Australia: Judicial vs. Arbitral Power - The Limits of the Fair Work Commission's Jurisdiction

In brief

• A Full Bench of the Fair Work Commission (FWC) has delivered a significant decision which confirms that the FWC does not have jurisdiction to declare rights that already exist under the Fair Work Act.¹
• This decision is the first decision of the Full Bench concerning the distinction between arbitral and judicial power in the context of the FWC.
• The decision is likely to reduce the FWC’s role in future applications seeking to utilise section 505 for disputes about right of entry.

Background

In October 2015, union officials representing maintenance contractors’ employees performing work at BHP Billiton’s Kwinana Nickel Refinery sought entry to the premises to have discussions with employees prior to the commencement of the 6.00am shift.

BHP Billiton refused to permit entry, arguing that the union officials only had a right to enter to hold discussions during breaks in an employee’s actual shift. The union disagreed – the CFMEU argued that because work was being performed at the refinery on a 24 hour basis, they were entitled under the Fair Work Act to enter the premises to have discussions with relevant employees before their shift commenced.

The union applied to the FWC to resolve this dispute under section 505 of the Fair Work Act. The question that was posed by the union in its application before Commissioner Williams was whether certain officials ‘are entitled to enter the premises’ to meet with employees before or after their shifts. The union argued that such times constituted ‘other breaks’ under section 490(2) of the Fair Work Act.

At first instance, Commissioner Williams held that the FWC did not have jurisdiction to make such a determination.² The Commissioner decided that answering this question involved the adjudication of existing legal rights, which is a judicial function and therefore beyond the powers of the FWC. However, Commissioner Williams did find that, even if the Commission did have jurisdiction, the right to enter and hold discussions ‘during mealtimes or other breaks’ did not extend to periods before a shift commenced or after it was completed.

Full Bench’s decision

On appeal, the Full Bench, comprising Vice President Watson, Deputy President Bull and Commissioner Cribb, held, in dismissing the appeal, that Commissioner Williams was correct in his conclusion that the remedies sought by the union, if made, would have involved the FWC exercising judicial power.

Relevantly, the Full Bench stated:

The only matter in dispute was whether the reference to "other breaks" in s.490 of the Act includes periods before the employees’ shift starting times and after their shift finishing times. The determination of that question clarifies the scope of rights conferred by s.490. No new rights or obligations are created by such a determination. No further functions or analysis is sought beyond the interpretation of the disputed term "other breaks" in s.490. The determination of the question involves the ascertainment of legal rights and obligations which are created by s.490. This is classically a judicial function.³

In reaching this conclusion, the Full Bench confirmed that an administrative tribunal, such as the FWC, cannot exercise the Commonwealth’s judicial power (which includes the ascertainment, declaration or enforcement of currently existing legal rights). However, the FWC will have jurisdiction where opinions are formed about the existence of legal rights in the course of arriving at what rights should exist in the future, as this falls within the arbitral powers of the FWC.

In this appeal the Full Court was particularly cognisant of parties ‘disguising’ the exploration of existing rights as matters which go to the ‘future rights’ of the parties.

The Full Bench applied the principles in Ranger Uranium⁴ and distinguished the decision of Police and Nurses.⁵ Police and Nurses was distinguished on the basis that that decision involved considerations of fairness and could not be characterised as a declaration of existing rights with respect to right of entry.

Given the Full Bench’s findings on jurisdiction, it did not consider it necessary or appropriate to deal with the other grounds of appeal, including regarding the proper construction of the phrase ‘other breaks’.

What does this decision mean for the jurisdiction of the Fair Work Commission?

This decision makes findings about jurisdiction which significantly limit the FWC’s powers. This is likely to have implications for future applications seeking to utilise section 505 of the Fair Work Act.

The Full Bench confirms that the FWC does not have jurisdiction to make a bare declaration of rights where a party approaches the FWC for a definitive statement of the rights it presently enjoys under the Fair Work Act and nothing more. Such a declaration can only be ordered by a court.

As a result, it is likely that the FWC’s role in disputes about right of entry under section 505 will be reduced. Where a party is seeking a declaration as to existing rights under the Fair Work Act, its only option will be to commence proceedings in the Federal Court. This will ultimately have the effect of a more time consuming and expensive process for parties to undertake, but, on the other hand, may also discourage parties from making inappropriate or unnecessary applications.

This article was written by Russell Allen, Catherine Russo and Yannis Vrodos, Perth.

¹ CFMEU v BHP Billiton Nickel West Pty Ltd [2017] FWCFB 217 (16 January 2017).

² CFMEU v BHP Billiton Nickel West Pty Ltd [2016] FWC 3829 (12 July 2016).

³ [2017] FWCFB 217 (16 January 2017) [27].

⁴ Ranger Uranium Mines Pty Ltd; ex parte FMWU (1987) 163 CLR 656.

⁵ Police and Nurses Credit Society Ltd v FSU (2003) 132 IR 13.