Australian and International Pilots Association v Network Aviation Pty Limited
[2013] FWC 2359
•17 APRIL 2013
[2013] FWC 2359 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.229 - Application for a bargaining order
Australian and International Pilots Association
v
Network Aviation Pty Limited
(B2013/763)
VICE PRESIDENT WATSON | SYDNEY, 17 APRIL 2013 |
Application for bargaining order - whether Australian and International Pilots Association is a bargaining representative - eligibility rules - subsidiary company - meaning of ‘operated by’ - Fair Work Act 2009 - ss. 176, 228, 229, 230, 576.
Introduction
[1] This decision concerns an application for a bargaining order made under s. 229 of the Fair Work Act 2009 (the Act) by the Australian and International Pilots Association (AIPA) against Network Aviation Pty Limited (Network), a wholly-owned subsidiary of Qantas Airways Limited (Qantas). The application relates to proposed bargaining between AIPA and Network for an enterprise agreement to cover Network pilots, some of whom are purportedly members of AIPA.
[2] The application was made on 5 April 2013 and listed for Mention on 9 April in Chambers. At the request of the AIPA the matter was then listed for an expedited hearing on 12 April 2013. Mr K. Bolwell and Ms S. Chandra appeared for AIPA, and Mr R. Dalton, of counsel, appeared for Network.
[3] The central issue in this matter is whether AIPA can validly enrol pilots employed by Network under the terms of its eligibility rule. Network contends that this issue relates to the jurisdiction of the Commission to deal with its application because a valid application can only be made by a bargaining representative (s. 229(1)) and an employee organization cannot be a bargaining representative unless it is entitled to represent the industrial interests of an employee in relation to the work that will be performed under the proposed agreement (s. 176(3)). AIPA contends that the refusal of Network to recognise it as a bargaining agent is based on an erroneous interpretation of its eligibility rule and these very circumstances justify the granting of a bargaining order.
[4] AIPA relied on documentary evidence to advance its claim. Network led evidence from three witnesses, Mr Mark Davey, Network’s Chief Operating Officer, Michael Nesbitt, Network’s Financial Controller, and Aaron Allegretto, Network’s solicitor. There is little conflict in the evidence or the general circumstances of the matter. The central issue is largely to be determined by a legal interpretation of AIPA’s rules as they apply to Network’s circumstances.
AIPA’s Eligibility Rule
[5] The relevant portion of AIPA’s eligibility rule is as follows:
“ 4 - ELIGIBILITY FOR MEMBERSHIP
Any person who is normally employed as a pilot or flight engineer on regular public transport airline services extending beyond the Commonwealth of Australia or (except in the case of flight engineers) within the Commonwealth of Australia operated by an Australian airline principally engaged in providing international regular public transport airline services or by Australian Airlines Limited shall be eligible for membership in the Organization.
Without in any way limiting the generality of any other provision of this rule or being limited thereby, all persons who are normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated in whole or part and under any name by any of:
(i) Qantas Airways Limited ABN 16 009 661 901;
(ii) Qantas Limited ABN 73 003 613 465;
(iii) Australian Airlines Limited ABN 85 099 625 304;
(iv) Jetstar Airways Pty Limited ABN 33 069 720 243;
(v) Eastern Australia Airlines Pty Limited ABN 77 001 599 024; or
(vi) Sunstate Airlines (Qld) Pty Limited ABN 82 009 734 703;
shall be eligible for membership in the Organization.”
[6] AIPA relies on the second paragraph of Rule 4. Network contends that neither the first or second paragraph applies to the pilots it employs.
Principles of Interpretation of Eligibility Rules
[7] The principles of interpretation of an organization’s eligibility rules are well established, and in this case are not in dispute. A Full Court of the Federal Court of Australia in Electrical Trades Union of Australia v Waterside Workers’ Federation of Australia (No. 2) 1 said:
“Eligibility provisions, such as those contained in r.6 of the federation’s rules, should not be construed narrowly or technically. Such provisions serve the function of defining the general area or areas of industry or industrial pursuit from which the membership of the relevant organization can legitimately be drawn and with which the organization can legitimately be concerned. Plainly, they should be liberally construed (R. v. Cohen; Ex parte Motor Accidents Insurance Board (20); Co-operative Bulk Handling Ltd. v. Waterside Workers’ Federation of Australia (21)). In particular, when they refer to an industrial pursuit, they should ordinarily be seen as referring to the performance of general functions rather than to the precise activities which may, in a particular place or at a particular point of time, be involved in the performance of those functions but which are liable, by reason of changing technology or advances in technique, to be displaced by substituted or varied activities.”
[8] A majority of the High Court of Australia said the following in R v Williams; Ex parte Australian Building, Construction Employees’ and Builders’ Labourers Federation: 2
“The eligibility provisions in the rules of a registered organization of employees serve the function of defining the general area or areas of industry or industrial pursuit from which members can legitimately be drawn and with which the organization can legitimately be concerned (see Reg. V Dunlop Rubber Australia Ltd; Ex parte Federated miscellaneous Workers’ Union of Australia (16); Co-operative Bulk Handling Ltd. v. Waterside Workers’ Federation of Australia (18)). Since such eligibility provisions constitute a reference point for courts, commissions, employers, employees and other organizations in determining or ascertaining an organization’s proper coverage and field of operation, they must be construed objectively (see Reg. v. Aird; Ex parte Motor Accidents Insurance Board (20)). In so construing them, however, it is permissible to pay regard to any common understanding among people concerned with relevant industries and particularly with industrial matters of the ordinary application of the words used and to take account of evidence of that common understanding furnished by the previous use of the words in the relevant organization’s rules and in statutory provisions, decisions, determinations, awards, reports and other papers concerned with the relevant industry or industries (see, e.g., R. v. Hickman; Ex parte Fox and Clinton (21); Reg. v. Aird; Ex parte Australian Workers’ Union (19)).”
The History of the AIPA Eligibility Rule
[9] Network relies on a number of decisions that have considered the AIPA eligibility rule. It notes an acknowledgement in correspondence from AIPA to the AFAP recorded in a decision of Vice President McIntyre in 1996 to the effect that the first paragraph of the current rules confer no rights on AIPA to cover any air pilots employed by companies that are subsidiaries of Qantas 3.
[10] The second paragraph of the current eligibility rule arose from a decision of Senior Deputy President Kaufman in 2007 4 and an appeal against that decision determined later that year5. At first instance, his Honour considered whether the Qantas subsidiaries were “operated by” Qantas. He found that “although the subsidiaries are ultimately controlled by Qantas each operates its own airline service.”6 Having found that the subsidiaries were not “operated by” Qantas, his Honour stated that pilots employed by the subsidiaries were not eligible to be members of AIPA under the eligibility rule as it stood at the time. He expressly adopted the submissions on behalf of the Qantas group on the meaning of the term “operated” in the AIPA rule. Those submissions were that the term should be construed by reference to the relevant airline services and it is proper to have regard to the relevant regulatory background.
[11] On appeal the Full Bench did not depart from that approach. It also declined to include a paragraph in the second paragraph of the rule that would have extended eligibility to pilots employed by all Qantas subsidiaries.
[12] In 2011, the question of eligibility of AIPA to enrol pilots employed by another subsidiary of Qantas, Jetconnect, was considered by a Full Bench 7. A majority of the Full Bench examined the history of the second paragraph of Rule 4 and concluded that the paragraph was intended to extend only to the subsidiaries of Qantas specified in that paragraph8. The majority also dismissed an argument that the substantial control exercised by Qantas over Jetconnect meant that the airline services of Jetconnect were effectively operated by Qantas.
Network’s Circumstances
[13] Network has for many years been an aviation charter operator based at Perth airport in Western Australia. Its main customers are in the mining and infrastructure resource industry in Western Australia who operate ‘fly-in, fly-out’ arrangements. Its business has grown considerably in recent years with the increased mining investment and greater utilisation of associated ‘fly-in, fly-out’ arrangements.
[14] Network has been a wholly owned subsidiary of Qantas since 2011. Except for one customer, it operates from a stand-alone terminal at Perth airport which is separate from the terminals used by other airlines. For Fortescue Metals it operates in conjunction with services provided by QantasLink and Qantas Domestic from the main Perth domestic terminal. The Network terminal is owned by Network on a lease between Network and the Perth Airport Authority.
[15] At the time Qantas purchased the shares in Network, Network operated 7 Embraer E120 turbo prop aircraft (E120s) and two Fokker 100s (F100s). Over the past two years Network has purchased an additional 10 F100s. The fleet currently comprises 7 E120s and 11 F100s. with the final F100 due to arrive in May 2013.
[16] All Network aircraft, and its Perth terminal, carry the Network corporate logo and livery. The logo is an oval with a stylised ‘n’ in the middle. The livery is aircraft painted silver or white, ‘Network Aviation’ painted down the side, and the Network logo painted on an aqua aircraft tail.
[17] Network has been issued with an Air Operator’s Certificate by the Civil Aviation Safety Authority (CASA). The most recent certificate was issued with an effective date of 30 November 2012 and is expressed to expire on 31 January 2015. It authorises Network to operate Charter Operations and Aerial Work Operations. Regular Public Transport Operations are not presently authorised but are reserved for further consideration. Under CASA’s regulations Network has nominated its key personnel and established its suite of Operational Manuals.
[18] Network has two Divisions. The Airways Division is responsible for the management and operation of pilots, cabin crew and other staff. Network Turbine Solutions is responsible for aircraft maintenance, baggage control and other logistical activities. Network has approximately 360 employees across the two Divisions.
[19] Network directly negotiates its contracts with its customers and suppliers. It has its own IT system and its own website.
[20] The CEO of Network reports to the Executive Manager of the Regional Airlines Group at Qantas. The Chief Operating Officer of Network, Mr Mark Davey, is a Qantas employee seconded to his position at Network. Industrial Relations advice and representation is provided by Mr Andrew Woods, a Qantas employee.
[21] Network’s financial results are incorporated with the other airlines within the Regional Airlines Group, Sunstate and Eastern and published as part of the Qantas financial reports.
[22] Qantas has several policies that its subsidiaries are required to apply. They include health and safety, risk management, security, environment, and code of conduct and ethics. Network has certain other policies of its own, including long service leave, parental leave, drugs and alcohol, uniforms, Flight Administration Manual, carriage of passengers policy and freight and baggage acceptance policy.
[23] Network has certain contractual relationships with other Qantas group companies. For example it provides maintenance services for QantasLink for two of its aircraft at the Network terminal for a monthly fee. QantasLink is paid by Fortescue Metals for all services provided by Qantas group companies and from the payment it receives, QantasLink pays Network for the portion of the services Network provides.
[24] AIPA has accepted applications for membership from Network Pilots since 1 February 2011. AIPA currently has 36 pilots employed by Network enrolled as members. AIPA estimates that over half of Network’s pilots are AIPA members. The Network pilots are covered by the Network Aviation Australia, Collective Workplace Agreement for Pilots 9, which has a nominal expiry date of 28 March 2013.
[25] On 22 February 2013, Network issued a Notice of Employee Representational Rights and a letter to employees, notifying them that it was scheduling a meeting with AIPA and the Australian Federation of Air Pilots to commence negotiating for an enterprise agreement. A meeting was held on 14 March 2013, at which Network expressed a preliminary view that AIPA may not be able to act as a bargaining representative for the Network pilots.
[26] A further meeting was scheduled for 10 and 11 April. This meeting was cancelled by Network by letter dated 22 March for the reason that, having considered the eligibility question in more detail, it had come to the view that AIPA was not entitled to represent the pilots under its rules.
Are Network’s pilots covered by the AIPA eligibility rule?
[27] AIPA submits that it is entitled to act as a bargaining representative for Network pilots as AIPA’s eligibility rule allows it to accept membership from “persons who are normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated in whole or part and under any name by any of:
(i) Qantas Airways Limited ABN 16 009 661 901;
(ii) Qantas Limited ABN 73 003 613 465;
...”
[28] AIPA submits that the correct approach to interpreting its eligibility rule is to give the words “operated in whole or in part” their plain and ordinary meaning. AIPA submits that Network is a wholly-owned subsidiary of Qantas, and as such is operated in whole or in part by Qantas.
[29] In the alternative, AIPA submits that the test formulated by Atkinson J in Smith, Stone and Knight 10 which concerned the liability of a parent company for operations conducted on its behalf by a subsidiary, should be used to determine whether or not Network is operated in whole or in part by Qantas. The test involves a consideration of a variety of factors to determine whether the business of a subsidiary is being carried out as the parent company’s business or its own. The factors identified as relevant to this question were:
● Were the profits treated as the profits of the [parent] company?
● Were the persons conducting the business appointed by the parent company?
● Was the company the head and brain of the trading venture?
● Did the company govern the adventure, decide what should be done and what capital should be embarked on the venture?
● Did the company make the profits by its skill and direction?
● Was the company in effectual and constant control?
[30] Network submits that AIPA’s eligibility rule does not extend to Network pilots. It relies on the previous considerations of the AIPA rule to contend that neither the first nor the second paragraphs of the eligibility rule extends to pilots employed by Qantas subsidiaries that are not expressly named. It submits that the interpretation contended for by AIPA is inconsistent with these previous interpretations and seeks to reargue submissions that were unsuccessful before the Full Bench in the Jetconnect 11 case. Network submits that despite the control exercised by Qantas over broad strategic and policy issues, Network’s direct operational responsibility under the regulatory scheme compels a conclusion that its services are operated by itself - and not by Qantas.
[31] It is clear from a consideration of the history of the AIPA rule that employees of Qantas subsidiaries are not generally covered by the rule. Only if a subsidiary is specifically mentioned in the rule or it can be established that the operations of a subsidiary are such that its services are in reality operated by Qantas can employees of a subsidiary be eligible for membership of AIPA.
[32] On the evidence in this matter I find that Network’s air services are operated in its own name, by itself, and under the Air Operator’s Certificate issued to it by CASA. It operates those services under the regulatory regime applying to holders of Air Operator’s Certificates. In the course of operating those air services it employs the pilots subject to the enterprise bargaining negotiations that are currently underway.
[33] The coordination, control and interaction of Qantas and its other subsidiaries does not alter that central fact. I consider that the degree of control of Qantas is primarily in relation to high level strategic direction and broad policies and is no more than what might be expected from an operating parent company. In my view there is no sound basis to find that Network’s operations are operated in whole or in part by Qantas.
[34] It follows from these findings that pilots employed by Network are not eligible to belong to AIPA. AIPA cannot therefore be a bargaining representative of those pilots and it cannot validly make the application under s. 229 of the Act. Accordingly AIPA’s application is dismissed.
VICE PRESIDENT WATSON
Appearances:
Mr K. Bolwell for the Australian and International Pilots Association
Mr R. Dalton, of counsel, for Network Aviation Pty Limited
Hearing details:
2013
Sydney
April
12
1 [1982] 59 FLR 78, at 87.
2 [1982] 153 CLR402, at 407.
3 Print M9403.
4 [2007] 163 IR 152.
5 [2007] 170 IR 121.
6 Australian and International Pilots Federation v Australian Federation of Air Pilots [2007] AIRC 420 at [48].
7 Australian and International Pilots Association v Qantas Airways Ltd [2011] 211 IR 220.
8 Australian and International Pilots Association v Qantas Airways Ltd [2011] 211 IR 220 at [104].
9 AC313564.
10 Smith, Stone and Knight Ltd v Birmingham Corporation [1939] 4 All ER 116.
11 Australian and International Pilots Association v Qantas Airways Ltd [2011] 211 IR 220.
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