Contractor agreements in focus as AIG flags appeal to ADJ Contracting case

One of the most contentious workplace disputes to have emerged under the Fair Work Act is set for a Federal Court challenge, with Australian Industry Group seeking to overturn a Fair Work Australia ruling allowing for contractors and labour hire workers to be paid the same amount as the permanent workforce.

Ai Group says the employer body will seek a judicial review of the Fair Work Australia full bench decision approving a deal between the Electrical Trades Union and the Victorian electrical contractor ADJ Contracting.

“The FWA decision allowed the inclusion of an enterprise agreement clause which imposed substantial restrictions on the engagement of contractors and labour hire,” Ai Group chief executive Heather Ridout said.

“In Ai Group’s view, the relevant clause is an ‘unlawful term’ under the Fair Work Act. These types of union clauses impede legitimate commercial arrangements between businesses and inhibit the productive organisation of work.”

“We will argue that the FWA Full Bench decision should be overturned.”

But Andrew Douglas, Macpherson + Kelly partner, says the clause in dispute has a long history under Australian enterprise agreement and is “relatively uncontroversial in industrial relations circles”, notwithstanding a brief interlude under WorkChoices.

Douglas questions whether this is the right issue for AiG to focus on, adding the appeal is unlikely to succeed because it directly pertains to the employer/employee relationship.

“To be paid at equivalent rates is something we’ve assumed is normal practice,” Douglas says, and does not diminish the management benefits of taking on contractors.

“Is this a fight they really want to take on?” Douglas says. “If it does succeed, it’s going to create a storm.”

The case relates to a dispute where the company argued a protected ballot order could only be granted once the parties were actively bargaining and if the employer would not bargain, the union would have to seek a “majority support determination” from FWA to force the company to the table.

But in a ruling that riled employer groups, the tribunal’s full bench found the union had genuinely sought to negotiate, and therefore had the right to proceed with strikes.

The full bench of FWA said in its ruling that there is “nothing in the legislative provisions to suggest that a bargaining representative should not be permitted to organise protected industrial action to persuade an employer to agree to bargain.”

“Nor is there anything to suggest that a union, which is genuinely trying to reach an agreement for its members, but cannot get the employer to agree to bargain, should not be able to organise protected action unless it has the support of the majority of employees.”