Legitimate Adverse Operational Consequences of Industrial Action May Trigger Redundancies without Contravening Good Faith Bargaining

Construction, Forestry, Mining and Energy Union v Anglo Coal (Capcoal Management) Pty Ltd t/a Capcoal [2017] FWCFB 317 

In August 2016, workers at Anglo Amercian's German Creek coal mine in Central Queensland engaged in a protracted period of industrial action during bargaining negotiations for a new enterprise agreement. In order for mining to continue with fewer workers, Anglo changed its mine plan by using draglines to remove overburden rather than smaller shovels and trucks. This realised a cost saving of around AUD40million over three years. As a result of these changed operations, the shovel fleet fell so far behind the dragline that over 80 jobs for shovel operators effectively became surplus to requirements. Anglo implemented redundancies in respect of the positions affected, many of which were undertaken by striking members of the Construction, Forestry, Mining and Energy Union (CFMEU).

Application for Good Faith Bargaining Orders 

The CFMEU sought good faith bargaining orders pursuant to section 229 of the Fair Work Act, alleging that Anglo, by "parking" the shovels and reducing capacity resulting in redundancies, had engaged in unfair and capricious conduct undermining the freedom of association or collective bargaining principles contrary to section 228(1)(e) of the Fair Work Act. DP Asbury of the Fair Work Commission found that it was not capricious or unfair for an employer, in responding to the commercial challenges of industrial action, to restructure its business to offset loss and damage. The application was dismissed.

Appeal by CFMEU 

The CFMEU appealed DP Asbury's decision and the matter came before the Full Bench of the Fair Work Commission. The CFMEU argued, amongst other things, that but for the lawful industrial action, the redundancies would not have occurred; the response taken by Anglo was disproportionate; and that Anglo had notice of the industrial action so that it could have taken legally available and defensive action. The Full Bench found that Anglo had legitimate business reasons to justify its conduct and it was not unfair or capricious, and the Appeal was dismissed. 

Importantly, the Full Bench addressed a submission by the CFMEU that an employer's responsive options were effectively limited to "lock-outs" or orders to suspend or terminate protected industrial action, but did not include termination of employment. This submission was rejected. While employees taking protected industrial action are immune from certain civil and criminal liabilities, they are not immune from an employer's response (which may include restructuring and redundancies) based on its legitimate business interests.

Adverse Action Claims 

Having "struck out" in the bargaining order proceedings, the CFMEU is pursuing Anglo for adverse action claims on behalf of some of the redundant workers. This avenue was left open by the comments of DP Asbury to the effect that:

• retention of contractors to backfill jobs left vacant by striking workers exposed Anglo to a future adverse action claim

• if it was established that there was discrimination, in the redundancy process, in favour of recent casual and labour hire workers, that may undermine collective bargaining because it would reduce the number of CFMEU members who would have otherwise remained employed.

Recommendations for Employers 

During periods of protracted industrial action in bargaining for a new enterprise agreement, employers are entitled to implement business improvement plans to offset loss and damage, even if those plans result in the termination of employment of striking workers.

However, employers must still exercise caution that the basis for selection of positions marked for redundancy is defensible on legitimate business grounds. Patterns of selection which appear to discriminate against persons exercising a legal right to take protected action may expose employers to adverse action claims or good faith bargaining orders.