Can you stand down employ­ees dur­ing a peri­od dis­rupt­ed by pro­tect­ed indus­tri­al action?

In Brief

Employ­ers seek­ing to min­imise their loss­es asso­ci­at­ed with indus­tri­al action should take note of a recent deci­sion of Fair Work Aus­tralia which clar­i­fies the abil­i­ty of an employ­er to stand down employ­ees dur­ing such a period.

Aus­tralian Man­u­fac­tur­ing Work­ers Union (“AMWU”) v McCain Foods (Aust) Pty Ltd [2011] FWA 6810

McCain Foods (Aust) Pty Ltd (McCain Foods) oper­ates two pro­cess­ing facil­i­ties com­pris­ing approx­i­mate­ly 450 pro­duc­tion and 50 main­te­nance employees.

Since May 2011, the pro­duc­tion and main­te­nance employ­ees have been in nego­ti­a­tions with McCain Foods for a new enter­prise agree­ment. On 8 Sep­tem­ber 2011, AMWU noti­fied McCain Foods that the main­te­nance staff intend­ed to engage in an all-day strike on 14 Sep­tem­ber 2011. This action was autho­rised by a pro­tect­ed action bal­let and was accept­ed to be pro­tect­ed indus­tri­al action.

Upon receiv­ing this noti­fi­ca­tion, the man­age­ment group of McCain Foods met to dis­cuss what mean­ing­ful work could be con­duct­ed by the pro­duc­tion staff should the main­te­nance staff not attend for work on 14 September.

On 14 Sep­tem­ber, all main­te­nance staff engaged in a 24 hour stop­page which affect­ed the oper­a­tions of the site. Although some activ­i­ties were able to be con­duct­ed with­in the facil­i­ties, McCain Foods were unable to find work for many employ­ees who were stood down for the day.

The AMWU sub­se­quent­ly applied for an order that McCain Foods unlaw­ful­ly stood down these employees.

Were the employ­ees unlaw­ful­ly stood down?

In deter­min­ing this mat­ter, Vice Pres­i­dent Wat­son of Fair Work Aus­tralia ini­tial­ly con­sid­ered the rel­e­vant pro­vi­sion of the Fair Work Act 2009 (the Act) deal­ing with this issue, name­ly sub­sec­tion 524(1)(a) which pro­vides that an employ­er may…stand down an employ­ee dur­ing a peri­od in which the employ­ee can­not use­ful­ly be employed because of…industrial action”.

Vice Pres­i­dent Wat­son sub­se­quent­ly explored the crit­i­cal phrase, can­not use­ful­ly be employed”, by refer­ring to the explana­to­ry mem­o­ran­dum to the Act and rel­e­vant case law. The prin­ci­ples which can be drawn from these mate­ri­als are as follows:

  1. Whether an employ­ee can­not be use­ful­ly employed is a ques­tion of fact depend­ing on the circumstances.
  2. If an employ­er is able to obtain some ben­e­fit or val­ue for the work that could be per­formed by an employ­ee, then the employ­er would not be able to stand down the employee.
  3. A pow­er­ful indi­ca­tor that the employ­ee can be use­ful­ly employed is where the employ­er has sched­uled par­tic­u­lar work to be per­formed by the employ­ee on the rel­e­vant day. In those cir­cum­stances, the employ­er would have to estab­lish that the work sched­uled could not be per­formed as a result of the dis­rup­tion caused by the indus­tri­al action.

In apply­ing these prin­ci­ples, Wat­son VP found that McCain Foods took a ratio­nal and fair approach to find­ing use­ful work” for the pro­duc­tion staff by con­duct­ing a man­age­ment team meet­ing. How­ev­er, it was not­ed that this approach could have been improved by con­sult­ing with staff as to the work that could be per­formed. Nonethe­less, Wat­son VP rea­soned that this would not have altered the deci­sions reached by management.

In con­clu­sion, Wat­son VP held that the employ­er was enti­tled to stand down the employ­ees giv­en that McCain Foods rea­son­ably deter­mined that some use­ful work could be under­tak­en but oth­er work was either of no ben­e­fit or a threat to safe and pro­duc­tive oper­a­tions lead­ing to a poten­tial raw mate­r­i­al loss or prod­uct damage.”

Lessons for Employers

The sig­nif­i­cance of this deci­sion for employ­ers is that it pro­vides an avenue to min­imise costs asso­ci­at­ed with indus­tri­al action by stand­ing down employ­ees where no use­ful work can be per­formed. How­ev­er, employ­ers will need to thor­ough­ly con­sid­er what work can be per­formed by the employ­ees and should prefer­ably involve staff in such discussions.

For fur­ther infor­ma­tion please con­tact us.

Authored by War­wick Ryan and Nathan Day.