What's in and what's out? Full Federal Court clarifies scope of 'status quo' obligation

A Full Federal Court has dismissed an appeal lodged by the Australian Manufacturing Workers’ Union deciding that an employer’s policy changes, which were disputed by the Union, did not breach its obligation to maintain the ‘status quo’ under its enterprise agreement.

This decision provides rare judicial insight into the interpretation and treatment of status quo obligations in enterprise agreements, which are often raised in workplace disputes but infrequently litigated in court.

In late 2023, Opal Packaging Australia Pty Ltd consulted on proposed changes to its Alcohol and Other Drugs (AOD) Policy and announced the commencement of a different form of random drug testing (using a sample of the workforce at a particular site as opposed to blanket testing of all employees at a nominated site).

Disputes were initiated at several sites and prior to those disputes being resolved Opal conducted random sample testing at three of its sites in February 2024.

The Australian Manufacturing Workers’ Union (AMWU) alleged this conduct contravened the status quo clause in Opal’s enterprise agreement which provided that “work shall continue normally and the status quo remain”. The Union sought declarations and civil penalties for breaches of the Fair Work Act 2009 (Cth).

At first instance, the primary judge dismissed the AMWU’s claim on the basis that, properly construed, the status quo obligation did not inhibit Opal’s alleged conduct in conducting random AOD testing at the relevant sites.

The disputed clause before the Court was clause 16.3 of Opal’s 2022 Enterprise Agreement, which provided as follows.

16.3 Work to continue as normal

(a) It is a term of this agreement that while the dispute resolution procedure is being followed work shall continue normally and the status quo remain unless an employee has a reasonable concern about an imminent risk to his or her health or safety or the company has a concern about an imminent risk to the health or safety of any employee.

(b) While the dispute resolution procedure is being followed, work in the area affected will remain as it was at the initiation of the dispute.

(c) For the avoidance of doubt, no employee’s duties, shift, occupation or income will be changed during this process.

The Full Court of the Federal Court, comprised of Justices Raper, Hatcher and Longbottom, in a judgment delivered on 1 May 2026, dismissed the AWMU’s appeal.

The majority, (Justices Raper and Longbottom), held that the proper construction of the status quo obligation in Opal’s enterprise agreement was temporally fixed to the time that the dispute was raised.

Critically, this meant that any changes that were implemented prior to the dispute being lodged, and which were otherwise consistent with existing Opal’s policies and practices, could not fall foul of the status quo obligation.

As to what Opal was prohibited from doing once such a status quo obligation was enlivened, the majority observed that it was not able to “prescribe the universe of circumstances in which Opal may or may not be precluded from acting in particular ways”. However, their Honours found that the clause was concerned with preserving working conditions while a dispute was on foot and, in doing so, held a dual purpose in:

• preventing industrial action by employees; and
• restraining Opal from action that affected how its employees perform work.

On the facts of the case, the majority found no relevant pre‑dispute policy or practice that prevented random testing. The AOD Policy was found to have always permitted random testing and did not prescribe a selection methodology. They therefore rejected the AMWU’s argument that Opal’s prior “blanket testing” approach created a legally binding restriction on Opal to continue with this method of testing.

Justice Hatcher reached the same outcome but accepted the AMWU’s broader construction of the clause as being a reference to the status quo ante. Nonetheless, his Honour considered that the impugned conduct did not fall foul of the state of affairs prior to the dispute being raised, agreeing that random testing was not prohibited by the relevant policies or procedures and there was no established custom or practice that limited Opal in the manner contended by the AMWU.

This decision provides rare and critical insight into how a court will approach the task of construing status quo obligations and, more broadly, ambiguous terms of an enterprise agreement.

The Full Court re-affirmed the principles of construction that apply to enterprise agreements, including as set out in Australian Workers’ Union v UGL Resources (Contracting) Pty Ltd [2025] FCAFC 107 and James Cook University v Ridd [2020] FCAFC 123; 278 FCR 566.

In doing so, the Court gave primacy to the text of the words in the enterprise agreement, choosing not to give weight to industrial history or the broader industrial context in which the enterprise agreement was situated within, in order to determine its purpose and meaning.

In this case, the majority distinguished this clause with another class of status quo clauses,[1] which linked the stand fast obligation to the state of affairs prior to the matter being disputed.

Whilst the Court avoided clearly marking the boundaries of what a status quo clause might prohibit, it did not agree with the AMWU’s submission that ‘status quo’ obliges an employer to effectively freeze all policies or practices implemented before the dispute began.

As to what might constitute an adopted “practice”, the Court referred to conventional notions of custom and practice under contract law, being that they must be notorious and uniform whilst also being reasonable and certain. As such, exceptional or infrequent conduct (such as Opal’s conduct in ceasing AOD testing during the COVID-19 pandemic) will not qualify as a “practice” that the employer is required to continue.

• Evidently, the terms of the relevant status quo provisions, rather than industrial history and context, will be the determining factor in ascertaining employer’s obligations to maintain certain work practices and procedures during a dispute arising from an industrial instrument. Care must therefore be taken in how such provisions are drafted including consideration of whether there is any express or implied definition of what the “status quo” is or how it might be limited in a particular circumstance.

References:

[1] See Construction, Electrical, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Thiess Pty Ltd [2011] FCA 1020 and Civil Air Operations Officers’ Association of Australia v Airservices Australia [2021] FCA 1313.

The views expressed in this article are general in nature only and do not constitute legal advice. Please contact us if you require specific advice tailored to the needs of your organisation.

For more insights from the Kingston Reid team on the workplace law issues facing organisations in 2026, head to our Publications page to access our 2026 Workplace Insights report.

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