Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Sch. 6, Item 4 - Application to make a modern award to replace an enterprise instrument.

AIRLINE OFFICERS (QANTAS AIRWAYS LIMITED) AWARD 2000

Application by Australian Municipal, Administrative, Clerical and Services Union and Qantas Airways Limited and others for a modern enterprise award for Airline Officers - jurisdiction - whether existing award an enterprise instrument - merits of application - significant structural changes in industry - diverse range of employers in airline operations - terms of existing instrument have industry and enterprise origins - insufficient case made out for modern enterprise award - application dismissed - Fair Work (Transitional Provisions and Consequential Amendments Act 2009 Schedule 6 sub-items 2(A), 4(5), 6, 9(3).

Introduction

[1] The Australian Municipal, Administrative, Clerical and Services Union (ASU) and Qantas Airways Limited and others (Qantas) have each made an application under item 4 of Schedule 6 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the Transitional Act) for the Fair Work Commission to make a modern enterprise award to replace the Airline Officers (Qantas Airways Limited) Award 2000 (the Airline Officers Award).

[2] At the hearing of this matter Ms T Firth of counsel and Ms J. Oldmeadow appeared for Qantas. Mr. E White, of counsel and Mr. J. Cooney appeared for the ASU.

Jurisdiction

[3] A threshold issue arises in this matter as to whether the Commission has jurisdiction to make a modern enterprise award. A modern enterprise award may be made, on application, to replace an enterprise instrument: Schedule 6, Item 4(2). An enterprise instrument relevantly includes an award that applies only to a single enterprise: Schedule 6, Item 2(2A).

[4] There are five named respondents to the Airline Officers Award including the parent company, Qantas Airways Limited. Three of the companies are wholly owned subsidiaries of Qantas Airways Limited and are related bodies corporate for the purposes of the Corporations Act 2001. The other company, Qantas Holidays Limited, was formerly a related body corporate but on 30 September 2010 Qantas reduced its shareholding in that company to 29%. Qantas Holidays Limited thereby ceased to be a related body corporate to the other respondents. It is now part of the Jetset Travelworld group of companies.

[5] These circumstances raise the issue as to whether the Airline Officers Award can be regarded as an enterprise instrument. The ASU contends that as the change in ownership occurred after the commencement of the Transitional Act, the status of the Airline Officers Award as an enterprise instrument continues such as to enable an application to be made to replace it by a modern enterprise award. In the alternative it seeks to vary the Airline Officers Award retrospectively to remove Qantas Holidays Ltd as a respondent and to re-establish its status as an enterprise instrument. Qantas consents to the variation.

[6] We do not accept the submission of the ASU on the status of the award and the applications. In our view the requirements of Item 4(2) must be met at the time an application is made. The application was made on 23 December 2013. The application was required to seek the making of a modern enterprise award to replace an enterprise instrument. At the time the Airline Officers Award was not an enterprise instrument. The applications were therefore invalid.

[7] We propose to consider the alternative application to vary the award after considering the merits of the applications.

The Legislative Task

[8] The role of the Commission in an application to make a modern enterprise award is governed by sub-item 4(5) of Schedule 6 to the Transitional Act which provides:

(5)       In deciding whether or not to make a modern enterprise award, and in determining the content of that award, the FWC must take into account the following:

(a)  the circumstances that led to the making of the enterprise instrument rather than an instrument of more general application;
(b)  whether there is a modern award (other than the miscellaneous modern award) that would, but for the enterprise instrument, cover the persons who are covered by the instrument, or whether such a modern award is likely to be made in the Part 10A award modernisation process;
(c)  the content, or likely content, of the modern award referred to in paragraph (b) (taking account of any variations of the modern award that are likely to be made in the Part 10A award modernisation process);
(d)  the terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument;
(e)  the extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment;
(f)  the likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons;
(g)  the views of the persons covered by the enterprise instrument;
(h)  any other matter prescribed by the regulations.

[9] It is also necessary to consider the modern enterprise awards objective: Item 6 of Schedule 6 of the Transitional Act. This is a legislative requirement for the Commission to recognise that modern enterprise awards may provide terms and conditions tailored to reflect employment arrangements that have been developed in relation to the relevant enterprises and to generally have regard to other modern awards objectives. We turn to consider these factors in relation to the circumstances of this case.

The Circumstances that led to the making of the enterprise instrument rather than an instrument of more general application: Item 4 (5) (a)

[10] There is a complex history to this award. From the 1970s, clerical employees in the domestic part of Qantas’s predecessors, Australian Airlines and TAA, were covered by an industry award, the Clerks (Domestic Airlines) Award. Clerical employees in the international operations of Qantas were also covered by an industry award from around the same time. Administrative staff employed by Qantas were covered by enterprise awards since 1974.

[11] In 1992, an enterprise award was made applying to Qantas clerical and administrative employees. This award replaced some eight enterprise and industry awards applicable to Qantas. Also in 1992, Qantas acquired Australian Airlines. The following year the Australian government shareholding in Qantas was reduced to 50%. In 1995 the remaining shareholding was sold to the private sector. The 1992 Award was ultimately replaced by the Airline Officers Award in 2000. At some point, which was not made clear in the submissions to us, the clerical employees in the domestic operations of Qantas became covered by this award in lieu of the industry award.

[12] The historical coverage by both industry awards and enterprise awards and the previous public sector nature of the operations is noted. The current award was developed at around the same time as significant structural changes were occurring in the Qantas group.

Whether there is a modern award that would, but for the enterprise instrument, cover the persons who are covered by the instrument: Item 4 (5) (b)

[13] Most of the employees covered by the Airline Officers Award would be covered by either the Airline Operations Ground Staff Award 2010 or the Clerks Private Sector Award 2010 if the Airline Officers Award is terminated. The one nurse employed by Qantas would be covered by the Nurses Award 2010.

[14] We note also that Qantas employees may have become covered by these industry awards since 2010 when the Airline Officers Award ceased to be an enterprise instrument and the exclusion in modern awards of employees covered by enterprise instruments thereby ceased to apply. This was not recognised by the parties in practice however.

The content, or likely content, of the modern award referred to in paragraph (b): Item 4 (5) (c)

[15] The wages and conditions in the Airline Officers Award are more generous to employees than the applicable modern awards. Qantas submitted that the level 3 classification in the Airline Officers award is equivalent to level 2 in the modern awards. The rate in the former is approximately $35per week higher. Qantas also submitted that the level 9 in the Airline Officers Award is equivalent to level 8 in the Airline operations modern award and level 5 in the clerks modern award. The rate in the former is approximately $50 higher than the Airline operations award equivalent and approximately $150 higher than the clerical award equivalent. We have not analysed the detail of these comparisons but the submissions of Qantas infer that the rates in the Airline Officers Award may not be properly fixed minimum rates.

[16] The other conditions in the Airline Officers Award are generally more beneficial to employees, particularly in relation to notice of termination of employment, personal/carers leave and public holidays.

The terms and conditions of employment applying in the industry in which the persons covered by the enterprise instrument operate, and the extent to which those terms and conditions are reflected in the instrument: Item 4 (5) (d)

[17] There have been significant changes in the airlines industry over the past 25 years. Changes have included the entrance of low cost carriers, increased competition, the demise of several airlines, increased outsourcing and increased involvement of third party service providers. Outsourcing and third party service providers applies to clerical and administrative work in the airline industry.

[18] The Airline Operations Award 2010 covers both airline operators and companies providing ancillary on airport support for airline operations. Qantas made submissions in the award modernisation process in relation to the terms of this award. The Clerks - Private Sector Award 2010 applies to clerical employees in all industries. Employees in contract call centres are covered by the Contract Call Centres Award 2010. Apart from the enterprise awards applying to Qantas, the only other enterprise award in the airline industry is the Airservices Australia Award.

[19] Qantas clerical and administrative employees are covered by enterprise agreements. The current agreement is the tenth negotiated between Qantas and the ASU on behalf of clerical and administrative employees. It contains wages and conditions well in excess of those in each of the awards under consideration. The agreement does not however apply to the manager classifications at the top of the Airline Officers Award classification structure.

The extent to which the enterprise instrument provides enterprise-specific terms and conditions of employment: Item 4 (5) (e)

[20] The more generous terms and conditions in the Airline Officers Award can be described as enterprise specific, although they originated from both enterprise and industry awards.

The likely impact on the persons covered by the enterprise instrument, and the persons covered by the modern award referred to in paragraph (b), of a decision to make, or not make, the modern enterprise award, including any impact on the ongoing viability or competitiveness of any enterprise carried on by those persons: Item 4 (5) (f)

[21] As most of the employees covered by the Airline Officers Award are covered by an enterprise agreement there would be no immediate impact on the termination of the Airline Officers Award. They will be affected on the renegotiation of that agreement if a different safety net award then applies. Managers will lose award coverage and will not be covered by any other industrial instrument.

[22] Qantas does not contend that the retention or the termination of the Airline Officers Award will impact on its ongoing viability or competitiveness.

The views of the persons covered by the enterprise instrument: Item 4 (5) (g)

Any other matter prescribed by the regulations: Item 4 (5) (h)

[23] The ASU, the ANMF and Qantas consent to the making of a modern enterprise award to replace the Airline Officers Award. The ASU produced survey material that suggested that the retention of specific Qantas instruments is generally supported by Qantas employees.

The Modern Enterprise Awards Objective

[24] The specific provisions of the Airline Officers Award and their continuation by a replacement modern enterprise award is consistent with the modern enterprise awards objective.

Should a modern enterprise award be made?

[25] A large number of clerical employees are employed in the airlines industry. The employers of such employees have become more diverse with the structural changes that have occurred in the industry, including the introduction of new airlines, expanded operations of international carriers and increased utilisation of airport based contractors. New entrants covered by other instruments include Qantas subsidiary, Jetstar. The proportion of clerical employees in the industry covered by the Airline Officers Award has declined significantly as a result of these changes. Nevertheless Qantas remains a major player in the Australian airline industry.

[26] While the more generous terms of the Airlines Officers Award can be described as enterprise specific, we note that their origin includes terms of industry awards. Further the award currently applies to a former related company, Qantas Holidays Limited which is no longer part of the Qantas group.

[27] The employees covered by the Airline Officers Award will lose some more generous safety net award benefits. A very small number of managers will lose award coverage by the termination of the existing instrument. Such employees in the airline industry are generally not award covered.

[28] We note the consent of parties to the award to the making of a modern enterprise award. We also note the need for a variation to the award to enable the application to be regarded as valid.

[29] In all of the circumstances we do not consider that a sufficient case for the making of a modern enterprise award has been made out. A more logical and fairer result would be to have all clerical and administrative employees in the airlines industry covered by common industry modern award safety nets.

Conclusions

[30] As we have concluded that a sufficient case for the making of a modern enterprise award has not been made out, we do not need to consider whether to vary the Airline Officers Award to validate the applications in this matter. The applications are dismissed. In accordance with Schedule 6 Item 9 (3) of the Transitional Act the Airline Officers Award terminates at the date of this decision.

VICE PRESIDENT

Appearances:

Ms. T Firth of Ashurst and Ms J Oldmeadow with permission for Qantas Airways Group

Mr. E. White of counsel and Mr. J. Cooney with permission for the ASU

Hearing details:

2014

Melbourne

9 July

Final written submissions :

Qantas on 29 July 2014.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR553025, AP765780>