Payments relating to industrial action

The 'no work-as-directed, no pay' principle has been derived from the common law.[1] Since 1996, the Workplace Relations Act has prohibited employers from making a payment to an employee in relation to a period in which the employee takes industrial action. It is also prohibited for employees to demand or accept such a payment from an employer.[2]

The Workplace Relations Amendment (Work Choices) Act 2005 (Cth) introduced the four-hour rule which required that an employer must withhold four hours pay for a period of industrial action of less than four hours. For industrial action longer than four hours, the employer must not pay the employee for the total duration of the action on that day.[3]

The four-hour rule for strike pay was retained in the Fair Work Act 2009 (Cth) (the Fair Work Act) for unprotected industrial action only. Additional options were also introduced to provide employers with flexibility and discretion in managing partial work bans.[4]

It is unlawful for an employer to pay, or an employee to demand or to accept strike pay for any period of protected or unprotected action.[5]

See Fair Work Act s.470

If an employee engaged, or engages, in protected industrial action against an employer on a day the employer must not make a payment to the employee in relation to the total duration of the industrial action on that day.

To be clear, the requirement that the employer not make a payment to an employee relates to the total period of the industrial action and not necessarily the whole day.

If protected industrial action is taken on a public holiday, payment at the applicable penalty rate (if any), must be withheld.[6]

The prohibition of payment does NOT apply to a partial work ban, which is addressed later in this Part.

Related information

• Partial work bans

See Fair Work Act s.473

An employee must not ask for, or accept, a payment from an employer if the employer would contravene the prohibition of payment in s.470 of the Fair Work Act by making the payment.

A union, or an officer or member of a union, must not ask an employer to make a payment to an employee if the employer would contravene s.470 of the Fair Work Act by making the payment.

Note: These are civil remedy provisions.

If the industrial action is, or includes, an overtime ban the prohibition of making a payment to an employee, as set out in s.470 of the Fair Work Act, only applies in circumstances where:

• the employer requested or required the employee to work the period of overtime, and
• the employee refused to work the period of overtime, and
• the refusal was a contravention of the employee's obligations under a modern award, enterprise agreement or contract of employment.

In such circumstances, the total duration of the industrial action for the purpose of s.470 will be or include the period of overtime to which the ban applies.

An example is provided in the Explanatory Memorandum:[7]

A term of an enterprise agreement might allow an employee to decline a request to work overtime on the ground of family responsibilities. If an employee declines to work overtime and complies with that term, the prohibition on the payment of strike pay will not apply because the employee has not engaged in industrial action.

The High Court of Australia has held that the phrase 'payment to an employee' in s.470(1) does not include every type of economic benefit transferred by an employer to an employee during a period of protected industrial action.[8]

The purpose of s.470(1) is to prohibit strike pay, that is, payments by an employer to make up, in whole or in part, wages not earned by the employee during the period of industrial action. There is no suggestion that the purpose of s.470(1) is to suspend the entirety of the employer's obligations under the relationship of employment. Indeed, the Act contemplates the continued subsistence of the employment relationship during and after the industrial action.[9]

Whether the prohibition of 'a payment to an employee in relation to the total duration of the industrial action on that day' is apt to capture any given payment may depend on the circumstances of the case. For example, a payment of a gift might be caught if the circumstances show that it was made to compensate for wages not earned.[10]

In some circumstances allowances may still be payable to employees who engaged, or engage, in protected industrial action.[11]

NOT a 'payment'

Safety & production allowance

Thiess Pty Ltd v Construction, Forestry, Mining and Energy Union[2015] FWCFB 5530 (Hatcher VP, Catanzariti VP, Johns C, 2 October 2015).

Facts

Employees of Thiess Pty Ltd and Mt Owen Pty Ltd were covered by an enterprise agreement which required that the employees be paid a Safety & Production Allowance.

Employees of both companies engaged in protected industrial action. A dispute subsequently arose as to whether the companies were required to pay employees their Safety & Production Allowance for the weeks during which they engaged in the protected industrial action in accordance with the agreement, or whether the payment would be prohibited by s.470 of the Fair Work Act.

Outcome

The Full Bench held that the companies were obliged under the terms of the agreement to pay the fixed amount of the Allowance each week, notwithstanding that protected industrial action occurred in that week. The Full Bench found that the payment of the Allowance did not bear a relationship to the performance of work or otherwise in any particular period, as there was no mechanism in the agreement for a pro-rata payment of the Allowance.