November 2011

The Qantas industrial dispute reveals flaws in the Fair Work bargaining process

The notice issued by Qantas on Saturday, 29 October 2011 to lock out its workers from 8pm, Monday 31 October 2011, was met with differing views from the government, the unions, the business community and the public. The early shutdown was designed to avoid a tense workplace between Saturday and the start of the lock out. The employees were paid not to work, and we all got a taste of what a lock out would mean.

The unions called the proposed lock out a deplorable act. Qantas saw the shut down and planned lock out as necessary to protect itself from future industrial action up to and beyond the Christmas period. The public was divided in its opinion and customers not too happy.

Given the potential impact on the economy the Federal Government intervened, approached Fair Work Australia and used exceptional provisions in the Fair Work Act 2009 to have all industrial action terminated on both sides. The parties will now seek to negotiate a settlement in the next 21days with the prospect that a settlement may be imposed upon them if they can\'t agree.

Lessons can be learnt from the weekend. It may be time for legislative reform. In looking at the entire situation, some potential failings in the enterprise bargaining process can be identifed for employers.

Some background

The unions had been negotiating with Qantas for new enterprise agreements for over a year. There had been many bargaining meetings and private conferences before Fair Work Australia. However, there were sticking points about job security and Qantas' desire to be unrestrained in future business decisions.

The unions threatened protected industrial action. Sometimes the action was cancelled shortly before it was due to occur. Other times the action went ahead. Qantas estimated that the industrial action since May 2011 has cost it $70 million and would begin to cost $15 million a week.

Interestingly, Fair Work Australia doubted that this damage alone would cause significant damage to the economy to itself warrant termination of the bargaining period. But Qantas' lock out changed the playing field.

1: Employees have many options for industrial action

Under the Fair Work Act, eligible employees can take protected industrial action called employee claim action. That industrial action may be:

  • the performance of work by an employee in a manner different from that in which it is customarily performed, or the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work;

  • a ban, limitation or restriction on the performance of work by an employee or on the acceptance of or offering for work by an employee;

  • a failure or refusal by employees to attend for work or a failure or refusal to perform any work at all by employees who attend for work;

As is readily apparent, employees have available various options as to the form of their protected industrial action against their employer. The industrial action can be short (such as a 1 hour work stoppage), inconvenient but bearable (such as overtime bans) through to oppressive and damaging (indefinite stop work).

2: Employees can opt not to take notified industrial action

The Full Bench of Fair Work Australia has held that employees and the union, after giving notice of industrial action, are not compelled to follow through with the notified action and can cancel it (Boral Resources (NSW) Pty Ltd [2010] FWAFB 1771 (31 March 2010)). This decision has had a number of consequences for employers.

With 72 hours notice an employer usually makes arrangements for the business in the event of the protected industrial action occurring (such as engaging other labour or rearranging business commitments). The employer, on cancellation of the industrial action, has to abandon those arrangements. The employees attend work as normal and are obliged to be paid. There are naturally other costs for the employer. There could be an adverse impact for the business because it may have delayed or rescheduled business to accommodate the threatened industrial action. Customers may withdraw future custom because the service is unreliable.

It is our experience that employees and unions may, on a number of occasions, give notice of action but then withdraw.

3: Employers can lock out only in response to employee claim action

Under the Act, employers can only take protected industrial action against employees in response to industrial action by employees (section 411). This is called employer response action.

There is real doubt about an employer's ability to take any protected industrial action simply following the cancellation of industrial action after it is first notified. An employer suffers a business cost in making temporary arrangements, but has to wait for the next notice of industrial action and for that action to occur before it can take its own industrial action.

The only industrial action available for employers is:

  • the lockout of employees from their employment by the employer of the employees.

An employer can do nothing else. It is an all or nothing choice which will damage employment and industrial relations let alone customer relations.

Conclusion

For most employers, there would be no basis for the Federal Government to intervene in its dispute and seek the industrial action be terminated on grounds of significant damage to the Australian economy.

Employers will have to follow the rules, bargain in good faith and can only consider a lock out once the employees actually take their industrial action. Employees may threaten a whole range of different industrial action and then withdraw it at the last minute. Employers have only one option.

There appears to be an asymmetry in the bargaining tools available to the parties. Legislative reform may be needed to encourage a more mature bargaining process.

Author - James Mattson