One Key Resources group, which supplies workers to BHP Billiton and Glencore, has appealed the Federal Court's decision that found its broad-coverage enterprise agreement was invalid because it was voted up by just three people.
The decision means group subsidiary One Key Workforce falls back to the industry award, which prohibits use of casual employees and now entitles the company's 1,100 casual workers to annual and sick leave entitlements.
Seeking an urgent stay of the ruling pending appeal, the company told the court last month it was at serious risk of insolvency as it now owed $3.5 million to its existing workforce.
Barrister Ian Neil SC also argued the decision would have "profound" and "widespread" implications for other agreements.
'Between a rock and a hard place'
However, the company's claim appeared to backfire as Justice Geoffrey Flick then demanded it pay the monies owed as a security in return for a stay order.
"Quite frankly I'm between a rock and a hard place in this case," Justice Flick said.
"If I give the orders you seek, a considerable number of workers are not going to get paid the entitlements they should be paid.
"If I don't grant the order you seek, the company goes into administration and the security the workers have is prejudiced."
The Construction, Forestry, Mining and Energy Union, which brought the case, told the court it feared the company would go "belly up" and abandon the workers if it lost the appeal.
The union argued the company's liabilities were "significantly higher" than its estimates and called for a $3 million security deposit as a condition for a stay order.
Justice Flick said he was sympathetic to the union's position and proposed One Key Resources expedite its appeal and come up with enough money to cover its liabilities to date.
"It's time to put up or shut up," he told the company.
One Key Resources has since reached an agreement with the CFMEU to pay $1 million in an interest-bearing trust account pending appeal. If the company loses, the money will be distributed to employees.
Threat to EBAs
One Key Resources is one of the largest labour suppliers in the coal industry and is part of the Fircroft Group, a global technical recruitment company that operates in more than 60 countries.
The ruling on appeal threatens a common form of enterprise agreement in the labour hire industry, where a few employees vote to approve an agreement that applies across multiple industries and classifications.
Justice Flick found that while agreements voted and approved by a few were not necessarily unlawful the One Key Resources agreement was invalid because the employees who voted were not representative of the broad selection of workers it proposed to cover.
Labor has promised to introduce laws to crack down on such deals, which it labels "sham agreements" and claims are used as a loophole to circumvent unions and undercut conditions.
A full federal court is expected to hear the appeal in February.