Woolworths has won its bid against the United Workers Union (UWU), with the Fair Work Commission finding the union has been unfairly negotiating with the supermarket giant and protest picket lines outside its distribution hubs are "unlawful".
Strikes by 1,500 Woolworths distribution hub workers have now dragged on for more than two weeks, and have thrown the supermarket's supply chain into chaos.
Woolworths successfully argued to the commission that picketing outside its sites was impacting on "good faith bargaining requirements" under the Fair Work Act.
The commission's deputy president, Gerard Boyce, said he was "satisfied that the picketing has prevented access in and out" of Woolworths distribution hubs, and could be classified as "unlawful".
"I find the UWU has not and is not meeting its good faith bargaining requirements under the act," he said.
The commission ordered on Thursday night that the protesters do not block access to the Woolworths distribution hubs.
Woolworths said it would try to reopen its main distribution hub in Melbourne's south-east "as soon as possible".
"We're sorry that this disruption has inconvenienced so many customers and we thank them for their understanding," it said in a statement.
"Today's decision is a positive step for our team members who want to get back to work before Christmas. It also means we will be able to progressively boost stock levels across stores in Victoria."
Legal experts say the case was "novel" and any order is likely to be appealed.
The UWU's Tim Kennedy acknowledged the orders of the Fair Work Commission.
"But the only way agreement will be reached and the strike will cease is after members democratically vote on a final position from the company," he said in a statement
"Workers are not robots and should not be treated like robots. But this is exactly what Woolworths has been seeking to do for thousands of workers across their warehouses."
The ruling comes as tense negotiations continued on Friday between Woolworths and the United Workers Union, with the union saying it thought they were getting closer to an agreement.
Woolworths argued picket lines were 'metaphorical gun'
Woolworths has previously estimated that the strike action at the four distribution centres in Victoria had resulted in it losing at least $50 million in sales.
The supermarket had applied to the commission for a bargaining order to move along picket likes outside distribution hubs at the centre of the strike.
Marc Felman outside court on Friday. (ABC News: Emilia Terzon)
Legal counsel for Woolworths Marc Felman KC called the picket lines "obstructive", "capricious or unfair", and "a metaphorical gun".
He argued they were having the effect of not allowing workers who may want to continue working to enter the site.
"It is an obvious pressure point for Woolworths, who are struggling."
Yet the UWU's barrister, Hugh Crosthwaite, told the hearing there was no proof the picket lines were impacting the ongoing negotiations between the union and the company.
"The union's position is that the conduct at the [Dandenong site] does not have any impact on bargaining and therefore it cannot undermine it," he said.
"On a basic assessment, it is utterly implausible."
'Novel' legal argument by Woolworths
The strike by members of the United Workers Union (UWU) is a legally protected action, meaning workers can not be sacked for taking part in it. They are also not paid while they are not working.
Prior to the FWC finding, labour law professor Shae McCrystal said Woolworths was in uncharted territory with a novel argument it was trying to get the commissioner to accept.
Essentially, Woolworths had argued that the union was undermining its own attempts to bargain with the company because it was promoting a picket line.
"The underlying strike action, not going to work, is a legally protected action," Professor McCrystal said.
"The picket itself is not, it doesn't fall into the definition of an industrial action in the Fair Work Act (laws that govern work and disputes).
"So it's neither protected or unprotected."
Normally, companies that are being hindered by picket lines — protests outside sites — ask the courts for an injunction. Sometimes, they will use arguments about, for example, interrupting traffic or access.
But there's one big problem with that.
"There's nothing inherently unlawful about standing on public land."
The Fair Work Commission is not a court, and that is not what Woolworths is doing.
Instead, it had been seeking to establish that the union was breaching "good faith bargaining" — the process by which parties negotiate with the best of intentions to reach an agreement — and it is doing it through actions that have long been practised as part of collective bargaining and union activity.
"Woolies's argument is a novel use of bargaining provisions, we've not seen them used like this before," Shae McCrystal explained, adding, "and I'm not entirely sure what Commissioner Boyce will do with it."
"What they've got to try and do is argue the picket is undermining collective bargaining … that the actions of unionists in asserting their claims undermines the bargaining process — that's quite a novel argument."
Professor McCrystal said any orders imposed could lead to a situation where the union was forced to tell workers not to picket the company, but would have no impact if the workers just decided to continue picketing anyway.
Farmers caught in the 'crossfire'
The strike action has so far avoided fresh produce distribution, but Victorian Farmers Federation president Emma Germano said some farmers have been caught in the crossfire as demand drops from Woolworths, as consumers shop elsewhere due to shortages created by the strike.
"If you're a shopper and you go into Woolworths and there's nothing there other than fresh produce, the next time that you go shopping, you don't go to Woolworths," Ms Germano said.
"And Woolworths are having to cancel orders to farmers, or massively cut down orders to farmers.
"I spoke to two growers this morning, [and] they've been impacted by a number of other problems this year, and now this on top of it."
She said affected supermarket suppliers have few options to offload the perishable produce, such as sending it to central markets, because supermarkets have different packaging.
Ms Germano said the government should step in at this point.
"When it impacts fresh fruit and vegetables, fresh produce, essential items, it shouldn't be allowed," she argued.
"And we need to see the government step up and change some of the rules here, because anything that impacts essential items for families shouldn't be allowed."
No other major supermarkets are affected by the industrial action at the Woolworths distribution centres, meaning consumers can buy goods elsewhere if they are unavailable at Woolworths.
Woolworths has been contacted for comment.