[2012] FWAFB 6612

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.266 - Industrial action related workplace determination

Transport Workers' Union of Australia
v
Qantas Airways Limited; Q Catering Limited
(B2011/3993)

VICE PRESIDENT WATSON
SENIOR DEPUTY PRESIDENT HARRISON
COMMISSIONER HARRISON



SYDNEY, 8 AUGUST 2012

Industrial action related workplace determination - mandatory terms - agreed terms - core terms - terms dealing with matters at issue - use of contract labour - terms and conditions of contractors and labour hire employees - proportions of contractors and labour hire employees - consultation - wage increases - reasonableness of conduct during bargaining - whether good faith bargaining requirements met - how productivity might be improved - Fair Work Act 2009, ss.266, 267, 268, 272, 273, 274, 275.

CONTENTS

   

Page

Paragraph

    1.

Introduction

3

1

    2.

The context of bargaining and the making of a workplace determination

4

8

    3.

The tribunal’s task

6

25

    4.

General consideration of the relevant factors

14

32

 

    The merits of the case

14

33

 

    The interests of the employers and employees

15

39

 

    The public interest

16

42

 

    How productivity might be improved

16

44

 

    The extent to which the conduct of the bargaining representatives was reasonable

16

45

 

    The extent to which the bargaining representatives have complied with the good faith bargaining requirements

17

53

 

    Incentives to continue to bargain at a later time

18

55

    5.

    Categories of terms

18

56

 

    Mandatory terms

18

57

 

    Agreed terms

18

58

 

    Core terms

19

60

    6.

Consideration of specific terms

19

62

 

    Site rates

19

63

 

    Contracting out

20

68

 

    Compulsory redundancies

22

74

 

    Proportions of supplementary labour and outside hire

23

78

 

    Allocation of overtime

24

83

 

    Scope of the determination

25

88

 

    Classifications

25

92

 

    Wage increases

26

93

 

    Duration and negotiation of the next agreement

27

98

 

    Superannuation

28

103

 

    Dispute settlement

28

105

 

    Part-time employees

29

111

 

    Shift work days off

29

114

 

    Changes to shift work rosters

29

115

 

    Overtime

29

116

 

    Meal breaks

30

119

 

    Blood donors leave

30

121

 

    Payment of wages

30

123

 

    Adjustments to pay

31

126

 

    Holding an Aviation Security Identification Card (ASIC)

31

128

 

    Limitations on weight

31

132

 

    International standards

32

136

 

    Access to the workplace determination

33

140

 

    Conduct of the parties

33

142

    7.

Workplace Determination

34

146

Introduction

[1] On 31 October 2011 a Full Bench of Fair Work Australia (FWA) made an Order to terminate industrial action in relation to a proposed enterprise agreement being negotiated between Qantas Airways Limited, Q Catering Limited (QCatering) and the Transport Workers’ Union of Australia (TWU). 1 Each of these entities was a bargaining representative for the negotiation of an enterprise agreement. As the bargaining representatives did not settle all of the matters at issue between them during the 21 day period following the termination of the industrial action,2 Fair Work Australia is required by s.266 of the Fair Work Act 2009 (the Act) to make a workplace determination as quickly as possible thereafter. This decision, and the Workplace Determination we have decided to make, represents the finalisation of this dispute.

[2] After the parities failed to reach agreement during the 21 day period following the Order terminating industrial action directions were made for the filing of proposed workplace determinations and witness statements by Qantas Airways Limited and QCatering and the TWU. Qantas Airways Limited and its subsidiary QCatering put a joint case in this matter and will be jointly referred to as “Qantas” in this decision.

[3] At the hearing of this matter on 23, 26—30 March, 3, 4, 30 May, 25 and 26 June 2012 Mr H. Dixon SC appeared for Qantas and Mr A. Hatcher SC appeared for the TWU.

[4] Evidence was led by Qantas from the following persons:

[5] Evidence was led by the TWU from the following persons:

[6] In addition to the evidence that was led, other evidence was tendered in the proceedings. The witnesses were not subject to cross examination.

[7] The evidence covered a wide range of topics including the state of the Australian economy, the state of the airline industry, the operations of Qantas, the history of the use of labour hire and contract entities, the wages and conditions of other ground service providers, the history of bargaining and negotiations, the circumstances of Qantas ground servicing and catering employees and the matters raised by the parties in their negotiations. We deal with the evidence in more detail below in the course of considering the applicable criteria and the matters required to be determined.

The context of bargaining and the making of a workplace determination

[8] The context of this matter is important. As noted above it arises from failed negotiations for a new enterprise agreement to cover Qantas ground handling operations. However, the scope of the negotiations and the groups of employees to be covered by this Workplace Determination are significant areas of dispute and underpin a number of key issues that are required to be determined.

[9] Ground handling functions encompass baggage handling at airport terminals (bag room services), various services on the ramp of the terminal including loading and unloading baggage from planes (ramp services), cleaning and preparation of plane cabins (fleet presentation), freight services and the provision of meals and refreshments for on-plane catering purposes (catering services). Enterprise agreements have been negotiated between Qantas and the TWU, as a representative of ground handling employees since the early 1990s. The last agreement was negotiated in 2008 and is known by the parties, and referred to in this decision, as EBA7. 3 The negotiations were aimed at reaching a replacement agreement intended to be known as EBA8.

[10] In late 2011 there were approximately 4015 permanent employees of Qantas covered by EBA7 comprising approximately 1702 employees in bag and ramp services, 466 in fleet presentation, 166 in freight and 1681 in catering. This group of employees represents approximately 15% of the Qantas Group workforce. The evidence establishes that the attrition rate of the employees covered by EBA7 has been approximately 4% per annum.

[11] Changes in Qantas’s operations and the airline industry generally are important elements of the context of this matter. Qantas has faced increased competition in its domestic and international operations over the past 12 years. This has taken the form of new entrants into the markets, increased flights by existing competitors and a capacity growth of seats. These changes have resulted in airlines offering lower priced tickets to attract customers and fill available capacity. Qantas has had no option but to respond to these competitive pressures. It expects these competitive pressures to continue.

[12] Qantas also tenders for and supplies ground handling services to international airlines and small regional airlines. This market has also become increasingly competitive with the introduction of specialist ground handling contractors. In addition to the provision of catering services to Qantas, QCatering also provides in-flight catering services to other airlines. It has also faced increased competition from new entrants into this market in recent years.

[13] Since 1997, Qantas has adopted an approach of competitive tendering for parts of its ground handling functions. It has also utilised labour hire employees on ramp services work and other ground handling for a larger number of years. In 2007, significant outsourcing proposals were developed by Qantas which were not proceeded with after agreement was reached to changes in work practices to improve the efficiency of Qantas employees.

[14] The EBA7 negotiations addressed the issues of contracting and job security against the background of potential outsourcing and labour hire arrangements in Qantas ground handling operations. Although the matters were discussed at length and certain understandings were reached, no specific provisions were inserted into the agreement regarding the wages and conditions of contractor and labour hire employees.

[15] In December 2008 and January 2009 Qantas announced its intention to contract out ramp and baggage work at certain airports. This led to industrial action by Qantas ground handling employees which was later the subject of Federal Court proceedings. In a decision handed down on 13 May 2011 Justice Moore found that by virtue of their involvement in the industrial action, the TWU and a certain number of its officials contravened s.494 of the Workplace Relations Act 1996 (the Workplace Relations Act). 4 Qantas sought injunction, damages and penalties for breaches of s.494, breach of the enterprise agreement, contravention of the Trade Practices Act 1974 and actions under various common law torts. The TWU made a cross claim alleging contravention of s.401 of the Workplace Relations Act by virtue of Qantas’s attempts to reduce its labour costs and allegedly making false and misleading statements in negotiating EBA7. Apart from the findings in relation to s.494, all other actions were dismissed.

[16] In 2009, Qantas established a new company known as Qantas Ground Services Pty Limited (QGS). The establishment of this company arose from the dispute between Qantas and the TWU over the intention of Qantas to outsource the bag room functions in Perth. As a result of discussions over this dispute, QGS was established to supply workers to perform bag room functions at Adelaide and Perth; ramp functions at Sydney Domestic Terminal for Qantas Link and supply labour hire employees for Qantas. The TWU made an enterprise agreement with QGS in 2009 (the QGS Agreement) 5 which contains wages and allowances less than those contained in EBA7. The QGS Agreement was made on 24 June 2009 under s.333(d) of the Workplace Relations Act and has a nominal expiry date of 30 November 2012.

[17] Qantas presently utilises QGS to supply supplementary labour working alongside Qantas employees at Sydney Domestic Terminal, Melbourne, Brisbane, Adelaide, Perth, Canberra, Darwin, Townsville, Sydney International Terminal, Hobart and Cairns. The employees of QGS include employees formally engaged by other labour hire companies such as Blue Collar, Workforce International and Chandler McLeod (Ready Workforce). In the past Qantas has adopted a practice of paying labour hire providers, other than QGS, an amount based on the rate of pay for Qantas employees. The rates paid by Qantas to QGS with respect to QGS employees are based on the QGS Agreement. Qantas utilises QGS to operate and manage all ramp and bag room functions at the Sydney Domestic Terminal, and the bag room at Perth. Qantas engages other third parties to operate all ground handling functions at Port Hedland, Broome, Karratha, Newman and Kalgoorlie.

[18] QCatering has engaged labour hire employees to supply labour hire workers at each catering centre (Mascot, Brisbane, Adelaide, Melbourne and Perth). It has contracted out particular functions at some locations, for example replenishing headsets, packing cutlery and replenishing bar carts at Mascot. It does not utilise QGS.

[19] Qantas indicated to the TWU during the 2011 enterprise bargaining negotiations, and confirmed in the proceedings before us, that it intends to use QGS and/or labour hire workers to replace Qantas ground handling employees who leave the business through attrition and to increase the size of the workforce as a result of any growth in the business. It does not intend to continue the practice of paying labour hire providers rates of pay calculated by reference to Qantas employee rates.

[20] The recent history of QGS and other labour hire providers, and the future hiring intentions of Qantas, were important matters during the extended dispute over the renegotiation of EBA7, and remained important during this arbitration.

[21] Both Qantas and the TWU led expert evidence from two leading Australian economists, Mr Chris Richardson and Dr Frank Gelber respectively on the general economic context.

[22] Dr Gelber predicted that the Australian economy is expected to continue to perform well over the next 3 years. He predicted wages growth to pick up gradually in 2012 and unemployment to decline back below 5% by late 2012. He predicts growth in the Labour Price Index of 4% per annum from July 2011 to June 2015. Dr Gelber predicts the aviation industry to be buoyant with growth stronger than the Australian GDP and world GDP. He predicts Qantas will maintain its dominant position in the domestic market and benefit from increased passenger numbers in the international market. He expects Qantas to perform strongly in the next 3 years.

[23] Mr Richardson generally agreed with the general business backdrop outlined by Dr Gelber. His views diverged on the risks to Australia which he described as “notable” and “building”. He said that Dr Gelber underplays the consequences of any European “meltdown” and takes the view that the downside risks have changed markedly. He said that more emphasis should be given to the downside risks. Mr Richardson cautioned against using projections used for long term planning purposes as a measure of future passenger movements. He expects actual passenger movements to be less than those forecast by the Bureau of Infrastructure, Transport and Regional Economics. Mr Richardson notes that Qantas earns revenue in deregulated and highly competitive markets and its costs are determined in regulated and less competitive ways. He said that this remains a potentially vital mismatch. He notes that Qantas’s return on equity remains below the most conservative of benchmarks, is below the rate of return for 10 year Commonwealth Bonds and is substantially riskier than such alternative investments.

[24] We note that much of the evidence of the experts related to broad national and economic trends and in relation to Qantas related to the company as a whole. In fact Qantas and its subsidiaries operate a number of different airlines in different markets. This determination relates to ground handling employees in Australia principally servicing domestic and international operations under the Qantas brand.

The tribunal’s task

[25] As is evident from the following provisions, the Act imposes different obligations on Fair Work Australia depending on the subject matter of bargaining, the status of negotiations and the proposed terms of the Workplace Determination. The Act creates certain categories of terms. “Mandatory terms” and “agreed terms”, as defined in the Act, must be incorporated in the Workplace Determination. “Core terms” must satisfy s.272. The Workplace Determination must deal with matters at issue in a way the tribunal considers appropriate having regard to the factors contained in s.275. The Workplace Determination cannot include any other terms.

[26] Division 3 of Part 2-5 of the Act deals with “industrial action related workplace determinations” and provides as follows:

[27] Division 5 of Part 2-5 of the Act deals with core terms, mandatory terms and agreed terms of workplace determinations and provides as follows:

[28] The factors in s.275 have a general bearing on the package of terms to be contained in the Workplace Determination and a more specific bearing on many of the particular claims. Both parties contended that the approach of a Full Bench of the Australian Industrial Relations Commission under predecessor legislation in CFMEU v Curragh Queensland Mining Ltd (the Curragh Case) 6 should be adopted. We agree that this is a leading case dealing with the approach to similar legislation in the same context as the present case and deals with many of the same factors we are required to take into account. When amending legislation adopts wording or tests from predecessor legislation it is inferred that the legislature intended that authorities dealing with the predecessor legislation will continue to apply.7 While there are some changes to the wording of the factors to which regard must be given, the provisions are substantially the same.

[29] In particular we note the consideration by the Full Bench of the earlier authorities and the endorsement of the approach that the task of the tribunal in a matter such as this is to assess the respective positions of the parties in relation to the matters at issue and, by reference to the statutory factors, arrive at a conclusion that would be regarded as appropriate in the context of the bargaining had the bargaining concluded successfully. The Full Bench in the Curragh Case noted that this did not involve a form of subjective prognostication as to the outcome of the negotiations. Rather, the task involves an objective assessment of the statutory factors and an overall judgment as to an appropriate workplace determination to apply to the operations concerned until the parties replace the determination with a new enterprise agreement.

[30] In relation to specific criteria in the Act the Full Bench said:

[31] As we have noted, the relevant employees of Qantas are currently employed under the terms of an enterprise agreement known as EBA7 which commenced operation on 12 December 2008. It contained a nominal expiry date of 1 July 2011. Bargaining for a new agreement commenced on 24 March 2011. EBA7 was the basis for the negotiations. Each of the parties raised claims for variations to the terms of EBA7 and approached the negotiations on the basis that until everything was agreed, nothing was agreed. Therefore the terms of EBA7 and the claims made by each of the parties in the negotiations were matters at issue during the negotiations and remained at issue at the end of the post industrial action negotiation period.

General consideration of the relevant factors

[32] We consider it desirable to make some general comments on the application of the s.275 factors in this case before considering the specific terms and matters at issue. All of the factors must be given weight to the extent that they are relevant to a particular matter. The significance of particular factors will vary in the overall judgment that is required to be made.

The merits of the case

[33] This is obviously an important consideration although it is neither possible nor desirable to exhaustively list the disparate merit considerations that might be considered relevant in this matter.

[34] EBA7 is an appropriate starting point because it represents the package of terms the parties have previously agreed to apply, the terms under which the parties are presently operating, and the basis for the negotiations conducted by the parties. If terms have not been operating satisfactorily or if circumstances have changed such as to warrant a change, then a party seeking the change must make out a case for the change. Traditional merit considerations will be relevant. These fall generally within the concepts contained in the objects of the Act including the achievement of productivity and fairness through enterprise level collective bargaining, noting that this arbitration is in substitution for bargaining between the parties that did not result in an agreement.

[35] It is also relevant to have regard to practices of other employers in the airline industry and the terms and conditions applying to their employees. Such information is capable of being relevant to the fairness of particular terms as well as the appropriateness of the package of benefits in a highly competitive environment. We note in this regard that in many respects, the current wages and conditions of the employees covered by this arbitration are the highest or among the highest of comparable employees in the airline industry in Australia.

[36] As the arbitration involves the replacement of an enterprise agreement, limitations on powers for making modern awards are not relevant. However issues of principle and the approach of industrial tribunals to particular matters will be relevant to the merits of the case. These include the general reluctance of industrial tribunals to interfere with the right of management to manage its business, unless some unfairness to employees is demonstrated. 8 The Full Bench decision in the XPT Case is frequently quoted as stating the relevant principle. The Bench expressed the principle in these terms:

[37] The extent to which the parties have been prepared to deal with matters in enterprise bargaining negotiations and their approach to such matters for this and other groups of employees will also be relevant. Such practices may provide a guide to deciding what provisions are fair and reasonable in a workplace determination applying at this enterprise.

[38] In relation to this and other groups of employees, Qantas has been reluctant to insert provisions into its enterprise agreements covering matters such as its intentions regarding redundancies, procedures regarding outsourcing and operational issues. However, it has been prepared to provide assurances by way of side letters on some such matters, in some cases having regard to jurisdictional limitations that have applied to the content of enterprise agreements. The approach of Qantas is relevant to some of the matters at issue in this case. We deal with these matters specifically below.

The interests of the employers and employees

[39] We agree with the Full Bench in the Curragh Case that this factor calls for an appropriate balance between the legitimate expectations of the employers and employees.

[40] The increased competition and cost pressures facing Qantas are obviously relevant to its future ability to grow and prosper. Qantas believes that there is a significant labour cost differential per unit of labour between it and its competitors for persons exercising the same skills and performing similar work. We are satisfied on the evidence in these proceedings that Qantas faces significant competitive pressures and needs to implement cost savings in order to respond to those pressures. In our view its efforts to obtain greater flexibility to meet operational peaks and troughs, and reduce its operational costs to enhance its competitive position should be given due weight in our consideration of the terms and conditions to apply to the employees to be covered by this Workplace Determination.

[41] Qantas employees have been required to deal with significant operational changes and are clearly affected by the economic and competitive position of Qantas. While they cannot be immune from the effects of these changes, they have a legitimate expectation to be involved in the development of the changes, and contribute to ways in which the operational goals of greater efficiency and reduced costs can be achieved without placing undue hardship on them. In the competitive environment and in the face of organisational restructure, the employees also have legitimate concerns as to their job security. Ultimately it is in the interests of both Qantas and its employees that Qantas operates a viable and competitive business and is able to retain, attract and reward skilled and motivated employees.

The public interest

[42] Qantas is an iconic Australian business with a very successful history. It contributes greatly to the Australian tourism industry, the business community and the broader public interest, not only through the services it provides but also through the direct and indirect labour it employs. Its ability to respond to competitive pressures and remain successful has a broad public interest beyond the interests of its shareholders and its employees.

[43] The disruption from industrial action that caused significant loss and damage to Qantas, its employees and the public in 2011 is also a factor in this case. It is in the public interest that there is a fair and lasting settlement of the matters in dispute and a period of stability for all concerned for an appropriate period into the future.

How productivity might be improved

[44] We agree with the approach of the Full Bench in the Curragh Case that this factor involves a focus on eliminating unreasonable restraints to productivity. The context of competitive pressures in the airline industry highlights the importance of this factor in the present case. We propose to consider the effect on productivity in relation to the specific disputed claims in this matter.

The extent to which the conduct of the bargaining representatives was reasonable

[45] This requirement is directed to conduct of the bargaining representatives during bargaining for the agreement in question and therefore focuses on the bargaining process leading to the termination of industrial action and this arbitration. We agree with the Full Bench in the Curragh Case that this factor should be applied against the background of the rights and obligations available to parties involved in enterprise bargaining under the Act. In general, conduct that is lawful and available under applicable laws would not be considered unreasonable because the scheme of the Act, as with predecessor legislation, permits parties to take protected industrial action and engage in robust negotiation tactics in support of their claims in enterprise bargaining. In bitter industrial disputes, tactics used by one side or the other during the bargaining process may be open to criticism from the other side. However in our view, conduct would need to be particularly out of the ordinary, and not reasonably open in the circumstances, to give rise to a finding that it was unreasonable.

[46] In this matter the TWU contends that in recent times Qantas has departed from commitments it made in letters regarding QGS in 2009 and that the arrangements regarding QGS in 2009 were obtained by deception. It also contends that certain conduct regarding proposals to settle this dispute was unreasonable and the lock out of employees in October 2011 in response to employee industrial action was unreasonable because it was disproportionate to the industrial action taken by TWU members.

[47] Qantas denies that it acted unreasonably in any of these respects. It contends that its 2009 letters have been misconstrued and that its negotiation tactics are not unusual nor amount to unfair bargaining tactics. It points to the loss of approximately $70m from industrial action in 2011 and asserts that its response of bringing the negotiations to a head were clearly open to it and prevented ongoing damage, particularly losses flowing from forward bookings and the impact of the industrial action on its brand and reputation. Qantas submits that in those circumstances its actions cannot be described as unreasonable.

[48] We have considered all of the evidence in relation to these matters and we do not consider that the conduct of either party during the bargaining process was unreasonable.

[49] Some of the allegedly unreasonable conduct concerning QGS occurred before or outside of the bargaining process. Statements made by Qantas during the bargaining process as to its future operational intentions are in our view more appropriately described as frank and open than unreasonable. Disclosing its intentions enabled the TWU to take into account those matters in the negotiations.

[50] We turn to the allegations about negotiating tactics. In the context of long running and bitter enterprise bargaining negotiations, placing deadlines on the acceptance of offers, withdrawing offers that have not been accepted, and making non-negotiable package offers are not in our view unreasonable. We note that until this arbitration it was not previously contended that any of this conduct was in breach of the good faith bargaining obligations in the Act.

[51] We note that in its decision terminating the industrial action the Full Bench noted the evidence led by Qantas about the impact of the industrial action engaged in by all three unions. The Full bench said: 9

[52] While value judgments could be made as to the appropriateness of the damaging industrial action engaged in by the parties, and it would clearly have been preferable for the negotiations to reach a conclusion without such damage to all concerned, in the light of the circumstances at the time, we do not consider that any of the industrial action can be described as unreasonable or that it should outweigh our consideration of the merits of the claims made by the parties in this arbitration.

The extent to which the bargaining representatives have complied with the good faith bargaining requirements

[53] The TWU contends that certain conduct engaged in during bargaining was capricious, unfair, undermined collective bargaining and thereby involved a breach of the good faith bargaining requirements in the Act. These contentions cover similar matters raised in relation to the reasonableness of conduct such as the disproportionate response of a shutdown of the airline, advancing non-negotiable offers and placing deadlines on acceptance of package offers.

[54] We do not consider that the TWU has established that any of these matters amount to a breach of the good faith bargaining requirements of the Act. As we have noted above, it can be expected that bargaining in a hotly contested dispute will be robust and that parties will take steps to bring about a desired result that the other party will regard as unreasonable or uncalled for. Action which is provided for in the Act, of itself, will usually not amount to a breach of the legislation’s good faith bargaining requirements. One may be critical of the amount of industrial action engaged in by both parties and the damage it caused to them, each other and the community generally. However it is quite a different thing to contend that the action was capricious or unfair and undermines collective bargaining. We do not think any of the actions of the parties can be so described.

Incentives to continue to bargain at a later time

[55] This factor is consistent with the encouragement of collective bargaining and the desirability of parties making enterprise agreements central to the objects of the Act. We will consider this matter generally in relation to the matters at issue and in particular in relation to the duration of the determination we make.

Categories of terms

[56] It is appropriate that we make some general comments about each of the categories of terms described in ss.267 - 273 of the Act.

Mandatory terms

[57] By virtue of s.267(1) of the Act it is necessary to include clauses in the Workplace Determination containing a dispute settlement procedure, a flexibility term and a consultation term. There are limited differences in the positions of the parties as to the wording of these provisions. We propose to adopt the wording contained in the Qantas proposed workplace determination subject to a consideration of the disputed areas below.

Agreed terms

[58] Section 267(2) requires FWA to adopt terms that the bargaining representatives for the proposed agreement agreed should be included in the agreement at the end of the post termination of industrial action negotiation period.

[59] It is accepted by the parties in the proceedings that there were no agreed terms at the end of the post-industrial action negotiation period because the negotiations were conducted on the premise that “nothing was agreed until everything was agreed”. 10 We agree that this is the position and there are no agreed terms, as defined in s.274 of the Act, to be inserted into the Workplace Determination. To the extent there is now some consensus as to certain matters, we are required to apply the tests that apply to core terms, and any agreement is likely to impact on the merits of those matters.

Core terms

[60] There are further requirements for core terms of workplace determinations contained in s.272 of the Act. These include the insertion of a nominal expiry date and the application of jurisdictional and other requirements applicable to enterprise agreements. We will include a nominal expiry date and address the jurisdictional and other requirements in the course of considering each of the matters at issue.

[61] By virtue of s.267(3) of the Act we are required to include terms that we consider deal with the matters at issue. The Workplace Determination we make deals with the matters at issue in the manner we consider appropriate. In some cases this may involve declining to insert a term sought or dealing with the matter in a different manner to that sought by the parties.

Consideration of specific terms

[62] We now turn to consider the specific terms of the Workplace Determination.

Site rates

[63] The clause sought by the TWU is as follows:

[64] The TWU seeks this clause “to ensure that the workplace determination is not immediately undermined or avoided by contracting out and the engagement of labour hire employees, including through Qantas subsidiary QGS”. 11 The TWU contends that the claim should be granted because of the way in which Qantas established QGS, its intention now of using QGS as the future prime provider of its labour, Qantas’s right to contract out functions in the future and the abandonment of Qantas’s practice of paying labour hire employees the same as Qantas employees with the objective of reducing costs.

[65] Qantas contends that such a clause is unprecedented in its operations and in the airline industry, interferes in the heartland of managerial discretion, undermines the integrity of the agreement the TWU has made with QGS, is inconsistent with the premise of the QGS Agreement that rates for QGS employees would be lower than those of Qantas employees and will lead to an increase in costs, undermine competitiveness, is inconsistent with authority and is inimical to improving productivity. Qantas also contends that there will be a similar impact on the operations of QCatering because of the impact of the clause on contractors and labour hire employees.

[66] We do not believe that a case has been made out for the insertion of the clause sought by the TWU. In our view it is not appropriate for this Workplace Determination to directly or indirectly govern the terms and conditions of employment of employees not covered by it. The use of contractors and labour hire employees is widespread in the airline industry and is a method by which airlines are able to achieve operational flexibility and reduce costs. It has become part of the operational strategy of Qantas and other airlines. Granting the TWU claim would overturn the approach of Qantas in using contractors and lead to immediate and significant increases in its costs with respect to contractor and labour hire employees. In view of the strong opposition of Qantas and its expressed need to reduce its costs in a difficult market environment the claim cannot be justified. The claim fails on the grounds of merit and by virtue of its negative impact on efficiency and productivity.

[67] We do not consider that the claim can be any more justified by the preparedness of the TWU to support a revised classification structure containing a lower “new starter” rate than the commencement rate in the EBA7 classification structure.

Contracting out

[68] The TWU seeks the insertion of what is described as “the ACTU Protocol” - a revised version of a protocol dealing with contracting out and outsourcing developed first in 1996. The protocol was appended to EBAs 2-6 but not included in EBA7 as a result of perceived jurisdictional limitations. Qantas however confirmed its commitment to the protocol in a side letter. The TWU seeks to insert a clause requiring adherence to the protocol and an Appendix as follows:

[69] The TWU contends that the key feature of the clause is the requirement to provide an opportunity for employees to prepare an in-house bid to demonstrate that savings can be generated without outsourcing. Qantas contends that the model consultation clause is sufficient to deal with such matters.

[70] Section 273 of the Act requires FWA to insert the model consultation clause unless satisfied that an agreed consultation clause meets the requirements of s.205(1) of the Act. In this case there is no alternative agreed clause. We are therefore not permitted to depart from that clause in relation to the matters with which it deals.

[71] It appears to us however that the protocol deals with matters other than consultation. Paragraphs one and two of the protocol deal with consultation. Paragraphs three and four deal with the provision of resources and paid time off for union nominees and union members to attend meetings to respond to the business case for contracting out and prepare specific in-house bids. Paragraph five deals with promoting Australian products.

[72] Given the history of contracting out at Qantas, we consider that it is desirable that when contracting out is being contemplated, Qantas employees should be given an opportunity to prepare an in-house bid to provide an alternative to contracting out. For this opportunity to be meaningful there needs to be adequate time and resources to prepare a proposal covering at least the general concepts involved. Qantas has been prepared to provide such resources and time off in the past, although there has not been any quantification of the amount of leave or paid meeting times available. We believe there is merit in some continuation of the arrangements but we do not believe that any such entitlements should be open-ended.

[73] We are prepared to provide the following clause in the Workplace Determination which contains some specific limitations and other restrictions based on reasonableness. The disputes procedure in the Workplace Determination will apply to any disputes over its operation. The parties should review the operation of the clause during the life of the Workplace Determination and review its terms during their next enterprise negotiations.

Compulsory redundancies

[74] The TWU proposes the following clause covering compulsory redundancies:

[75] The TWU submits that such a commitment provides further protection for existing employees against Qantas engaging supplementary labour at the expense of employees covered by the determination.

[76] Qantas opposes the insertion of the clause but is prepared to issue a side letter to the effect that no employee will be made compulsorily redundant as a direct result of the use of QGS or third party labour hire. Qantas’s grounds for opposition include that such a clause will place Qantas out of step with its competitors, will place TWU employees out of step with other Qantas employees and will be difficult to negotiate out from any future enterprise agreement. Mr Dixon said the following as to the inclusion of the word “direct” in its proposed side letter:

[77] Although there has been no history of compulsory redundancies as a result of using contractors for this group of employees and no plans for this to occur in the near future, the extensive use of contractors and a subsidiary labour provider, QGS, raises legitimate concerns by employees about the impact of these changes on job security. We consider that the commitment Qantas is prepared to give should be contained in the Workplace Determination. Having regard to Qantas’s reasons for the wording of the commitment, we will adopt that wording.

Proportions of supplementary labour and outside hire

[78] The TWU seeks the following clause in the Workplace Determination:

[79] The TWU advances this claim in conjunction with the site rates claim to limit the use of supplementary labour and in order to “ensure that the workplace determination is effective”. 13 It contends that the only real efficiency sought by Qantas is the ability for it to restructure its affairs so that the Workplace Determination will not affect the future workforce and this claim is designed to prevent this occurring.

[80] Qantas opposes the claim on jurisdictional and merit grounds. It submits that the clause does not deal with a permitted matter, ratios have no previous history within Qantas or the airline industry, the clause will increase costs and reduce flexibility and cannot be said to enhance productivity.

[81] The determination of how to engage labour, the extent to which contractors are utilised and the numbers of employees to be engaged in various categories are classically regarded as matters properly to be determined by the management of an enterprise.

[82] In our view this claim fails on merit. Qantas has for many years utilised labour hire and contractors to provide it with flexibility of labour supply and to reduce its costs. It has not been shown that current Qantas employees have been adversely affected by this practice, although the TWU opposes the extent to which labour hire and supplementary employees are engaged and contends that Qantas should not be permitted to allow the number of direct Qantas employees to dwindle by attrition. To interfere with management’s decisions on such a matter would require clear and strong evidence of unfairness. No such case has been established with respect to current employees or otherwise. In the light of this conclusion it is not necessary that we determine whether there is jurisdiction to insert the clause. Even if there is jurisdiction to grant such a clause we would dismiss it on the grounds of merit.

Allocation of overtime

[83] The clause sought by the TWU in relation to the allocation of overtime is as follows:

[84] The effect of the clause is to require Qantas to offer overtime and non-rostered work such as shift extensions to direct employees before labour hire employees.

[85] The TWU contends that the clause is consistent with existing Qantas practices and will prevent the erosion of earnings by the use of labour hire employees or contractors.

[86] Qantas contends that the claim goes beyond existing practices, intrudes into management’s prerogatives and may cause inefficiencies such as requiring overtime to be paid to full-time employees instead of providing available shift extensions on single time to part-time employees.

[87] While we consider that practices such as those currently adopted by Qantas are generally fair, we are concerned that the clause sought by the TWU may unfairly advantage full-time employees at the expense of part-time employees and involve the potential for excessive working hours for full-time employees. We are also concerned that the effect of the preference for overtime for full-time employees over shift extensions for part-time employees may be inefficient and unproductive. We note that the parties agree on the retention of clause 16.3.2 of EBA7 which states:

In our view it is not appropriate to go beyond this clause.

Scope of the determination

[88] The TWU seeks to have the Workplace Determination cover QGS. Qantas submits that the scope of the Workplace Determination should be the same as EBA7.

[89] QGS and its employees were not involved in any of the negotiations leading to industrial action, did not engage in any of the industrial action and were not subject to the orders terminating the industrial action that led to this arbitration. During that period they were and remain covered by the QGS Agreement which has not passed its nominal expiry date. In our view there is no jurisdiction to extend the scope of the determination to QGS employees.

[90] Even if there is jurisdiction we would not be inclined to extend the scope of the agreement. The scheme of the Act is that the direct employers and employees are responsible for determining the terms and conditions of employment that apply to them. They have done so in the current agreement negotiated by QGS and the TWU. They will have an opportunity to renegotiate the agreement on its expiry later in 2012.

[91] We will provide for the same scope of the Workplace Determination as in EBA7.

Classifications

[92] The TWU advanced a revised classification structure with a lower “new-starter” rate than the current agreement and lower than the average QGS “new-starter” rate. It contended that the new structure had a range of advantages for Qantas. The TWU made it clear that the revised structure was being advanced in conjunction with its claims for site rates and if its claim for site rates was not accepted then it simply sought the continuation of the current classification structure with increases in wage rates. As we have dismissed the claim for a site rates clause it is not necessary to consider the TWU proposals further.

Wage increases

[93] The TWU seeks increases in wages of 5% per annum from 1 July 2011 and 1 July 2012 and for the Workplace Determination to run until 30 June 2013. Qantas proposes 3% increases from the commencement of the Workplace Determination and on each anniversary of the commencement for a three year term.

[94] The assessment of an appropriate wage increase involves a matter of broad judgment based on a range of relevant circumstances. The TWU submits that relevant factors include compensation for inflation, catch up for reductions in real wages, levels of increases for other employees in the community and improvements in productivity. Qantas submits that the relevant factors include the history of wage increases and other financial benefits provided to this group of employees, increases in pay agreed with the TWU and other unions for Qantas employees and employees of other employers in the aviation industry, increases in the national minimum wage and movements in the consumer price index.

[95] We have considered all of these factors and the evidence in relation to them. We note in particular:

[96] As far as the operative date of the increases the TWU submits that as the employees have not received an increase in wages since July 2010, the increases should apply from 1 July 2011. Qantas submits that there are no exceptional circumstances warranting a retrospective wage increase, and applying a retrospective wage increase would place employees in the same position as they would have been if they had not engaged in damaging industrial action. We note that the agreed operative date for increases in the recent Licensed Aircraft Engineers Workplace Determination was 1 January 2011, being the anticipated commencement date of a new agreement following the expiry of the previous agreement on 31 December 2010.

[97] In all of the circumstances we have decided that the increase in wages should be 3% per annum and that the increases should apply from 1 July 2011. In our view a 3% increase is in line with appropriate other measures and has due regard to the current circumstances of the employees and Qantas. We note that this outcome could have been achieved without the losses to all concerned.

Duration and negotiation of the next agreement

[98] The TWU seeks a nominal expiry date of 30 June 2013. Qantas seeks a nominal expiry date three years from the date the Workplace Determination is made.

[99] Qantas submits that three year agreements are the usual practice within the company and was the length agreed with the ALAEA for the period of operation of the Licensed Aircraft Engineers’ Workplace Determination. Qantas contends that the extensive disruption, loss and damage arising from the 2011 dispute should be followed by an appropriate period of stability over employment terms and conditions.

[100] The TWU submits that a Workplace Determination is intended to be a departure from the norm and should be as brief as possible to allow the parties to return to enterprise bargaining.

[101] We have considered this matter in the light of the content of the Workplace Determination we have decided to make. The Workplace Determination is in large part derived from the existing agreement. It provides for wage increases similar to those contained in the existing agreement and in other Qantas agreements. Few express productivity improvements have been sought by Qantas. The significant changes sought by the TWU relate more to the terms and conditions of other employees than those covered by this Workplace Determination. It has been usual for the parties to negotiate an agreement for three years from the expiry of the last agreement. In all of the circumstances we consider that the nominal expiry date of the Workplace Determination should be 30 June 2014. This means that the wage increases we will provide under the Workplace Determination will operate from 1 July 2011, 1 July 2012 and 1 July 2013.

[102] The TWU seeks provisions relating to the next negotiations between the parties including the timing of the commencement of negotiations and time off for union representatives. In our view these are matters for the parties and should not form part of the Workplace Determination.

Superannuation

[103] Currently Qantas employees who are in a Qantas accumulation division of the Qantas Superannuation Plan or in an external fund receive employer contributions at the rate of 10% in lieu of the minimum amount required to be contributed in accordance with the Superannuation Guarantee Legislation. The arrangement is not currently reflected in TWU EBAs.

[104] The TWU seeks a clause of the Workplace Determination that requires contributions to be made of 1% above applicable legislation - so that there would be an enforceable obligation and the percentage contributed would be required to be increased if the legislative obligation increases. The TWU submits that this is consistent with the existing agreement made at the time of EBA7 and is reflected in a side letter.

[105] Qantas is opposed to any enforceable obligation, which it says is unprecedented, and is opposed to the claim that the contribution be maintained at 1% above the legislative minimum. It is prepared to issue a side letter undertaking that contributions of 10% will continue to be made.

[106] We are prepared to reflect the existing contribution level in the Workplace Determination. However we are not satisfied that a merit case has been made out that the contribution level should increase in the event that the legislative obligation increases. A clause in the Workplace Determination will reflect this position.

Dispute settlement

[107] The TWU seeks a revised Dispute Settlement Clause that provides for a wider scope than that contained in EBA7. The TWU proposal involves the application of the disputes procedure to any dispute pertaining to the relationship of Qantas and employees or Qantas and the TWU whereas the Qantas proposal limits matters subject to the procedure to disputes about matters arising under the Workplace Determination or the National Employment Standards. The TWU also wishes to confer power on FWA to make a status quo order in relation to disputes that come before it. Qantas is opposed to such a variation to the current clause.

[108] The TWU submits that Qantas’s position reflects a desire to maintain absolute management prerogative with respect to its employees and avoid scrutiny of its decisions and actions. It submits that it is sensible and appropriate that the parties are required to discuss a dispute pertaining to the relationship of the company and its employees or the union with the union and have access to conciliation and arbitration as necessary.

[109] Qantas submits that if the TWU proposal is adopted, a range of matters such as rostering, allocation of work, allocation of overtime and allocation of leave could be open to challenge, alternative mechanisms exist in relation to these matters, the changes will not enhance productivity and no evidence of difficulty, hardship or unreasonableness has been demonstrated to warrant any change. Qantas opposes the creation of a power to issue status quo orders for a range of reasons including a concern that the TWU may use the power to delay changes and that it will act as a disincentive to resolve disputes.

[110] We are not prepared to depart from the procedure contained in EBA7. The existing procedure complies with the legislative requirement. It has not been established that there should be a departure from the existing clause, either by evidence of unsatisfactory operation of the procedure or on the basis of industrial merit.

Part-time employees

[111] Both parties propose an increase in the number of hours that a part-time employee can work. The current provisions require part-time employees to be engaged from 20-30 hours per week. The TWU submits that the existing range should be increased to 27-37 hours and Qantas submits that the range should be between 25-37 hours.

[112] Further disagreement exists in relation to the TWU’s proposed modification of the provision requiring Qantas to convert a part-time employee to full-time if he or she works temporary full-time employment for longer than 104 weeks. Qantas submits that the existing obligation to convert part-time employees to full-time should not be changed. It has managed the hours performed by part-time employees to minimise conversion because it does not require more full-time employees and requires the flexibility provided by part-time employees.

[113] We are prepared to vary the existing hour restrictions in the manner proposed by Qantas but we are not otherwise disposed to vary the part-time provisions as we do not consider that a merit case for such additional variations has been established.

Shift work days off

[114] The TWU proposes that the Workplace Determination should require Qantas to provide shift workers with two consecutive days off in any 14 day period. Qantas opposes this change on the basis that existing rosters do not always provide for this and no case for a change has been demonstrated. We believe that the claim is fair and should be contained in the Workplace Determination. We will make the obligation subject to operational requirements.

Changes to shift work rosters

[115] The TWU seeks to increase the amount of notice that must be given for any change in shift rosters from seven to 21 days. We do not believe a case has been made out to support this change.

Overtime

[116] The TWU proposes that the Workplace Determination should require Qantas to pay non-rostered overtime either for the entire shift or for five hours, whichever is greater. The TWU explained this claim with reference to the pressures on employees arising from risk assessments for required manpower to cover absences. It submits that if it is determined that an employee should be called in to cover an absent employee it is proper that the person be rostered the entire shift.

[117] Qantas submits that the claim is new in this arbitration, is unprecedented in its operations, the change will not enhance productivity and will lead to cost increases.

[118] We agree with the submissions made by Qantas on this matter. The claim fails on merit and also appears to lie outside the matters that can be included in the Workplace Determination.

Meal breaks

[119] The TWU is concerned at a practice it says exists of meal breaks being granted early in a shift and employees thereafter being required to work for a longer period without a break. It therefore seeks to amend the time meal breaks are to be given. Currently meal breaks are required to be given no later than five hours after the commencement of the shift. The TWU seeks to replace this with an obligation to give the break between four and five hours after the commencement of the shift. Qantas opposes the change on various grounds.

[120] We are not prepared to make this change. The current prescription is a standard award and agreement provision and enables employers to allocate meal break times sequentially in a shift to minimise operational disruption. We consider that every effort should be made to ensure that the break is given near the middle of the shift, and if this is not achieved then the matter can be addressed under the dispute settlement provision. However, the change proposed by the TWU would involve significant operational restrictions disproportionate to the alleged unfairness of the existing practices. This claim fails on merit.

Blood donors leave

[121] There is some doubt as to whether this claim is pressed. It is mentioned in the TWU individual flexibility arrangement clause as the sole matter that can be varied by way of an individual flexibility arrangement.

[122] As earlier indicated the model flexibility clause must be included in the Workplace Determination and such a limitation is not permissible.

Payment of wages

[123] Qantas propose that the pay period for all employees will be fortnightly. At the moment there are mixed practices. Four hundred and thirty of the approximately 4,000 employees are paid weekly because of the continuation of a practice that originally applied to their employment. The employees are all based in Sydney and are the only weekly paid employees on the Qantas payroll of over 25,000 employees.

[124] The TWU opposes the change. It contends that employees who currently have the entitlement to weekly pay should continue to have that entitlement.

[125] In our view fortnightly pay is now very common in the community and weekly payments are far less common than they once were. There is an obvious administrative saving in having to operate a payroll run less often and a clear anomaly concerning this group of employees - representing about 10% of employees covered by the Workplace Determination and less than 2% of employees on the Qantas payroll. The advantages of avoiding a payroll run every week will not be fully realised until the requirement is completely eliminated. We consider that this is an efficiency improvement that is clearly justified. We will provide for pay to be made fortnightly for all employees covered by the Workplace Determination.

Adjustments to pay

[126] The TWU claims that the Workplace Determination should require Qantas to rectify any pay discrepancy by 4.00 pm on the day after the employee raises the discrepancy. Qantas opposes the requirement on the grounds that it is unprecedented and pay issues often involve misunderstandings or require more lengthy investigation than can be conducted in the time nominated.

[127] We are not satisfied that a case has been made out to justify this provision. It is obviously in the interests of all concerned that pay queries are resolved as quickly as possible but we consider the imposition of an enforceable obligation of the type proposed to be unduly onerous.

Holding an Aviation Security Identification Card (ASIC)

[128] The TWU seeks a term imposing an obligation on Qantas as follows:

[129] The TWU led evidence that suggests that some contractors engaged by Qantas are entering secure areas controlled by Qantas and contends that Qantas should be made accountable for this by a term of the Workplace Determination.

[130] Qantas disputes the incidence of breaches of this requirement. They oppose the imposition of this requirement as they say that legislation and policies already govern the situation.

[131] In our view this is not a matter that should form part of the Workplace Determination. As a matter of general principle, requirements in legislation should not be re-imposed by industrial instruments. There has been no case established to depart from this general approach. Any compliance issues with the legislative obligations should be addressed in the appropriate forum.

Limitations on weight

[132] The TWU seeks a term of the Workplace Determination that an employee not be required or permitted to lift or carry articles of a weight that is not safe and reasonable. Qantas seeks the replication of a clause from EBA7, and earlier agreements, limiting the weight of articles employees can be required to lift to 50 kgs.

[133] The clause sought by Qantas is a follows:

[134] The clause sought by the TWU is as follows:

[135] Limitations on lifting weights and safety procedures for such matters are not appropriate matters to be dealt with in a Workplace Determination. Occupational Health and Safety legislation deals with respective duties and procedures in relation to such matters. The parties have not established a sufficient case to justify the supplementation of that regulation in the Workplace Determination. We will not insert either of the clauses sought.

International standards

[136] The TWU seeks the following clause in the Workplace Determination:

[137] The TWU contends that the clause is laudable because Qantas is in a position to influence the international aviation industry as a result of its status and its strategic shareholdings and has presented no evidence as to why it opposes the term.

[138] Qantas opposes the claim on jurisdictional and merit grounds.

[139] We do not believe that it is appropriate to insert such provisions in a workplace determination even if there was jurisdiction to do so. Workplace determinations should be confined to appropriate terms and conditions of employment for employees covered by the workplace determination. The clause travels well beyond this. The claim is not justified on merit. We doubt that there would be jurisdiction to insert the clause in any event.

Access to the determination

[140] The TWU seeks a clause that confers a right on an employee to request a copy of the Workplace Determination, a local agreement and the NES.

[141] The Act deals with the provision of information to employees. 16 We do not believe a case has been made out to supplement this obligation in the Workplace Determination.

Conduct of the parties

[142] The TWU seeks a clause requiring the parties to act in good faith in fulfilling their respective functions and responsibilities under the Workplace Determination. The specific clause is as follows:

[143] In our view such a clause is inappropriate for inclusion. Aspirational statements have been held to be inappropriate in other cases. 17 The proposed clause also purports to impose obligations on the behaviour of the parties, yet it does so with reference to concepts which are notoriously open to interpretation and disputation. In our view such a clause will add to the potential areas of conflict and make it more difficult to resolve disputes that may arise in the future. The dispute resolution process is designed to impose clear obligations on the parties in dealing with relevant disputes that may arise. We do not believe that a case has been established to supplement that process in the way proposed.

[144] Qantas questioned whether it was appropriate for the Workplace Determination to include clauses of EBA7 which are aspirational in nature, with reference to cll. 12, 13 and 14 of EBA7. Clause 14 concerns job security which has been addressed in paragraphs [73] to [76] above. Clauses 12 and 13 of EBA7 are in the following terms:

[145] As we have earlier noted, it is inappropriate to include aspirational statements in a workplace determination. Accordingly these clauses will not be included in the Workplace Determination.

Workplace determination

[146] We are satisfied that the Workplace Determination we make passes the better off overall test in s.193 of the Act, and that the Workplace Determination does not contain any clauses other than mandatory terms, core terms or terms that deal with the matters still at issue at the end of the post-industrial action negotiation period.

[147] For the reasons above we make the Workplace Determination published in conjunction with this decision.

VICE PRESIDENT WATSON

Appearances:

Mr. H. Dixon SC with Mr A. Gotting and Mr. S. Meehan of Counsel and Ms. T Firth for Qantas Airways Limited and Q Catering Limited.

Mr. A. Hatcher SC with Mr. M. Gibian of Counsel and Mr. M. Doherty for the Transport Workers’ Union of Australia.

Hearing details:

2012.
Sydney:
March 23, 26 to 30;
May 3, 4, 30;
June 25, 26.

 1   PR516214.

 2   Termed the ‘post-industrial action negotiating period’: see s.269(2) of the Fair Work Act 2009.

 3   Transport Workers Union (Qantas Airways Limited) Enterprise Agreement 7 (2008 - 2011), AC316753.

 4   Qantas Airways Ltd v Transport Workers Union of Australia [2011] 211 IR 1.

 5   Qantas Ground Services Pty Limited Ground Handling Agreement 2009, AC316753.

 6   Print Q4464.

 7   Lennon v Gibson and Howes Ltd (1919) 26 CLR 285 at 287.

 8   Australian Federated Union of Locomotive Enginemen v State Rail Authority of New South Wales (1984) 295 CAR 188 at 191.

 9   [2011] FWAFB 7444.

 10   See for example Exhibit B16 at 115, Transcript of proceedings 28 March 2012 at PN2305.

 11   Transport Workers Union of Australia, Outline of Submissions, 21 June 2012 at 133.

 12   Transcript of proceedings PN 8098 - 8099.

 13   Transport Workers Union of Australia, Outline of Submissions, 21 June 2012 at 138.

 14   Annual Wage Review 2011-2012 [2012] FWAFB 5000.

 15   Licenced Aircraft Engineers (Qantas Airways Limited) Workplace Determination 2012, AG891046.

 16   Sections 124-5.

 17   See for example Caltex Refineries (NSW) Pty Ltd v Australian Workers’ Union (2001) 110 IR 322 at [30].

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