Industrial action heating up? When will the Commission let you cool off?

Key Points:

The Patricks case should not be seen as limiting the flexibility given to the Commission to make a cooling-off order.

A Fair Work Commission Full Bench (MUA v Patrick Stevedores Holdings [2016] FWCFB 711) has recently overturned a "cooling-off" order that suspended a union's protected industrial action for 35 days. At first instance, the Commission formed the view that the elevation of hostilities between the parties had precluded the processes of negotiation and discussion. On appeal, the Full Bench held that there was no benefit to be gained by the order, as the evidence showed that managers were still able participate in bargaining meetings.

The decision is cause to consider the Commission's cooling-off power - what sort of circumstances need to be present for the Commission to order a cooling-off?

The requirements in section 425 for a cooling-off order

The Commission will make a cooling-off order if satisfied that a suspension is appropriate, taking into account:

• whether the suspension would be beneficial to the bargaining representatives, because it would assist in resolving the matters at issue;
• the duration of the protected action;
• whether the suspension would be contrary to the public interest or inconsistent with the objects of the Fair Work Act; and
• any other matters that the Commission considers relevant.

An application can only be made if protected action is occurring (rather than foreshadowed or otherwise probable). If an order is made, it applies to all of the protected action that is on foot. The duration of the suspension is a matter of discretion.

How has the Commission applied the section 425 factors?

The above factors are evidently open-ended, and bring about a clash of ideas.

• on the one hand, the clear purpose of section 425 is to provide temporary respite from protected action, to enable a focus on bargaining;
• on the other hand, the opposing argument commonly raised is that the very existence of protected action can likewise have the effect of reducing the differences between parties, and makes reaching agreement more likely.

This clash may explain why the Commission has adopted a cautious approach. For example, in Patricks, it was not enough to point to the hardening of bargaining positions, or that the protected action was creating difficulty for management in preparing for, and attending, bargaining meetings. The evidence showed that management was still able to participate in meetings notwithstanding the protected action, and that management was in fact planning to attend those meetings.

What has contributed to a successful application in the past?

Patricks shows that an applicant has to do more than point to the adverse effects protected action is having on the bargaining environment. Something more is required.

Previous cases reveal that the Commission is most concerned to ensure that an order, if granted, will chart a course for further bargaining, thereby increasing the chances of resolving what is in dispute. If that can be established beyond question then, depending on the precise circumstances, the balance of the inquiry may become less important.

Should a cooling-off application be in your toolkit?

Case law is still evolving and, save for Patricks, the scope of section 425 is yet to be authoritatively determined. In our view, the outcome in Patricks should not be seen as limiting the flexibility given to the Commission to make a cooling-off order. Instead, Patricks demonstrates that careful thought should be given to each section 425 criterion before making the decision to apply. Prior to any application, employers should consider the following:

• can you establish a clear link between the effect of the protected action and the inability to resolve matters in issue - for example, has the protected action meant management has been devoted only to responding to protected action, such that bargaining cannot meaningfully progress?
• how long has protected action had this consequence? Is there any indication that protected action will end?
• what is the status of bargaining? Can you point to outstanding claims that could be progressed if there were more opportunities to negotiate?
• if an order is granted, what will you to do to make sure that bargaining will be progressed?
• what other consequences have resulted from the protected action? For example, what impact has there been on third parties? What evidence can you provide to the Commission to establish these consequences?

Lastly, evidence going to these factors should be identified, investigated and largely prepared. Once the application is made, the Commission can determine a cooling-off application quickly.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.