

The Court determined that the CFMMEU ought to pay the employer $3 million (plus a pecuniary penalty of $30,000) for the loss suffered as a result of the unlawful industrial action, noting that the delay and disruption to the delivery of the freight had a serious effect on the employer’s critical path and contractual obligations. The Court also considered the following factors:

  • the MUA’s conduct in raising spurious safety claims had the potential of undermining confidence in the reporting of legitimate safety issues;
  • the MUA had received prior convictions over the course of the last ten years in relation to unlawful industrial action taken in the face of in-term agreements, which undermined the integrity of the enterprise agreement process;
  • the MUA was part of a large, asset-rich and well-resourced registered organisation and was therefore in a position to be properly informed of its legal obligations and options;
  • whilst the CFMMEU made concessions about its conduct, it did so only late in the proceedings, and without any apology;
  • there was a need for specific and general deterrence, noting that the members involved were still with the CFMMEU and officials of the MUA branch; and
  • the conduct was cynical in its nature, noting that it was deliberate, involved some degree of planning and was aimed at causing interruption to the employer’s operations.

With the consent of the parties, the payment of the compensation was suspended pending any further contravention of the FW Act by the MUA and the CFMMEU by way of organising or being involved in industrial action relating to any project of the employer within a period of ten years.

Lessons for employers

This decision should provide comfort to employers that courts are aware of the serious consequences that can result if employees engage in unlawful industrial action, and that the courts are prepared to penalise those involved.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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