Industrial action gets employer reaction
The Australian Institute of Marine and Power Engineers v Port of Brisbane Pty Ltd [2011] FWA 4653
Livingstones recently represented Port of Brisbane Pty Ltd in a hearing with the Australian Institute of Marine and Power Engineers (“AIMPE”) over the reduction of pay for employees engaging in a partial work ban.
Alex Aspromourgos, Managing Director, successfully defended the claim made by AIMPE that the Port of Brisbane’s reduction in the pay of employees who participated in the partial work ban was excessive. AIMPE contended that the reduction in payment should only be 4.16%, while Port of Brisbane had reduced the pay by 35%. Commissioner Simpson ruled in favour of the Port of Brisbane and maintained the reduction of 35%.
This decision is one of only two decisions under the Fair Work Act’s provisions on the calculation of the reduction in pay for employees engaging in partial work bans. While the Legislation has introduced a time based formula, it is now clear that employers have a wider discretion in calculating the pay reduction.
Under the Fair Work Act 2009 Employer Response Action is action which may be taken by an employer in response to industrial action taken by employees (or their representatives) who will be covered by the enterprise agreement.
In the present case, AIMPE gave notice to Port of Brisbane of an intention for Engineers to take protected industrial action in the form of a ban on the repair and maintenance of dredging machinery.
Under the Act, an Employer intending to reduce the pay of employees participating in a partial work ban, are required to notify the employees of the proposed reduction in pay.
On receiving the notice of intention to take protected industrial action, Port of Brisbane performed an analysis of the tasks performed by engineers in relation to dredging equipment and determined these functions formed approximately 35% of the duties of an engineer. Employees were advised that a pay reduction of 35% would occur for the duration of the partial work ban.
The repair and maintenance duties performed were unpredictable and contingent on the operational requirements at the time that the work was performed. This decision highlights the challenges to employers in calculating the appropriate percentage reduction in pay. Whilst there is a formula specified in the Regulations, it is not an exact science. When calculating the reduction in pay employers may use an estimate of the work that would otherwise be performed. This assessment is usually undertaken prospectively, before the ban commences rather than based on the events that transpire during the ban.
The formula specified in the Regulations for calculating the percentage reduction in pay does not permit consideration of factors outside of the proportion of work that will not be performed. However, the decisions AIMPE v Port of Brisbane Pty Ltd and Transport Workers Union v Department of Territory and Municipal Services (confirm that in the event of a dispute, the Act requires Fair Work Australia to take other factors into consideration when considering an order to vary the proportion that employee’s pay is reduced. Specifically, Fair Work Australia must consider reasonableness of the proportion with regard to the nature and the extent of the partial work ban, and “fairness between the parties taking into consideration all of the circumstances of the case”.
The Act provides Fair Work Australia with a broad discretion, and allows it to take into account financial loss incurred by an employer as a direct result of the partial work ban, or the impact of the ban on the wider community.
The decision by Commissioner Simpson to maintain the 35% pay reduction was a victory for common sense as it confirms Fair Work Australia’s ability to consider issues broader than the proportion of time involved in the work ban, in determining an appropriate pay reduction.
For more information on employer response action or this decision, please don’t hesitate to contact Eloise Bonel, Research Consultant, or Alex Aspromourgos, Managing Director.
