Building and Construction Industry Update June 2008

The transition to Fair Work Australia for the building and construction industry

The AIRC clarifies union responsibilities in relation to right of entry

Strike pay ‘a thing of the past’ says Federal Court in fining CFMEU $4,000

ABS statistics on industrial action – March 2008

CFMEU official facing jail for refusing ABCC interview request

Fines imposed on the CFMEU for unlawful conduct

CFMEU found to have made false and misleading representation about requirement to join the union

Employers to provide suitable meeting locations for right of entry, and

Federal Court dismisses ACCC case against CFMEU

Transition to Fair Work Australia for the building and construction industry

The Honourable Murray Wilcox QC has been appointed to oversee the transition of the Australian Building and Construction Commission (ABCC) to the specialist building and construction division of the inspectorate of Fair Work Australia (specialist division).

Workplace Relations Minister Julia Gillard has confirmed that the government will honour its pre-election commitment to retain the ABCC until 31 January 2010. The ABCC will then be replaced with the specialist division.

Minister Gillard has also announced the appointment of recently-retired Federal Court judge, the Honourable Murray Wilcox QC, to consult and report on all matters related to the creation of the Specialist Division including but not limited to:

• the operational structure of the specialist division and its relationship with other parts of Fair Work Australia
• the independence and accountability of the specialist division
• the powers required by the specialist division and its inspectors for the purpose of conducting investigations and compliance activities
• the rights of the persons who are subject to the investigations and compliance activities of the specialist division
• the resolution of disputes and complaints about the activities of the specialist division, and
• the best manner of ensuring an orderly transition between the ABCC and the specialist division.

As part of an extensive consultative process with industry stakeholders to ensure that the transition to the specialist division is ‘orderly, effective and robust’, feedback will be sought on the terms of reference to be issued to Mr. Wilcox. The terms of reference will be finalised and issued to Mr. Wilcox by the end of June.

Wilcox will then be given until March next year to report to the government, allowing him a sufficient period of time to fully and comprehensively consult and consider the above matters.

If you would like our assistance in preparing a submission on the terms of reference once they are issued, please contact us.

This article was written by Michael Atsaves, Articled Clerk, Melbourne.

The AIRC clarifies union responsibilities in relation to right of entry

A recent decision of the Full Bench of the Australian Industrial Relations Commission (AIRC)1 has clarified requirements for union permit holders seeking right of entry for suspected breaches of industrial laws and instruments. The decision confirms unions must provide specific information relating to each suspected breach that they wish to investigate. An employer may be entitled to refuse them entry if they cannot provide sufficient information.

The decision

The Australian Services Union (ASU) appealed a decision of Commissioner Spencer denying the ASU right of entry to two offices of the Australian Taxation Office (ATO).

A permit holder may exercise right of entry to a workplace if he/she ‘suspects, on reasonable grounds’ that a breach of the Workplace Relations Act 1996 (Cth) (Act) or an applicable industrial instrument has occurred or is occurring.

Upon attempting to gain entry, the ASU permit holder provided a notice to the employer which contained ‘generic’ descriptions of a number of workplace issues which did not relate to specific provisions of the agreement. The Act requires that an entry notice must specify ‘particulars of the suspected breach or breaches’.

However in this case, the notice contained a number of generalised employee grievances. Only one of the grievances, however, directly related to a provision of the agreement.

Furthermore, a number of the matters identified in the notice related to matters which the union had sought to include in the Agreement during its negotiations.

The AIRC held that there was a requirement to provide particulars of suspected breaches and that:

A common sense approach would indicate that such particularisation would require the presentation of material that gives a reasonable perception of the breach.

On appeal, the Full Bench of the AIRC upheld the original decision to refuse entry. It agreed that it would ‘make common sense’ for a union to provide particulars of each breach. Consequently, an employer is entitled to demand such details from the union and, where such particulars are not provided, refuse entry.

However, employers should at the same time be cautious in refusing entry, as an unjustified refusal to allow entry may render them liable under the Act for obstructing or delaying entry by an authorised permit holder.

The primary issue on each occasion is likely to be the degree of specification described by the permit holder. The Full Bench’s comments provide some guidance on how such issues might be handled in practice:
an employer might reasonably request further particulars of a suspected breach in circumstances where there is some ambiguity or uncertainty about the particulars that have been provided in the Entry Notice. A permit holder would be wise to have regard to (it’s burden to prove ‘reasonable grounds’) in providing particulars of a suspected breach.

…in our view the particulars provided… should at least disclose the nature of the breach and give the constitutive facts which are said to give rise to it so that the employer understands the scope of the investigation.

Implications for employers

• A union must have reasonable grounds to justify exercising right of entry powers in relation to a suspected breach of the Act or an instrument. The Full Bench confirmed that the standard of proof required to ‘suspect’ a breach is not high: ‘’suspicion’ means a ‘state of mind – including suspicion and belief – it requires the existence of facts which are sufficient to induce that state of mind in a reasonable person.’
• A union must be able to justify its grounds for seeking entry by providing particulars of each suspected breach, and the specific provisions of the Act or agreement which are allegedly being breached.
• Employers are entitled to require such information from unions before they enter a workplace. If the union cannot provide this level of information, an employer may be able to validly refuse entry.

This article was written by Ben Davies, Solicitor, Melbourne.

Strike pay ‘a thing of the past’ says Federal Court in fining CFMEU

The CFMEU was recently fined $4,000 for pressuring an employer on a Melbourne CBD project to pay strike pay to employees participating in a stoppage relating to a ‘safety dispute’. A CFMEU organiser and delegate were not personally fined, as the court found that they were simply carrying out union policy.

The ABCC brought proceedings against the CFMEU, one of its organisers (John Setka) and a shop steward (Alex Tadic) for coercing a head contractor (Bovis Lend Lease) to pay strike pay during a dispute in May 2004.

Facts

The dispute arose from a safety incident involving a spill of concrete at the workplace. Although the spill created a safety risk in the immediate vicinity, the rest of the site was still safe to continue work. The day after the spill, Mr Tadic instructed all employees to go home for the day rather than working in other areas, as suggested by Bovis. A 48 hour stoppage on ‘safety grounds’ then ensued, involving all workers at the site. Setka and Tadic informed Bovis that the employees would not return unless they were paid for the stoppage.

The stoppages ultimately continued over six days. During this time, two other Bovis sites were subject to work bans or threats of bans. When the employees finally returned to work, Bovis agreed to pay them for 10 hours of the stoppages.

Decision

The court ultimately found that ’there was no reason why work could not continue in other parts of the site which were unaffected by the spill’.

The CFMEU, Setka and Tadic were each found to have pressured Bovis to pay employees engaged in unlawful industrial action, in contravention of section187AB of the pre-reform Workplace Relations Act 1996 (Cth) (pre-reform Act).

The maximum penalty for such breaches under the pre-reform Act was $10,000 for an organisation and $2,000 for an individual.

The CFMEU was fined $4,000 on the basis that it ‘officially applied pressure’ to Bovis to pay strike pay and had made threats to other Bovis sites.

Neither Setka nor Tadic were fined for their conduct. The court concluded that ‘Mr Setka was simply doing his job in accordance with the CFMEU’s then approach to safety issues and strike pay’ whilst Mr Tadic ‘was performing his representative role as a shop steward’. The court also commented that the CFMEU had since changed its approach and union representatives ‘are now well aware that agitating for strike pay is a thing of the past.’

Implications for employers

Individual union representatives are likely to escape sanction if they are carrying out union policy. In this case Mr Setka was found to simply be acting as the ‘agent’ of the CFMEU, which bore ultimate responsibility for the decision to pursue the strike pay claim.

This article was written by Ben Davies, Solicitor, Melbourne.

ABS statistics on industrial action – March 2008

Statistics released by the Australian Bureau of Statistics (ABS) on 13 March 2008 confirm that industrial action in the construction and building industry has risen slightly from 3.1 days lost per 1000 employees to 3.8 days lost per 1000 employees. Despite this, the figures are still very low historically. The statistics reflect the success of reforms such as the introduction of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), and the National Code of Practice for the Construction Industry (Code).

Recent data released by the ABS shows that industrial disputes have increased in recent months. Key figures released by the ABS on 13 March 2008 show that for the December 2007 quarter, the number of working days lost per 1000 employees in the construction industry rose to 3.8 working days. This is higher than the figure for the September 2007 quarter where 3.1 working days per 1000 employees were lost due to industrial disputes. Nevertheless, this figure is still significantly lower than previous years. For example, in the March 2005 quarter, the number of working days lost per 1000 employees in the construction industry was 43.5. 

Overall, there has been a significant decrease in industrial action over the years. By way of comparison, the September 1996 quarter recorded a loss of 263.9 working days per 1000 employees for the construction industry.

This article was written by Rebecca Mason, Articled Clerk, Melbourne.

CFMEU official facing jail for refusing ABCC interview request

A Victorian CFMEU official is facing a possible jail sentence for a breach of section 52 of the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), for refusing to attend a compulsory ABCC interview. Section 52 of the BCII Act gives the Australian Building and Construction Commission (ABCC) power to compel individuals to provide information, produce documents and attend interviews as part of its investigations. A failure to comply with the ABCC’s request can attract a maximum penalty of six months jail.

A CFMEU official is the first to potentially face a jail sentence under the BCII Act for failing to attend an interview with ABCC investigators after the Commissioner referred the matter to the Commonwealth Director of Public Prosecutions.

Victorian CFMEU (construction division) Assistant Secretary Bill Oliver said the official had not been accused of illegal behaviour but had refused to give evidence on what was said at a union meeting because his ‘conscience’ prevented him from doing so.

It is unclear when the incident took place but it is believed to have occurred late last year.

The BCII Act provides that the penalty for failing to comply with an ABCC request is six months jail.

The Rudd Government has decided to retain the ABCC and the Coalition’s BCII Act until January 2010.

This article was written by Maya Tal, Paralegal, Melbourne.

Fines imposed on the CFMEU for unlawful conduct

In a recent decision, the Federal Court has ordered the Construction, Forestry, Mining and Energy Union (CFMEU) to pay $28,500 in damages and penalties for unlawful conduct in breach of the Workplace Relations Act 1996 (Cth) (WR Act) and Trade Practices Act 1974 (Cth) (TPA). The decision follows the court’s findings in July of last year—that the union contravened secondary boycott laws, engaged in unlawful coercion and induced a breach of contract on a building site in Wollongong.

Background

In October 2003, LGB Contracting Pty Ltd (LGB) engaged a subcontractor, A&L Silvestri. A&L Silvestri was engaged to carry out earthmoving works at a Wollongong building site. Three CFMEU officials, Michael Lane, Peter Primmer and David Kelly, took issue with A&L Silvestri because they were not a CFMEU member. The officials visited the site on 21 October 2003, and raised traffic management concerns and safety issues relating to A&L Silvestri’s equipment. Mr Lane then parked his vehicle across the driveway, preventing anyone from accessing the site.

The next morning, a meeting took place between the CFMEU and LGB. A&L Silvestri’s contract was subsequently terminated. The Australian Building and Construction Commission (ABCC) alleged that LGB terminated the contract due to the CFMEU’s threats of industrial action.

Decision

A&L Silvestri and the ABCC argued that the union threatened to take industrial action against LGB, with the intention to coerce LGB to make a certified agreement with the union.
A&L Silvestri sought damages against the CFMEU for inducing a breach of contract and interfering with a common law contract. A&L Silvestri also sought damages for contravention of the secondary boycott provisions of the TPA, alleging that the union prevented LGB from using the services of A&L Silvstri.

The court found that the CFMEU and Mr. Lane had contravened the coercion provisions of the WR Act. The court also found that the CFMEU and all three union officials had breached the secondary boycott provisions in the TPA and had induced a breach of contract between the subcontractor and the head contractor.

The court imposed a penalty of $5,500 on the CFMEU and $1,800 on Michael Lane. The CFMEU was also ordered to pay the subcontractor damages of $23,000 plus interest.

Implications for employers

• This decision demonstrates the willingness of the court to impose penalties on unions and union officials for breaches of the WR Act and TPA.
• At the time of the decision being handed down, the maximum penalties for breach of the coercion provisions of the WR Act were $2,200 for an individual and $11,000 for an organisation. Currently, the maximum penalty for coercion under the WR Act is $6,600 for an individual and $33,000 for a body corporate. However, the ABCC may also bring an action under section 43 of the Building and Construction Industry Improvement Act 2005 (Cth) relating to coercion. The maximum penalty for breaching section 43 is $22,000 for an individual and $110,000 for a body corporate.
• The court commented in its penalty decision that there has been a considerable change of culture in the building industry in the past few years and that ‘any return to the bad old days be appropriately penalised.’

This article was written by Rebecca Mason, Articled Clerk, Melbourne.

CFMEU found to have made false and misleading representation about requirement to join the union

In a recent Federal Court appeal the Full Bench found that the Construction, Forestry, Mining and Energy Union (CFMEU) had breached provisions of the pre-reform Workplace Relations Act 1996 (Cth) (pre-reform WR Act) which prohibit the making of false and misleading representations about a contractor’s obligation to join a union. The court also found the CFMEU had advised an employer to take discriminatory action against a non-member. The court also found that the CFMEU had not threatened or coerced a contractor to enter into an EBA with the union, despite there being an implication that they would not receive further work if they did not. The case indicates that the threshold for establishing ‘coercion’ (whether in respect to the pre-reform or post-reform WR Act) on the part of a union remains high. In this case, despite there being strong evidence that the union applied pressure to the contractor to enter into an Enterprise Bargaining Agreement (EBA), the court found that there was no breach of the Act.

Background

‘Pro-Finish’ was a partnership of contractors working at a building site. On 19 January 2004, members of the Pro-Finish partnership were approached by Mr Casper, delegate of the CFMEU. Mr Casper represented to them that they were obliged to join the CFMEU or the state union when, in fact, there was no such obligation. On 18 February 2004, Mr Casper advised the head contractor at the site not to accept Pro-Finish’s services because they ‘abused and swore’ at him. On 17 February 2004, Mr Lane, an employee of the union represented to members of the Pro-Finish partnership that the building site was going to be a union site and that it was necessary for them to enter into an EBA with the union. Mr Lane also indicated that if Pro-Finish did not make an EBA with the CMFEU, he could arrange for lift and crane drivers to refuse to take equipment to workers engaged by Pro-Finish.

At first instance , the court found breaches of section 298SC(c) of the pre-reform WR Act (false or misleading representation about another person’s obligation to join an industrial association) by Mr Casper, Mr Lane, and consequently, the CFMEU and the union’s New South Wales branch. The court had ordered Mr Casper pay a penalty of $1,250 and Mr Lane pay $2,000 for breaches of section 298SC(c). The CFMEU was penalised $10,000 for breach of section 298SC(c) by the actions of Mr Casper and Mr Lane. The New South Wales branch of the CFMEU was also fined $10,000.

The ABCC appealed on the basis that further sections of the WR Act had been contravened, including section 298S(2)(a) (advise, encourage or incite a person to take discriminatory action against an eligible person because they are not a member of an industrial association) and s 170NC (threatening to take industrial action or other action with intent to coerce another person to agree to making an agreement under Division 2 or 3).

Decision

The court upheld the primary judge’s finding that Mr Lane had breached section 298SC(c) by representing that the building site was going to be a union site. It didn’t matter that Mr Lane had expressed himself in terms of his ‘objectives’ rather than in terms of a present factual position. There was an implication that it would be necessary in future for workers to be union members to work on the site.

It was also found that there was a statutory presumption that Mr Casper advised, encouraged or incited the head contractor to take discriminatory action against employees of Pro-Finish because they were not members of an industrial association. The majority held that this presumption had not been rebutted and remitted this matter to the primary judge.

The court found no breach of section 170NC. Mr Lane had not expressed an intention to coerce Pro-Finish to make an EBA. A strong implication that he would take action if the EBA was not made was not enough to amount to a threat to take action with intent to coerce.

Implications for employers

• Employers should be aware that they can raise the alarm when their employees and contractors are facing unlawful pressure from Industrial Associations to become members.
• Unlawful conduct includes a broad prohibition against union representatives making misleading representations about workers’ obligations to join the union. This will involve looking at the whole context of the statement in question.
• Unlawful conduct includes a presumption that a union representative was targeting an eligible person because they were not union members when the representative advises another person to take discriminatory action against that eligible person.
• Employers can enhance their prospects of establishing ‘coercive’ conduct by keeping detailed records of all relevant conversations and meetings with union officials.
• Employers should bear in mind that for a claim of coercion to be made out, the threat needs to be very explicit—even a statement strongly implying what the union might do if a person does not comply with its demands may not be enough to establish a breach of the WR Act.

This article was written by Karli Evans, Solicitor, and Yee Ching Rainbow Cheung, Articled Clerk, Melbourne.

Employers to provide suitable meeting locations for right of entry

In certain circumstances, the Australian Industrial Relations Commission (AIRC) can make orders regarding the right of entry for a union to enter a workplace if it is satisfied that an employer has made an ‘unreasonable’ request (eg requiring a union to meet with employees in an unsuitable location). Section 771 of the Workplace Relations Act 1996 (Cth) (WR Act) provides that the AIRC can make such orders as it considers ‘appropriate’. A recent decision of the AIRC provides some clarification with respect to the obligations of employers in relation to a union’s right of entry to hold discussions with employees, including what is an ‘unreasonable request’ on the part of an employer. The AIRC found that when a union lawfully enters premises to hold discussions with eligible employees, employers must act ‘reasonably’ when requesting that the officials hold discussions in a particular area. In assessing the ‘reasonableness’ of a location, the AIRC noted that relevant considerations include temperature, weather, availability of shelter, proximity to amenities, the availability of a viable alternative location and the ‘legitimate interests’ of all employees.

Background

On 24 January 2008, the Construction, Forestry, Mining and Energy Union (CFMEU) filed an application in the AIRC for an order pursuant to section 771 of the WR Act. The CFMEU claimed that its officials had been subjected to an unreasonable request by an employer BGC (Australia) Pty Ltd (BGC), when the officials entered BGC’s brickworks site at Kalamunda Road near Perth airport to hold discussions with eligible employees.

Section 771 of the WR Act enables the AIRC to make whatever orders it considers appropriate if it finds that an employer (or occupier) has made an unreasonable request to a union official while the official was exercising a right of entry.

Two CFMEU officials sought to enter the brickworks site on 22 January 2008. When they arrived at the site they were met with hostility from BGC representatives who accused them of trying to ‘poach’ workers. The officials maintained that they were exercising a statutory right of entry. They were eventually told by BGC that they could hold their meeting approximately 150 metres away from the main amenities and lunch area, out in the open in 31 degree heat and in full view of management.

The officials claimed that because of the heat and the distance between the meeting location and the amenities, the request was unreasonable and they challenged it.

Decision

The AIRC noted that the matters to be taken into account in relation to the reasonableness of the employer’s direction included the following:

• climatic conditions and access to site amenities – the temperature on the day of the meeting was 31 degrees. The commission said that it was unreasonable to require a meeting to be held in that heat without shelter and away from amenities.
• availability of alternate locations for meetings – from a site visit, the commission was able to identify many suitable alternate meeting locations that would not disturb other employees.
• legitimate interests of the employer – the WR Act protects the employer’s right to have rights of entry exercised lawfully and without disruption to the work site. However, BGC’s argument that it believed the CFMEU would act unlawfully by attempting to poach workers was an unreasonable fear and was not a good reason for requiring meetings to take place in the open and in full view of management.
• interests of employees – two main groups of employees need to be considered. They were employees who chose to engage in discussions with unions, and those who choose not to, and
• the public interest of observing industrial laws.

After considering the above factors, the AIRC found that BGC’s request was unreasonable. The AIRC ordered that BGC allow the CFMEU to exercise its right of entry in a location within 20 metres from the main amenities. The AIRC commented that the location might change from time to time depending on activities on the site, but in its view, a distance of 20 metres was sufficiently proximate to be reasonable. The AIRC also found that in bad weather or on days where the temperature exceeded 30 degrees, suitable covered areas must be made available for meetings.

Implications for employers

The right of union officials to enter work sites for the purpose of holding meetings with employees is lawful and protected by the WR Act. However, unions must exercise this right in accordance with the WR Act, and cannot impinge upon an employer’s right to protect their work sites from unnecessary disruption or unlawful purposes.

Although employers have the right to request the officials hold discussions in a particular area, employers must act reasonably. Specifically, this would include having regard to factors such as weather, shelter, proximity to amenities and the legitimate interests of employees when selecting a location for such meetings.

This article was written by Joanna Glynn, Partner, and Simon Dewberry, Senior Associate, Brisbane.

Federal Court dismisses ACCC case against CFMEU

On 16 May 2008, the Federal Court dismissed proceedings issued by the Australian Competition and Consumer Commission (ACCC) against the CFMEU and two of its officers, alleging various contraventions of the Trade Practices Act 1974 (Cth) (TPA). The ACCC alleged that the CFMEU, Mr Noonan and Mr Lancsar colluded with a major construction company (Bovis Lend Lease) against hiring a sub-contractor who engaged workers as independent contractors rather than as employees. The TPA prohibits two or more parties from taking action together aimed at disrupting the flow of goods and/or services between the parties (see sections 45E and 45EA). In terms of implications for employers, the decision means that significant evidence of collusion will have to be adduced before a court is likely to be satisfied that breaches of the TPA have been made out.

Background

The Federal Court has rejected an ACCC application alleging that the CFMEU, Bovis Lend Lease Limited (BLL) and CFMEU officials engaged in conduct in breach of sections 45E(3) and 45EA of the TPA.

The ACCC claimed that an agreement between the CFMEU and BLL resulted in an unlawful secondary boycott of plasterboard contractor, Bernmar Projects Pty Ltd, whose contract with BLL was terminated.

The case relates to the 2003 construction of ‘Landmark’ medium density apartments in the ACT. The ACCC argued that the union threatened to withdraw from negotiations with BLL for a national agreement unless the company terminated its contract with Bernmar, which hired workers under a labour-hire agreement in breach of its contract with BLL.

The ACCC said that the arrangement or understanding between BLL and CFMEU contained a provision aimed at preventing or hindering BLL’s continuing acquisition of Bernmar’s plasterboard services at Landmark.

Section 45E(3) prohibits a party from making a contract, arrangement or understanding with a work organisation or its officials containing a provision aimed at preventing or hindering that party from acquiring goods and services from another party. Section 45EA prevents a person from giving effect to such a provision.

Under the TPA, a body corporate can be fined up to $750,000 for each contravention of sections 45E(3) and 45EA, while a non-body corporate can be fined up to $500,000 for each breach of Part IV (section 76(1B)).

BLL

BLL admitted that its conduct constituted a breach of sections 45E(3) and 45EA in a statement of agreed facts with the ACCC. It was fined $100,000 and ordered to pay the ACCC $110,000 in costs.

CFMEU

The CFMEU contested the ACCC’s claim they were accessories under sections 76 and 75B of the TPA to BLL’s breaches.

Decision

In ruling in CFMEU’s favour, the court said that despite BLL’s admissions, it was not reasonably satisfied that the ACCC had sufficiently discharged its evidentiary burden in proving that the relevant conduct contravened the TPA.

The court said that the evidence merely demonstrated BLL’s willingness to address the union’s concerns by discussing the labour-hire issue with Bernmar. No specific course of action was agreed upon.

CFMEU had not, as the ACCC alleged, sought to enforce BLL’s contract with Bernmar. The parties’ mere expectation as to what might happen (ie, that the contract may be terminated) did not amount to a consensus.

The decision to terminate was BLL’s alone, albeit made under ’pressured circumstances’. BLL was in part motivated by its own self interest to ensure that Bernmar complied with legitimate practices.

The court ordered the ACCC to pay CFMEU’s costs.

Implications for employers

The decision means that a high level of proof is needed to satisfy sections 45E(3) and 45EA of the TPA. In particular, it appears that any arrangement reached or understanding arrived at by two parties with respect to work arrangements must be specifically aimed at preventing or hindering the acquisition of goods and/or services from another party. Agreements that are vague or unclear may fall short of satisfying the provisions.

The decision potentially gives unions greater scope to lawfully place conditions and demands on the way companies deal with one another, so long as those demands are not specifically or explicitly aimed at boycotting.

This article was written by Maya Tal, Paralegal, Melbourne.

Endnotes

1. ASU v ATO, Appeal by ASU [2008] AIRCFB 96

More information

For information regarding possible implications for your business, contact