CFMEU job security clause hits “matters pertaining” snag
Senior Deputy President Richards of Fair Work Australia has recently determined that the “job security clause” in the CFMEU template Construction Industry Agreement is not a matter which pertains to the relationship between an Employer and its Employees and therefore has no place in an Enterprise Agreement.
The CFMEU has been busy in recent months rolling out their template 2011 – 2015 CFMEU Enterprise Agreement. The Agreement contains a clause purporting to protect the job security of employees covered by the Agreement by imposing an obligation to ensure that any Contractors engaged are paid the same entitlements which apply to the Employers employees.
The decision in CFMEU v Brookfield Multiplex  FWA 4051 is significant and SDP Richards advised that “the issue at hand is an important one as it concerns a clause in an industry agreement which may have wider ramifications than the current case”.
The Employer in this case employed workers in a minority of the classifications listed in the template classification clause of the proposed Agreement and therefore during bargaining proposed an alternative job security clause promising the same pay and conditions for subcontractors who performed work which was the same as work performed by it’s direct employees.
The Union proposed a number of alternative clauses but the Employer would not agree because “the difficulty with the contractors clause as proposed by the CFMEU, in either of its guises, is that it would require the Employer to extend to all subcontractors it engages on its projects the same terms and conditions that apply to its direct employees covered by the Agreement, regardless as to whether the Employer employed employees who perform or will ever perform the type of work carried out by any such subcontractors across the building and construction industry.”
The CFMEU discontinued bargaining arguing that the clause had been adopted by other employers in the Industry and there was no point proceeding with other bargaining items unless the contractor clause was agreed.
The CFMEU pursued a protected action ballot in relation to bargaining for the Agreement. SDP Richards determined that the wide scope of classifications meant that the Employer would be required to extend the Agreement terms and conditions to all sub contractors irrespective of whether they performed or ever would perform work which was performed by their direct employees.
SDP Richards stated that it breached s172 of the Fair Work Act because it "travels beyond any ascertainable nexus with the relationship between the employer and its employees who will be covered by the agreement". It was noted that job security clauses are permissible if they directly concerned the security of the employees under the agreement which was not the case in the circumstances because of the extended reach of the proposed Agreement classification structure.
Employers in the construction Industry need to be aware of the consequences of signing standardised Agreements with classification structures which go well beyond classifications which cover work performed by their direct employees. Similarly, Contractors need to be aware when undertaking work for Companies covered by the standard CFMEU Enterprise Agreement that they may be required to apply the Agreement terms and conditions to their employees because of the operation of the extended job security clause.
The CFMEU’s persistence with the clause evidences the fact that it is an important part of their wider bargaining agenda and Employers have good reason to be cautious. The potential practical and legal ramifications of the CFMEU job security clause are extensive and we encourage Employers in the Industry to contact Zoe McIntosh of Livingstones for more information about the decision and how the clause can affect businesses impacted or potentially impacted by it.