Australia: Managing the workforce impacts of fuel supply disruption

With ongoing conflict in the Middle East and disruption to fuel supply, businesses are planning for the impacts of reductions in fuel supply, increased costs and fast-tracked changes to minimum standards to pass on increased fuel costs.

The implications extend well beyond procurement and logistics. Businesses should now be actively assessing the employment, industrial relations and safety issues that may arise as part of their operational contingency planning, particularly where fuel availability affects attendance, rostering, business continuity, transport-dependent operations and contractual supply arrangements.

Consultation

Businesses implementing operational changes in response to fuel availability constraints or increased fuel costs should be mindful of their consultation obligations. As was the case during the early stages of COVID-19, compliance with consultation requirements is likely to become a significant point of focus in employee and union disputes.

Awards and enterprise agreements generally require employers to consult with affected employees and their representatives about major workplace changes that are likely to have significant effects on employees.  A major workplace change is commonly defined as having a ‘significant effect’ if it results in outcomes such as: termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; elimination or diminution of job opportunities or job tenure; alteration of hours of work; retraining; relocation; or job restructuring. 

Separate consultation obligations may also arise where employers propose changes to regular rosters or ordinary hours of work.

The precise trigger for, and scope of, consultation will depend on the terms of the applicable industrial instrument. In practice, consultation provisions vary across industrial instruments, including in relation to when consultation is required, who must be consulted (and in what forum), and the matters on which the employer is required to provide information and consider employee views.

A disciplined process remains critical. This includes clearly communicating the proposed changes, inviting and genuinely considering workforce and representative feedback, and communicating decisions and implementation outcomes in a transparent and timely way.

Depending on the nature of the proposed change, consultation obligations under work health and safety legislation may also need to be addressed in parallel.

Suspension of operations and stand down

For businesses that directly rely on fuel supply to sustain operations, consideration should be given now to the options available under employment contracts, enterprise agreements, awards and the Fair Work Act to stand down parts of the workforce, with or without pay, if fuel is not available to sustain ordinary operating conditions.

As a general proposition, employers may stand down employees without pay where employees cannot be usefully employed because of a stoppage of work for any cause for which the employer cannot reasonably be held responsible. A stoppage of work caused by insufficient fuel supply will ordinarily satisfy that test, provided there is no other useful work available.

However, the exercise of stand down rights requires careful analysis. Particular complexity arises where only part of the workforce is stood down, where some operations are prioritised over others, or where the issue is fuel rationing or increased cost rather than complete absence of supply. The interaction between statutory stand down rights and contractual or enterprise agreement terms will also require close scrutiny.

Exercise of stand down rights can also often lead to disputation. The Fair Work Commission is empowered to resolve such disputes, and in doing so must take into account fairness between the parties. This further emphasises the importance of engagement with employees and their representatives prior to implementing a stand down where possible, and the importance of first considering alternatives, such as allowing access to leave or other agreed arrangements.

Requests to work from home

For employers with significant numbers of employees capable of performing work remotely, fuel disruption is likely to generate a substantial increase in requests to work from home. 

Businesses should therefore assess whether current remote work processes remain fit for purpose, including approval pathways, technology support, equipment arrangements and safety controls.

For employers seeking to maintain a predominantly office-based workforce, the precedent effect of accommodating large volumes of work from home requests, or temporarily relaxing existing attendance requirements, should not be underestimated. 

Approach to payment for employees unable to attend work

Where employees are unable to attend the workplace due to fuel availability issues and cannot perform work remotely, employers should adopt a clear and consistent position on payment and access to leave.

While the starting position will often be that employees who cannot attend work and cannot work from home are not entitled to payment unless using paid leave, the position remains subject to employment contract terms and any applicable industrial instrument.

Impact on bargaining and claims for additional benefits

For those currently bargaining for an enterprise agreement or about to commence bargaining, considering the impact of fuel cost increases on bargaining positions will be important, including claims for additional allowances and overall increases to rates of pay to account for the increased cost of living. 

Outside of bargaining, employers may also be faced with claims for additional payment and contribution to fuel costs associated with work related travel. This includes both general travel to work and rates for reimbursement of private vehicle use. 

The ACTU has announced its intention to make an application to the Fair Work Commission to uplift vehicle allowances in awards to account for increased costs of fuel - in advance of the annual wage review which would ordinarily take effect on 1 July. If made, those changes will increase pressure on employers to provide additional compensation for employees.

Work health and safety

Fuel disruption contingency planning should also include a specific focus on work health and safety risk. This includes risks arising from limitations on fuel supply to ongoing operations, including how operations can be safely ramped down and safely recommenced if required. 

It also extends to the risks associated with workplace change, stand downs, and increased employee stress and uncertainty. Psychosocial hazards are particularly relevant in this context and are increasingly scrutinised by regulators and employee representatives during periods of significant organisational and operational change. 

Increases to minimum standards to compensate for additional fuel costs

Following urgent amendments to the Fair Work Act designed to fast-track the process, the Fair Work Commission has also proposed making a road transport contractual chain order requiring participants in the road transport industry — including businesses that contract with road transport operators — to provide for recovery of increased fuel costs within road transport contractual chains.

While the final scope and terms of the proposed order remain subject to an ongoing Fair Work Commission process, the development is a timely reminder for businesses to review transport and logistics contracts now to understand where fuel cost and supply risk currently sits, whether existing cost pass-through mechanisms are sufficiently responsive, and whether current contractual settings will remain compliant if the proposed contractual chain order is made.