17 February 2012
SUBMISSIONS OF THE AUSTRALIAN AND INTERNATIONAL PILOTS
ASSOCIATION ON THE FAIR WORK ACT REVIEW
1
INTRODUCTION
1.1
The Australian and International Pilots Association (AIPA) welcomes the opportunity to
provide the Review Panel with our submissions as part of the review currently being
undertaken by the Panel into the Fair Work Act 2009 (C’th) (Fair Work Act).
1.2
AIPA is a professional Association and federally registered organisation representing
pilots employed by the Qantas Group (currently Qantas Airways Limited, Jetstar
Airways Pty Limited, Eastern Australia Airlines Pty Limited, Network Aviation, Express
Freighters Australia and Sunstate Airlines (QLD) Pty Limited) in airline operations
within Australia and around the world.
1.3
AIPA represents over 2,500 Qantas Group pilots in both domestic and international
operations and is the largest professional body of airline pilots in Australia. AIPA is the
eighth largest of 93 aircrew organisations that form the International Federation of
Airline Pilots’ Associations (IFALPA). In the global context, IFALPA represents 120,000
pilots.
1.4
AIPA regularly participates in regulatory, technical and government inquiries and
forums, and is recognised by various government and quasi-government bodies as
having a stakeholder interest in the Australian aviation industry.
1.5
AIPA’s key objective is to advance the employment interests of its members and, to
that end, represents individuals and the membership at large both in the workplace
and in the broader aviation industry.
1.6
Since the introduction of the Fair Work Act in July 2009, AIPA has dealt with numerous
issues arising out of the Act, including but not limited to enterprise bargaining,
industrial action, unfair dismissals and transfer of business.
1.7
More recently, AIPA has represented Qantas Long Haul pilots in protracted
negotiations with Qantas Airways Limited for a new enterprise agreement which, in
part, led to the grounding of the airline by Qantas management and the intervention of
the Federal Government and Fair Work Australia.
2
2.1
AREAS CONSIDERED BY THE SUBMISSIONS
AIPA does not intend to address all aspects of the Fair Work Act. Of the seven areas
which the Minister for Employment and Workplace Relations, the Hon Bill Shorten MP
has directed the Review Panel to examine, AIPA’s submissions will address three key
areas as listed below:
1

The emphasis on enterprise-level collective bargaining underpinned by simple good
faith bargaining obligations and related powers of Fair Work Australia;

The promotion of fairness and representation at work; and

Genuine unfair dismissal protection.
2.2
3
In addressing the three areas listed above, these submissions will consider the
following aspects of the Fair Work Act:

Enterprise Bargaining under Part 2-4 (with particular focus on good faith bargaining);

Transfer of Business under Part 2-8 (with particular focus on transfers of business
between a National System employer and wholly owned foreign subsidiaries or
foreign entities controlled by the employer;

Definitions relating to meanings of employee, employers etc, under Part 1-3 (with
particular focus on foreign crews performing work in Australian domestic aviation);

Unfair Dismissal under part 3-2 (with particular focus on demotions); and

Industrial Action under Part 3-3 (with particular focus on termination of protected
industrial action by Fair Work Australia).
GOOD FAITH BARGAINING
Division 8 of Part 2-4 of the Fair Work Act sets out Fair Work Australia’s role in
facilitating the bargaining process for an enterprise agreement. It lists the good faith
bargaining requirements which bargaining representatives are required to meet when
engaging in bargaining. The good faith bargaining requirements are:
3.1

attending, and participating in, meetings at reasonable times;

disclosing relevant information (other than confidential or commercially sensitive
information) in a timely manner;

responding to proposals made by other bargaining representatives for the
agreement in a timely manner;

giving genuine consideration to the proposals of other bargaining representatives
for the agreement, and giving reasons for the bargaining representative’s
responses to those proposals; and

refraining from capricious or unfair conduct that undermines freedom of association
or collective bargaining.
2
3.2
AIPA is of the view that the introduction of good faith bargaining is a step in the right
direction in achieving the object of the Act with regard to the provisions of “a balanced
framework for cooperation and productive workplace relations that promotes national
economic prosperity and social inclusion for all Australians”. However, AIPA believes
further improvements could be made.
3.3
There has been much debate in the media as to whether the Fair Work Act has
entrenched conflicts between workers and employers, therefore leading to poor
workplace performance and declining productivity.1 AIPA strongly supports the views
expressed by the Minister for Employment and Workplace Relations that employers
need to do more to improve employee engagement to lift performance and
productivity.
3.4
Having been on the frontline of the Qantas dispute, AIPA has encountered the
adversarial approach taken by Qantas against AIPA during negotiations for a new
enterprise agreement for Qantas Long Haul pilots. Of particular concern has been the
Company’s lack of engagement during the negotiations by withholding financial
information that would have assisted AIPA to understand and to verify Qantas’
financial position. Had Qantas supplied the information sought by AIPA during the
negotiations, the parties would have been able to develop a level of trust and
cooperation that would enable them to address any financial challenges that the
Company may have faced.
3.5
In August 2011, in the midst of negotiations for a new enterprise agreement for Qantas
Long Haul pilots, Qantas made public statements claiming that the Qantas
International segment of the business was losing money in the 2010/2011 Financial
Year despite the group reporting an overall profit of over $550 million. The CEO of
Qantas, Mr Alan Joyce and other Qantas representatives repeatedly asserted that
Qantas International lost $200 million during that Financial Year.
3.6
Qantas sought to rely upon the alleged loss as leverage in the negotiations for a new
enterprise agreement and demanded changes and further efficiencies from the Qantas
Long Haul pilots to reverse the loss allegedly made by the business.
3.7
Qantas Group’s Annual and Financial reports included Qantas Domestic, Qantas
International, and QantasLink within a single “Qantas” business segment. The figures
contained in the report provided limited information as to the financial and operational
support provided by Qantas to its wholly owned subsidiary, Jetstar.
3.8
Given the limitations of the financial information which was publicly available, it was
impossible for AIPA to determine the extent to which the allegations (that the
international business was a venture which had lost $200 million in the 2010/2011
financial year) were accurate.
3.9
AIPA and its members were, and continue to be, committed to the ongoing viability
and profitability of Qantas as part of the enterprise negotiations. To this end, AIPA
sought to understand and verify the Company’s financial position.
“Shorten puts blame on managers” by Mark Skully and Samantha Bowers in The Australian
Financial Review of 13 February 2012.
1
3
3.10 On 19 August 2011, AIPA wrote to Qantas with a list of 57 questions as to the volume
of costs incurred by each Qantas business segment and how profits were attributed to
each segment. As the financial information sought was likely to be confidential and
commercially sensitive information, AIPA was prepared to give confidentiality
undertakings to Qantas. However, despite numerous requests to the Company,
Qantas has yet to provide AIPA with the information sought.
3.11 AIPA notes that whilst there is an obligation imposed by subsection 228(1)(c) of the
Fair Work Act on a bargaining representative to disclose “relevant information (other
than confidential or commercially sensitive information) in a timely manner”, the
exclusion of confidential or commercially sensitive information from this obligation
imposes an impediment to good faith bargaining, especially where one bargaining
representative seeks to rely upon representations about its financial position during
negotiations for an enterprise agreement but is not prepared to provide information to
verify the representations.
3.12 Recommendation 1
AIPA recommends that subsection 228(1)(c) of the Fair Work Act be amended to
provide an effective way for bargaining representatives of employees to have access
to an employer’s financial information (subject of course to confidentiality). The Act
should make it compulsory for an employer to provide such information (including the
data from which the information was derived) to the bargaining representatives,
especially where the employer has relied upon and made representations to its
employees about its financial position as part of negotiations for a new enterprise
agreement. This would go a long way towards promoting fair and open negotiations
between the parties and the object of the Fair Work Act.
4
OUTSOURCING OF WORK TO FOREIGN WHOLLY-OWNED SUBSIDIARIES OR TO
FOREIGN SUBSIDIARIES CONTROLLED BY AUSTRALIAN ENTITIES
4.1
The Fair Work Act does not adequately deal with the situation where an Australian
employer transfers its business to a wholly-owned foreign subsidiary, or a foreign
subsidiary controlled by the employer, in an attempt to avoid the operation of an
enterprise agreement with its employees in Australia. Whilst the “transfer of business”
provisions of the Act deal with transfers of business between associated entities within
Australia, it does not deal with transfers of business between an Australian company
and its wholly-owned foreign based subsidiary or a subsidiary over which it has
control.
4.2
This issue is of particular concern in the aviation industry where there have been
instances of Australian airlines setting up subsidiary companies overseas to replace
Australian flight and cabin crews with foreign flight and cabin crews on routes which
the Australian crews used to operate.
4.3
An example of such a practice was the subject of an application by AIPA to Fair Work
Australia against Qantas and Jetconnect Limited in December 2009.
4
4.4
The background to the application can be found in the decision of Fair Work Australia
dated 6 September 2011. For ease of reference, we set out below the relevant
extracts from the decision:
“[9]
Jetconnect is a wholly-owned subsidiary of Qantas. It was established by
Qantas in 2001 as a wholly-owned limited liability company registered in New
Zealand. When Jetconnect first started operations it employed cabin crew from
a New Zealand base to on-hire to Qantas for its long haul operations and to
some New Zealand domestic operations conducted on behalf of Qantas.
[10]
In October 2002 Jetconnect was certified by the Civil Aviation Authority of New
Zealand (CAANZ) as an Aircraft Operator under the Qantas brand and
commenced to operate passenger services on behalf of Qantas on domestic
New Zealand routes. In September 2003 Jetconnect commenced to operate
trans Tasman services on behalf of Qantas, initially with only one or two round
trips per day. The pilots were New Zealand residents, based and trained in
New Zealand and the aircraft were leased from Qantas.
[11]
The basic arrangements as between Qantas and Jetconnect have remained
unchanged from the time that Jetconnect commenced to operate trans Tasman
services for and on behalf of Qantas in September 2003. These arrangements
include the leasing of B737 aircraft from Qantas under Operating Agreements,
with the aircraft being registered in New Zealand and operated by Jetconnect
under its own Air Operators Certificate (AOC) issued by CAANZ. The aircraft
bear Qantas livery and have a sticker near the door which says “Operated by
Jetconnect on behalf of Qantas Airways Limited.” The trans Tasman services
operated by Jetconnect have Qantas flight numbers, with the flight schedules
being determined by Qantas in consultation with Jetconnect. Jetconnect does
not control its routes or destinations, but contracts to Qantas to operate on
routes and destinations determined by Qantas. Qantas is responsible for
marketing and ticketing all its trans Tasman services, both those operated by
Qantas and those operated by Jetconnect.
[12]
The pilots employed by Jetconnect on the trans Tasman services wear Qantas
uniforms and have an Airport Identification Card issued by CAANZ containing a
card number and a Qantas staff number. The Jetconnect pilots are trained by
Qantas and are eligible to become members of the New Zealand Air Line Pilots
Association Industrial Union of Workers (NZALPA). The Jetconnect pilots who
are members of NZALPA are covered by the Jetconnect Collective
Employment Agreement 2008-2011, which was negotiated between Jetconnect
and NZALPA under New Zealand industrial laws. All other Jetconnect pilots
are employed under individual employment agreements.
[13]
Since September 2003, when Jetconnect commenced conducting a small
number of trans Tasman flights on behalf of Qantas, the number of trans
Tasman routes it flies for Qantas has increased and the number of flights
operated by Qantas itself has decreased. Before June 2009, Jetconnect
5
operated seven aircraft on 4 domestic lines of flying and 3 trans Tasman lines
of flying. However since Jetconnect ceased operating domestic flights in New
Zealand in about June 2009, it has been operating 6 lines of flying using seven
aircraft on trans Tasman services. Jetconnect uses B737 aircraft to operate
trans Tasman flights to and from Auckland and Wellington and Qantas uses
B737 and A330 aircraft to operate services to and from Auckland, Christchurch
and Queenstown. By January 2011, Jetconnect was operating approximately
154 flights per week on these services and Qantas was operating
approximately 52 flights per week.
[14]
In January 2011, Qantas advised AIPA representatives that under the March
2011 Schedule for B737s flying the trans Tasman services would be
undertaken by Jetconnect. This involves a further increase in flights on the
trans Tasman services undertaken by Jetconnect and a reduction in the flights
undertaken by Qantas.
4.5
AIPA’s application sought to vary the Qantas Shorthaul Pilots’ Award 2000
[Transitional] to include Jetconnect as a respondent and to clarify the definition of the
Award so as to include Jetconnect’s operations.
4.6
AIPA’s argument was that Jetconnect was operating as a business division or unit of
Qantas rather than an independent subsidiary, therefore Jetconnect and Qantas were
a single entity for the purpose of the industrial regulations of pilots. AIPA also argued
that the arrangements between Qantas and Jetconnect were a sham insofar as they
concern these industrial regulations.
4.7
In a two-to-one decision of the Full Bench, Senior Deputy President Boulton J and
Commissioner Hampton held that Fair Work Australia did not have jurisdiction under
the relevant legislative regime to vary the Award as sought by AIPA. Although they
both acknowledged that Qantas exercised a considerable degree of control and
influence over the operation of Jetconnect, they were reluctant to pierce the corporate
veil.
4.8
In Her Honour’s dissenting decision, Senior Deputy President Drake ruled that given
the evidence and the material presented, she was persuaded that Jetconnect was
acting as an agent of Qantas for the operations of Qantas’ short haul operations and
for the employment of pilots. Of significant interest were her comments in paragraph
121 of the decision, where she states:
“[121]
What Qantas has done in relation to conducting its trans-Tasman flights and
Jetconnect is to reverse the base from which flights are despatched and then
comply with the consequential compulsory New Zealand regulatory
outcomes, including those involving air safety. The rest is smoke and mirrors.”
6
4.9
Recommendation 2
AIPA recommends that the transfer of business provisions of the Fair Work Act be
strengthened to ensure that Australian companies cannot avoid their employment
obligations under Australian law and Australian workplace instruments simply by
setting up wholly-owned foreign subsidiaries or subsidiaries over which they have
control and then outsourcing the work to these subsidiaries, especially where the work
has a direct connection to Australia (e.g. the provision of transportation services of
passengers or goods in and out of Australia).
5
APPLICATION OF THE FAIR WORK ACT TO FOREIGN-BASED FLIGHT AND
CABIN CREW WHO WORK IN AUSTRALIA ON DOMESTIC FLIGHTS
5.1
As part of the Senate Inquiry into the Air Navigation and Civil Aviation Amendment
(Aircraft Crew) Bill 2011 and the Qantas Sale Amendment (Still Call Australia Home)
Bill 2011, AIPA has actively participated in, and has made submissions to, the Inquiry.
5.2
The Inquiry was established to consider, inter alia, issues of safety (including fatigue),
pay and working conditions and the effect on Australian jobs caused by the use of
overseas-based crew by Australian airlines and their subsidiaries.
5.3
AIPA is concerned about the practice of Australian airlines using foreign-based crew to
work on domestic routes within Australia, thereby replacing the jobs of Australian
domestic crew and avoiding the airlines’ obligations to provide terms and conditions of
employment under the relevant Australian workplace instrument.
5.4
Below are extracts from AIPA’s supplementary submissions2 which touch upon the
application of the Fair Work Act and on how the Act could be improved to address the
issue:
“Compounding the issue is the potential application of the Fair Work Act 2009 to the
foreign-based cabin crew. AIPA is concerned that the Submission3 of the Department
of Education, Employment and Workplace Relations (DEEWR) was at best equivocal
about the application of the Fair Work Act 2009 to the foreign-based cabin crew.
While the Submission was broadly concerned with the likely extra-territorial
application of Australian working conditions as a consequence of the drafting of the
Bill, the key issue of the rules governing the domestic sectors appears to be a
function of the characterisation of the particular sector between Australian ports:
2
3
AIPA supplementary submission to the Australian Senate Rural Affairs and Transport
Committee. Pilot Safety including consideration of the Transport Investigation Safety
Amndment (Incidents Report) Bill 2010
Department of Education, Employment and Workplace Relations, Submission 9 to the Senate
Rural Affairs and Transport Legislation Committee Inquiry into the Air Navigation and Civil
Aviation Amendment (Aircraft Crew) Bill 2011 and the Qantas Sale Amendment (Still Call
Australia Home) Bill 2011, undated
7
“3.…In general terms, while foreign-based crew would not be covered by the FW
Act while working on international flights that fly in and out of Australia, they may
be covered by the FW Act and a relevant modern award while working in Australia
on domestic flights.”4 [emphasis added]
“8. Foreign employees engaged outside Australia principally to work overseas,
including on international flights to and from Australia, are not covered by the FW
Act (see further below). This is consistent with the general principle that the law
governing a contract is the law of the place in which the contract is formed.
However, work carried out by overseas-based employees on Australian domestic
flights can be seen as a separate and distinct part of their engagement that may
be covered by the FW Act and relevant modern awards.”5 [emphasis added]
AIPA, while noting the difficulty that DEEWR faces when determining the threshold of
“principally to work overseas”, strongly believes that operating on domestic sectors is
distinctly different from operating on international sectors. We do not distinguish
those sectors on the basis of the nature of the work performed, but rather in the
context of the labour market within which it is performed - a distinction we believe is
entirely consistent with the policy intentions of the Migration Legislation Amendment
(Worker Protection) Act 2008.
Unfortunately, the evidence given to the Committee by the DEEWR confirmed to
AIPA that the current provisions of the Fair Work Act 2009 appear to be inadequate
to resolve the issues:
“Senator GALLACHER: So, if there was a a hub which was servicing Asia,
established by timetabling and scheduling, but due to curfew periods—for argument's
sake—there was an opportunity to operate that aircraft domestically and they used
international crew on that, would that escape the system as we currently have it?
Mr Kovacic: I really cannot give you a definitive answer. All I can say is that you need
to look at the specifics of each particular instance and form a judgment.
Senator GALLACHER: What is very clear is that, if you are operating domestically in
Australia, you are covered by the Fair Work Act?
Mr Kovacic: I do not think you can put it that black and white. I think what you can—
Senator GALLACHER: So if you are an Australian—
Mr Kovacic: If the travel, in terms of domestic, is incidental, arguably, potentially, you
are not covered. But, equally, if it is replacing, if I can put it that way, domestic aircraft,
it could be covered by the Fair Work Act.
Senator GALLACHER: 'Could'? 'Maybe'? It is not clear. You are not able to give us
any advice on that?
Mr Kovacic: All I can say is that work carried out by overseas based employees on
Australian domestic flights, if it can be seen as a separate and distinct part of their
engagement, can be covered by the Fair Work Act and relevant modern awards, and
that is a direct quote from paragraph 8 of the department's submission.
CHAIR: What the hell does that mean?
4
5
Ibid, page 1
Ibid, page 2
8
Senator FISHER: You have to look at the whole work circumstances—don't you, Mr
Kovacic—to make a decision. You cannot just—
Mr Kovacic: I think the point I was making is that you would really need to look at the
facts of each particular situation.
Senator FISHER: Yes, in their entirety. You cannot just pull out a couple of legs that
might look like they are domestic.” 6
In the circumstances, AIPA believes that the Bill in its current form casts too wide a
net in trying to prevent the exploitation of foreign employees and that foreign airlines
can legitimately be removed from that net. The DEEWR submission acknowledges
advice from the Department of Infrastructure and Transport (DIT) that foreign airlines
are generally not permitted to operate domestic sectors (known as cabotage). AIPA
agrees that:
“22.
The FW Act should not be interpreted as applying to pilots and crew of foreign
airlines operating between two or more points in Australia as part of an
international flight, as this would impermissibly interfere with the jurisdiction of
another State.”7
The debate needs to be refocused on the primary issue of domestic sectors operated
by Australian international airlines and the employment conditions of the crew.
In the absence of a specific definition in Australian legislation that determines the
beginning and end points of an international service, AIPA suggests that the
embarkation of the first passenger whose flight begins and finishes at an aerodrome
located in Australia marks the end of an inbound international flight and, similarly, the
disembarkation of the last passenger whose flight begins and finishes at an
aerodrome located in Australia marks the beginning of an outbound international
flight. Conversely, the carriage of any passenger whose flight begins and finishes at
an aerodrome located in Australia is to be considered as domestic carriage.
A further issue that the DEEWR evidence did little or nothing to clarify was that of
enforcement of the Fair Work Act 2009 against foreign corporations. AIPA is most
concerned about the possibility that the simple artifice of interposing a foreign
employment entity between the Australian employer and the foreign employee may
serve to protect the Australian employer from any enforcement action while, for all
intents and purposes, the foreign employment entity is practically beyond reach.
AIPA believes that this effective indemnification of the Australian employer who
directly benefits from the work of the foreign employee is best undone by a “deeming”
or “see through” provision that treats the Australian employer as if there was no
interposed foreign employment entity.
AIPA agrees with the DIT position:
6
7
Department of Education, Employment and Workplace Relations, Senate Committee Hansard,
Senate Rural Affairs and Transport Legislation Committee Inquiry into the Air Navigation and
Civil Aviation Amendment (Aircraft Crew) Bill 2011 and the Qantas Sale Amendment (Still Call
Australia Home) Bill 2011, 24 November 2011, page 19
Department of Education, Employment and Workplace Relations, Submission 9, Op cit, page 3
9
“Regulation of workplace conditions
The Department notes the Bill is intended to “protect the workplace conditions of
foreign or overseas-based flight or cabin crew.”
The Civil Aviation Act 1988 and the Air Navigation Act 1920 are directed at ensuring
aviation safety and implementing Australia’s rights and obligations within the
international framework of aviation regulation. The Department does not believe these
frameworks are appropriate as vehicles to achieve other policy objectives relating to
the regulation of workplace pay and conditions.” 8
We therefore recommend that the Air Navigation and Civil Aviation Amendment
(Aircraft Crew) Bill 2011 be amended to target the Fair Work Act 2009 as the
appropriate vehicle to provide the necessary protections to avoid the exploitation of
foreign crew members. Schedule 1 should be repealed and replaced with a new
“Schedule 1 - Amendment to the Fair Work Act 2009” that gives effect to the
following scheme:
1.
The definition of flight crew officer should be repealed and replaced by a
definition of Aircraft operating crew that reflects the Civil Aviation
Regulations 1988 definition of ‘operating crew”:
Aircraft operating crew means any person who:
(a) is on board an aircraft with the consent of the operator of the aircraft; and
(b) has duties in relation to the flying or safety of the aircraft.
Note
2.
This definition includes persons:
(a)
who are conducting flight tests; or
(b)
who are conducting surveillance to ensure that the flight is conducted in
accordance with these regulations; or
(c)
who are in the aircraft for the purpose of:
(i)
receiving flying training; or
(ii)
practising for the issue of a flight crew licence.
Two new definitions should be inserted that clarify the reach of the scheme.
The definition is deliberately broad and includes maintenance and other
activities:
Australian Domestic Aviation means activities conducted in Australia in the
support or conduct of commercial aviation operations that carry passengers whose
flight begins and finishes at an aerodrome located in Australia.
Note:
In this context, Australia includes the Territory of Christmas Island and the Territory of
Cocos (Keeling) Islands (see paragraph 17(a) of the Acts Interpretation Act 1901).
Australian Domestic Aviation Operator means the person, organisation, or
enterprise engaged in, or offering to engage in, an Australian Domestic Aviation
operation.
8
Department of Infrastructure and Transport, Submission 8 to the Senate Rural Affairs and
Transport Legislation Committee Inquiry into the Air Navigation and Civil Aviation Amendment
(Aircraft Crew) Bill 2011 and the Qantas Sale Amendment (Still Call Australia Home) Bill 2011,
undated
10
3.
A new section 13A should be inserted in Division 3:
13A
Extended Meaning of national system employee in relation to
Australian domestic aviation
Any non-national system employee performing work in Australian
Domestic Aviation shall be deemed to be a national system employee.
4.
Section 14 ‘Meaning of national system employer’ should be amended by
repealing and replacing subparagraph 14(1)(d)(i) to refer to an ‘aircraft
operating crew’ member and inserting a new paragraph (g) that is intended
to limit the scope of the deeming by a ‘direct benefit’ proximity test:
(g)
an Australian Domestic Aviation Operator who directly benefits from the
work performed by a non-national system employee in Australian
Domestic Aviation, regardless of the absence of a direct employment
relationship.
We see the ‘direct benefit’ test as being limited to work performed on or in a
aircraft or in any other support activity that, other than for an interposed
employment entity, might usually be performed by a direct employee of the
operator. AIPA does not intent “direct benefit” to include code-share or
other multi-user arrangements but does intend that the test would apply to
“virtual airlines’ and single user arrangements such as ‘wet’ leases and
charters.
AIPA believes that the scheme outlined above will more effectively address the issue
of the exploitation of foreign workers without affecting bona fide international
operations or foreign operators. We accept that the special case of the AustraliaNew Zealand arrangements may require further scrutiny, although we do not believe
that those arrangements were enacted to permit significant distortions of the normal
Australian labour markets.”
5.5
Recommendation 3
In summarising the supplementary submission to the Inquiry in respect of amendments
to the Fair Work Act, AIPA recommends that the Fair Work Act be amended to extend
its application to foreign-based flight and cabin crew who perform work in Australian
domestic aviation.
6
TERMINATION OF PROTECTED INDUSTRIAL ACTION
6.1
Since 9 August 2010, AIPA has been a bargaining representative for Qantas Long
Haul pilots in negotiations with Qantas for a new enterprise agreement.
6.2
On 29 October 2011, Qantas notified AIPA of its intention to lock out its Long Haul
pilots from 8.00 pm on 31 October 2011 (“the pilot lockout”). The notice to Long Haul
pilots included the following as to the reason for the lock out:
“The lock out is organised and engaged in as a response to the following industrial
action by employees organised by AIPA:
11
Ongoing ban relating to compliance with the Qantas uniform policy and substitution
with an AIPA approved uniform policy; and
Ongoing ban relating to compliance with Qantas cabin announcement policy and
substitution with an AIPA approved announcement.”
6.3
At that time, Qantas was separately engaged in negotiations with the Australian
Licensed Aircraft Engineers Association (“ALAEA”) for a proposed enterprise
agreement to cover licensed engineers. Qantas and QCatering Limited (“QCL”) were
also separately engaged with the Transport Workers Union of Australia (“TWU”), for a
proposed enterprise agreement to cover ramp, baggage handling and catering
employees.
6.4
On 29 October 2011, Qantas notified the TWU of its intention to lock out ramp and
baggage handling and catering employees from 31 October 2011. Qantas also notified
ALAEA of its intention to lock out licensed engineers from 31 October 2011.
6.5
The decision by Qantas and QCL to lock out the members of the TWU, ALAEA and
AIPA was accompanied by a decision to immediately ground the Qantas fleet.
6.6
On 29 October 2011 the then Minister for Tertiary Education, Skills, Jobs and
Workplace Relations, the Hon Chris Evans MP (“the Minister”) made application to Fair
Work Australia (“FWA”) pursuant to s424 of the Fair Work Act seeking orders that all
protected industrial action being engaged in by Qantas, QCL, ALAEA, TWU and AIPA
be terminated or in the alternative suspended for a period of 90 days.
6.7
The application was heard by FWA on an urgent basis commencing at 10.00 pm on
Saturday 29 and resuming on Sunday 30 October 2011 in proceedings designated as
B2011/3816.
6.8
On 31 October 2011, a Full Bench of FWA ordered that all protected industrial action
in relation to any or all of the proposed agreements between Qantas, QCL, ALAEA,
TWU and AIPA be terminated. The order is published by FWA as PR516214 and the
reasons for decision of FWA are published as [2011] FWAFB 7444.
6.9
In the lead up to the hearing before FWA, the only significant industrial actions taken
by the pilots were the wearing of red ties instead of the company issued black ties
whilst at work and the making of passenger announcements.
6.10 The evidence before FWA demonstrated that Qantas viewed the industrial action
taken or threatened by the TWU and ALAEA as protracted and damaging to Qantas.
There was no evidence or any probative evidence that the actions of AIPA members
were causing any operational difficulties or impediments to Qantas.
6.11 The evidence going to the reason for the lock out could not support a finding that it
was a response to the industrial action organised by AIPA. Rather the evidence
suggested that the lock out was part of a larger strategy by Qantas to roll up the three
separate bargaining disputes with the three separate unions into a single dispute and
bring that to a head in the expectation that this would lead to binding arbitration.
12
6.12 The two other unions, the TWU and the ALAEA had also organised, and their
members had engaged in, protected industrial action.
6.13 FWA found at [10] of the decision that it was unlikely that the protected industrial
action by the three unions, even taken together, was threatening to cause significant
damage to the tourism and air transport industries. FWA correctly held that it was the
Qantas action that was threatening to cause significant damage to the tourism and air
transport industries and indirectly to industry generally because of the effect on
consumers of air passenger and cargo services.
6.14 Despite the finding by FWA at [10] of the decision, it ordered that all protected action in
relation to the three proposed agreements be terminated.
6.15 AIPA is of the view that the finding at [10] meant that the unions’ industrial action did
not meet the legislative prerequisites for an order to suspend or terminate,
Accordingly, FWA could not suspend or terminate that industrial action. In terminating
all industrial action, AIPA believes that FWA acted beyond power. AIPA is currently
seeking a review by the Full Federal Court of the decision.
6.16 If AIPA’s view is not correct, then Fair Work Act would effectively enable employers
with a significant role in the Australian economy to effectively disempower their
employees in negotiations for an enterprise agreement by locking out their employees,
holding the national economy to ransom and then seeking government intervention to
terminate all industrial action - even where the industrial action taken by its employees
had been very minor or falls short of a threat to cause significant damage to the
Australian economy or a threat to endanger the life, personal safety or health or
welfare of the population or part of it.
6.17 Recommendation 4
AIPA recommends that the Fair Work Act be amended to make it clear that employer
response action must be a reasonable and proportionate response to employee claim
action or employee response action in order for it to be protected industrial action.
6.18 Recommendation 5
With regard to Fair Work Australia’s decision on whether such action should be
suspended or terminated, AIPA recommends that suspension should be the primary
remedy, with termination being the last resort after a period of suspension has been
exhausted.
6.19 Recommendation 6
AIPA recommends that the same notice period which applies to employee claim action
(ie 3 working days) should also apply to the notification of employer response action.
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7
DEMOTIONS AND PROTECTION FROM UNFAIR DISMISSAL
The Fair Work Act makes a distinction between demotion and dismissal for the
purpose of unfair dismissal under part 3-2 of the Act.
7.1
For the purposes of s.386(2)(c) of the Fair Work Act, a person is deemed not to have
been dismissed from their employment if the person was demoted, and their demotion
does not involve a significant reduction in his or her remuneration or duties and they
remain employed by the employer that effected the demotion.
7.2
It is apparent that s.386(2)(c) was intended to afford protection to those employees
who have been demoted and who have suffered a significant reduction in their
remuneration or duties as a result of the demotion.
7.3
However, there have been decisions by both the Australian Industrial Relations
Commission and Fair Work Australia which have stated that if a certified agreement or
any other employment agreement which provides for redeployment or demotion to
occur without terminating the employee’s employment, then the employee bound by
such agreements will not be afforded protection from unfair dismissal in respect of the
demotion or redeployment.
7.4
In the case of Holland v Qantas Airways Limited [2011] FWA 3778, the applicant, Ms
Michelle Holland, made an application for an unfair dismissal remedy based on the
assertion that her employment as a pilot with Qantas was terminated as a result of the
Company’s decision to demote her from the rank of Captain to First Officer.
7.5
Qantas asserted that as Clause 14.9 of the Qantas Airways Limited Flight Crew (Long
Haul) Certified Agreement 2005-2006 (EBA7) empowered management to demote Ms
Holland due to operational suitability, and therefore her employment could not have
been deemed to have been terminated. The basis of this argument was derived from
decisions of the Australian Industrial Relations Commission that “a demotion which
might amount to termination of employment will not do so if the employee’s contract (or
industrial instrument) contains an express term allowing demotion”.9
7.6
Ms Holland, on the other hand, asserted that her demotion amounted to an unfair
dismissal based on the following arguments:

A demotion is a termination of employment where it involves a significant
reduction in the remuneration or duties of an employee10;

For the purposes of the statute, a dismissal or termination of employment may
occur even if there is no termination of contract of employment11;

Where an industrial instrument provides for demotion, it must draw a distinction
between demotion, termination and redeployment. If the relevant demotion
clause makes no such distinction, the demotion may be treated as a dismissal or
termination for the purposes of the Act; and
9
Hermann v Qantas Airways Limited [2001] AIRC 316 and Boo Hwa Chan v Christmas Island
Administration (1999) Print S1443.
10 Visscher v The Honorable President Justice Giudice [2009] HCA 34.
11 Ibid.
14

Clause 14.9 of EBA7 does not operate to overcome the contractual principle that
a demotion will necessarily amount to a termination of employment, as it does
not distinguish demotion from termination of employment. Moreover, Clause 14.9
does not give a right to demote without termination.12
In the end, Senior Deputy President Drake concluded that Ms Holland’s demotion did
not amount to termination within the meaning of s.386(2)(c) of the Fair Work Act. In
Her Honour’s view, the language of Clause 14.9 of EBA7 sufficiently distinguished a
demotion from termination of employment at the initiative of the employer. AIPA
submits that the mere fact that an employee is covered by a workplace instrument or is
bound by an employment agreement containing provisions dealing with demotion
should not in itself exclude the employee from seeking unfair dismissal remedy,
especially when the demotion results in a significant reduction in pay or duties and is
manifestly unfair.
The provisions in such workplace instruments or employment agreements should not
in itself prevent employers from scrutiny as to whether their decision to demote was
harsh, unjust or unreasonable.
7.7
Recommendation 7
AIPA recommends that s.386(2)(c) of the FW Act should be amended to make it clear
that the protection from unfair dismissal in respect of demotions continues to apply
despite the fact that the employee may be covered by an industrial instrument or any
other employment agreement that contains an express term allowing for such
demotions.
12
Gorczyca v RMIT University [2002] AIRC 705.
15
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