There has been a great deal of ink spilt regarding the Fair Work Commission’s decision to cut penalty rates for Sundays and public holidays in hospitality, fast food and retail awards. But the lock-out of roughly 60 dairy workers in a small town roughly two and a half hours drive north of Melbourne hasn’t attracted nearly the same level of interest.

Milk company Parmalat and the Australian Manufacturing Workers’ Union have been negotiating a new agreement covering workers at Parmalat’s Echuca plant since August 2016. AMWU national food secretary Tom Hale told Crikey the company’s initial offer froze pay rates for four years, gutted existing redundancy provisions, and allowed for greater use of labour hire employees by the company. The offer was rejected.

The AMWU made an application to the Fair Work Commission for a protected action ballot, and in January members voted to undertake a four-hour strike. In response, the company announced it would would lock workers out “indefinitely”. This might not be a proportionate response to relatively modest strike action, but it is entirely legal. 

“Employer action has to be responsive, but it does not have to be proportionate,” University of Sydney law school associate professor Shae McCrystal told Crikey. 

McCrystal says there is a very limited scope for employers and employees to take industrial action.

“Lawfully protected strike action is only ever available to employees after an agreement has expired,” she said.

That means if you are part of a workforce covered by an agreement that hasn’t expired, or are covered by an award (most of the Australian workforce at any given time is in one of those two categories), you can’t lawfully strike — even if your workplace has widespread safety concerns, sexual harassment or bullying. Once the agreement has expired, there are still some hoops to jump through. 

“If [a workforce wishes] to conduct a strike they have to go through a number of steps — apply to the commission for a protected action ballot order, conduct a ballot overseen by the electoral commission or an independent ballot agent,” McCrystal said. “And once they’ve fulfilled those steps and can lawfully take action, the employer is allowed to do response industrial action, but only if the employees actually threaten or take protected industrial action.”

As McCrystal points out, this throws the power dynamic of negotiation out of balance, because “an employee has to go through all these steps to establish that they are genuinely trying to reach an agreement and are taking valid industrial action, and the employer can unilaterally declare a lock out without any prior oversight once the employees threaten to take the action.”

Another issue at play in the Parmalat dispute, with potentially even further reaching consequences, is the ability for employers to unilaterally apply to terminate an expired agreement.

Once employees rejected its initial offer, Parmalat applied to the Fair Work Commission to have the existing agreement terminated. The FWC has yet to make a determination. If Parmalat is successful, employees would have to negotiate a new agreement on the basis of the award conditions, rather than the much more generous provisions of the current agreement. 

The Fair Work Act states that the Fair Work Commission must terminate an expired agreement on application from a party to that agreement if the FWC is satisfied that it would not be contrary to the public interest, and it considers it appropriate, taking into account the views and circumstances of the parties covered by the agreement and the likely effect the termination would have on each of them.

McCrystal says employers’ ability to go back to the award as a base for bargaining, rather than starting by accepting the conditions in the agreement, is “a powerful bargaining lever”. 

In recent cases where employers have sought to improve their bargaining position by terminating an existing agreement, unions have argued it is contrary to the public interest to imbalance employer-employee relationship in this way. They have invariably been unsuccessful.

The commission will consider Parmalat’s application in April. The AMWU will oppose the application. 

“What’s not clear is what the commission would view as contrary to the public interest. It is also not clear when the circumstances of the parties would make it inappropriate to terminate.” McCrystal said.

Hale agreed that recent case law did not favour the union’s position. He says Parmalat’s application was “undoubtedly” a bargaining tactic.

“They’ve even said in their current proposal that, if employees accept, they would drop their application to terminate the agreement. So it’s pretty blatant.”

Parmalat’s other factories in Bendigo, Launceston and South Brisbane have continued to produce and are picking up the slack from the shuttered Echuca plant. As those locations are covered by different agreements, no solidarity strikes are possible and even minor forms of protest could expose the employees to fines.

“Section 44 d and e of the Trade Practices Act prohibits secondary boycotts,” Hale said. “So even if they said ‘oh I’m not doing that extra work we have to replace the Bchuca workforce, they could potentially face substantial fines.”

Parmalat’s most recent proposal will go to a secret employee vote to be held this Friday in Echuca. Hale says the mood with employees is overwhelmingly that the new offer does not address their concerns, and from his discussions, he thinks it is unlikely to be accepted.

Parmalat refused to comment.