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:
- Whether an employee cannot be usefully employed is a question of fact depending on the circumstances.
- 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.
- 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.
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Authored by Warwick Ryan and Nathan Day.
