Federal Court Upholds Site Rates for Labour Hire Workers and more

A protracted matter concerning the validity of enterprise agreement clauses regarding site rates for labour hire workers, right of entry for dispute resolution and the promotion of union membership have been recently upheld by a Full Court decision of the Federal Court. The following article outlines the main findings of that decision.

Background

On 28 April 2011, Fair Work Australia (FWA) approved the ADJ Contracting Pty Ltd Enterprise Agreement 2010-2014 (the Agreement).

Although not being a party to the Agreement, the Australian Industry Group (AiG) and the Australian Building and Construction Commissioner (ABCC) intervened and objected to the Agreement’s approval on the basis that it contained a:

• site rates provision requiring ADJ to, amongst other things, engage labour hire workers on the same rates of pay that ADJ’s own employees were entitled to under the Agreement;  
• provision allowing a union officials to enter the workplace to represent an employee as part of the Agreement’s dispute resolution procedure; and
• clause requiring ADJ to promote union membership to all prospective and current employees and encourage union members to participate in union meetings.

The site rates issue

It was argued the site rates provision of the Agreement was unlawful because it constituted an ‘objectionable term’ in breach of the Fair Work Act 2009 and it would place ADJ at risk of penalties due to the taking of adverse action against a contractor by:

• refusing to engage a contractor if they are subject to an enterprise agreement or workplace instrument which provided less generous terms and conditions than the Agreement; and
• not allowing contractors to exercise a workplace right by applying their own industrial instruments.

On the site rates issue, the Federal Court determined that there was:

• no potential adverse action as there was no basis to conclude that a workplace right existed for contractors to be entitled to the benefit of an industrial instrument as the site rates clause did not concern itself with any instrument covering contractors or their employees;
• no evidence to suggest that the imposition of terms and conditions on contractors would result in adverse action; and
• nothing within the clause which required ADJ to take action against a contractor because the contractor was entitled to the benefit of an industrial instrument.

The Federal Court rejected the appeal in relation to site rates.

The union right of entry issue

It was argued that the union right of entry provision was unlawful because it allowed a union official to enter the workplace to represent an employee as part of the dispute resolution procedure on  terms other than that provided by the FW Act for right of entry.

The Federal Court determined that the appeal sought a narrow approach to the right of entry provisions provided under the FW Act. The court noted that the FW Act’s Explanatory Memorandum provides that union officials may enter premises for the purpose of, amongst other activities, representing employees under a term dealing with dispute resolution and to attend induction meetings of new employees.

As this clause was consistent with the intent of the Act, this aspect of the appeal failed.

The promotion of union membership issue

It was argued that the clause requiring ADJ to promote union membership to all prospective and current employees and encourage ETU members to participate in union meetings was an ‘objectionable term’ which breached the FW Act’s requirement that an employer must not induce an employee to take or propose to become, remain or cease to be an officer or member of a union. 

On this point the Federal Court found nothing in this clause breached the Act as it was “entirely speculative” to consider what conduct ADJ may or may not participate in regarding the promotion of union membership within its business and, ‘on the face of it’ these particular clauses they were not unlawful or objectionable terms within the meaning of the FW Act.

Summary

The decision indicates that some latitude will be given to the interpretation and consideration of whether terms in and enterprise agreement are unlawful.

In another matter before a Full Bench of FWA, the AiG has also intervened regarding a site rates clause but on the basis of a different legal argument regarding if a site rates clause is a “permitted matter”. There is currently no decision on this matter as it has been adjourned pending further negotiations.

The site rates issue appears to be an area of considerable focus at the moment and we will continue to keep you apprised of developments.

If you would like more information about the case, please contact National Workplace Lawyers on +61 2 9233 3989. 

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.