FWA 8272
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 5, Item 6 - Review of all modern awards (other than modern enterprise and State PS awards) after first 2 years
China Southern West Australian Flying College
VICE PRESIDENT WATSON
MELBOURNE, 27 SEPTEMBER 2012
Review of modern awards - application to vary the Air Pilots Award 2010 - Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Sch 5 Item 6. Fair Work Act 2009 ss.134, 138.
 This decision, edited from transcript, concerns an application by China Southern West Australian Flying College (China Southern) to vary the Air Pilots Award 2010 1(the Award). The application is made under Sch. 5, Item 6 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) as part of the review of all modern awards of which Fair Work Australia is required to conduct after the first two years of all modern awards coming into effect (the 2012 Review).
 The matter was listed for mention and programming on 20 June 2012 Directions were issued requiring the Applicant to file submissions in support of the application by 11 August 2012, with other interested parties to file submissions in reply by 1 August 2012. The matter was set down for hearing of the application on 14 August 2012.
 A submission was received from the Applicant on 29 July 2012 and date for filing submissions in reply for interested parties was extended to 8 August 2012. Submissions in reply were received from Qantas Group, Australian and International Pilots Association, Australian Federation of Air Pilots and Mr Andrew McCall, acting as a private individual.
 The application concerns a variation to Clause 16.3 of the Award, titled Training—classifications. Clause 16.3 currently provides:
“Where the employer requires a pilot to reach and maintain minimum qualifications for a particular aircraft type in accordance with this award, all facilities and other costs associated with attaining and maintaining those qualifications will be the responsibility of the employer.”
 China Southern seek to vary the clause by adding the words “Unless otherwise agreed in writing between both parties.” to the end of the clause.
 Sch. 5, Item 6 of the Transitional Act provides:
“(1) As soon as practicable after the second anniversary of the FW (safety net provisions) commencement day, FWA must conduct a review of all modern awards, other than modern enterprise awards and State reference public sector modern awards.
(2) In the review, FWA must consider whether the modern awards:
(a) achieve the modern awards objective; and
(b) are operating effectively, without anomalies or technical problems arising from the Part 10A award modernisation process.
(2A) The review must be such that each modern award is reviewed in its own right. However, this does not prevent FWA from reviewing 2 or more modern awards at the same time.
(3) FWA may make a determination varying any of the modern awards in any way that FWA considers appropriate to remedy any issues identified in the review.
(4) The modern awards objective applies to FWA making a variation under this item, and the minimum wages objective also applies if the variation relates to modern award minimum wages.
(5) FWA may advise persons or bodies about the review in any way FWA considers appropriate.
(6) Section 625 of the FW Act (which deals with delegation by the President of functions and powers of FWA) has effect as if subsection (2) of that section included a reference to FWA’s powers under subitem (5).”
 Further provisions of the Act are also applicable and relevant to the 2012 Review. Section 134 provides as follows:
What is the modern awards objective?
(1) FWA must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:
(a) relative living standards and the needs of the low paid; and
(b) the need to encourage collective bargaining; and
(c) the need to promote social inclusion through increased workforce participation; and
(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and
(e) the principle of equal remuneration for work of equal or comparable value; and
(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and
(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and
(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.
This is the modern awards objective.
A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.”
Submissions of the parties
 China Southern operates a flight school for the training of pilots and utilises various types of aircraft for training purposes. Pilots can train for up to four years with China Southern in order to gain enough experience to obtain future employment with major airlines in the aviation industry. China Southern employs flight instructors who are responsible for carrying out training to future pilots. While not expressly stated, it appears that China Southern seeks the variation to apply to its own employees engaged as flight instructors.
 China Southern submits that currently clause 16.2 has the effect of ensuring that employers are responsible for training their employees on aircraft which is akin to an induction and applicable to training received only on the commencement of employment. China Southern submits the variation sought will enable employers and employees covered by the Award to enter into a bonding agreement for the purposes of career development. China Southern submits that a bonded career development program will incorporate all the training requirements a pilot needs to advance their career, not just those applicable on the commencement of employment. China Southern submits that the variation would result in benefits to both the employees and the employers by relieving the financial burden associated with ongoing flight training for the pilots and providing a greater retention rate of employees, therefore leading to a greater return on investment.
 Other interested parties oppose the variation. They submit that matters related to bonding agreements should be dealt with as part of enterprise bargaining and should not form party of the safety net award.
Should the variation be made?
 The Award is a safety net of basic terms and conditions of employment. A mechanism is provided for in clause 7.1 within the Award for individual agreements to be reached to provide flexibility in the operation of certain provisions of the Award. In this matter a further flexibility option is sought to be provided whereby an employer and an employee can effectively agree, as part of other employment arrangements, that the obligation in clause 16.2 will not apply in the particular circumstances of their employment.
 The basis of the application is explained in the various submissions made by the parties. It seeks to expressly allow what is termed a “bonding agreement”, a concept that has been utilised in the aviation industry for many years to allow funding of training in exchange for an employment opportunity. It appears to me that this option of a bonding agreement involves considerable questions as to the nature of the trade-off, as it were, between the costs of training and the benefits provided to employees. In my view such a matter can be, and is more appropriately, dealt with under the enterprise bargaining stream of the Act where award obligations can be modified on the basis of agreements subject to the relevant tests provided for enterprise agreements.
 In those circumstances and having regard to the subject matter of the application, it has not been established that the variation is necessary or appropriate to give effect to the modern awards objective.
 This Award is subject to an ongoing review pursuant to the provisions of the Transitional Act. There are other specific applications that are in the process of being considered by the tribunal. Decision on those matters will be issued in due course.
 For the above reasons the application is dismissed. The award will not be varied in the manner sought.
VICE PRESIDENT WATSON
M Lydick, for China Southern West Australian Flying College
A Molnar with S Littlewood for Australian Federation of Air Pilots
R Bernasconi with K Srdanovic for Qantas Group
K Bowell for Australian and International Pilots Association
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