Flight Attendants' Association of Australia v Virgin Australia Airlines Pty Ltd T/A Virgin Australia

[2015] FWC 611

[2015] FWC 611

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Flight Attendants' Association of Australia
v
Virgin Australia Airlines Pty Ltd T/A Virgin Australia
(C2013/1637)

COMMISSIONER CAMBRIDGE SYDNEY, 23 JANUARY 2015

Dispute settlement procedure - dispute as to capacity for employer to reduce amount paid as expense related allowance - earlier Decision which directed parties to comply with consultation requirements of agreement - further determination of Commission required - no case made to alter determination of employer.

[1] This matter was the subject of a Decision of the Fair Work Commission (the Commission) which was issued on 13 June 2014, [2014] FWC 3873 (the June Decision). The matter arises from an application made pursuant to section 739 of the Fair Work Act 2009 (the Act). The application was made by the Flight Attendants' Association of Australia (the FAAA) and taken against Virgin Australia Airlines Pty Ltd (the employer).

[2] This Decision has been issued further to the June Decision and should be read in conjunction with the June Decision.

Background

[3] The June Decision broadly held that the employer had not complied with particular consultation obligations arising from the Virgin Australia Long Haul International Cabin Crew Agreement 2011 (the Agreement), when it reduced the amount paid in respect to Meal and Incidental Allowances for overnights spent in Los Angeles (the LAX allowance). The Commission directed that the Parties undertake a review of the LAX allowance via properly convened meeting(s) of the Virgin Australia Cabin Crew Consultative Council (VACC Council). Further, in the event that the review of the LAX allowance did not lead to the Parties establishing an agreed figure for the LAX allowance, the Commission was prepared to hear further from the Parties in order to determine the appropriate figure.

[4] On 29 July 2014, the Commission was advised that the Parties had engaged in a number of consultations regarding the review of the LAX allowance but there had been no settlement of the matter. The FAAA requested that the Commission re-list the matter to establish a process to have the Commission determine the actual figure for the LAX allowance. The FAAA provided a document dated 28 July 2014 which set out a summary of relevant events and submissions in support of the LAX allowance figure being fixed at USD$183.32, or in the alternative, at USD$169.06.
[5] On 11 August 2014, the Commission issued Directions which provided for the Parties to file and serve material in support of their respective propositions for the determination of the figure of the LAX allowance. The matter was listed for further Hearing on 14 November 2014. However, the Parties eventually agreed that the Commission’s determination of the LAX allowance figure did not require further Hearing and could instead be made upon the documentary material that each side had filed since the June Decision.

[6] The FAAA sought to rely upon further filed material including witness statements of Murray Alexander Smith and Jeremy Paul Ricketts together with written submissions respectively dated 28 July, 22 September and 10 October 2014. The employer also filed further evidentiary material in the form of witness statements of Damian Paul Locke, Christine Amelia Bischoff and Tony Kempnich. As a supplement to this evidentiary material the employer also filed written submissions dated 1 September and 3 October 2014.

[7] The further material filed by the Parties confirmed that the VACC Council had met on 4 July 2014 in Brisbane and again in Sydney on 11 July 2014, in order to undertake consultation in respect of the review of the LAX allowance. Unfortunately, despite the VACC Council having been properly convened and undertaking a review of the LAX allowance, no agreement was reached on the actual figure for the LAX allowance relevant to staff accommodation in Los Angeles at the Warner Centre Marriott Hotel (the Marriott).

[8] The additional evidence and submissions which have been made by the Parties elaborated upon the underlying rationale to support the respective propositions which, for the FAAA, suggested figures of either USD$183.32 or USD$169.06, and which for the employer advocated that the existing USD$150.00 was correct.

The FAAA Case on Review of the LAX Allowance

[9] The FAAA submitted that the June Decision had determined that the methodology used to set the allowance figures (the Le Mare methodology) could be adapted to incorporate the particular circumstances of the Marriott location. The FAAA advanced two particular issues which were asserted to provide necessary adaptation of the Le Mare methodology for the circumstances experienced by flight crew when staying at the Marriott location.

[10] The FAAA submitted that the incidental allowance component contained within the Le Mare methodology and as established for the Marriott location, was lower than an incidental amount contained in the relevant modern award, the Aircraft Cabin Crew Award 2010. The FAAA then used a USD/AUD exchange rate of 0.941773 to translate the Modern Award incidental allowance component into a higher USD figure which it submitted was applicable to the Marriott location.

[11] In the further submissions of the FAAA it was asserted that at the Marriott location there was an absence of dining options between the hours 2300 to 0559 and this necessitated the use of room service as a means to provide for meals. The FAAA submitted that the Le Mare methodology alone was not sufficient to cater for these particular circumstances because it did not include reference to room service menu options.

[12] Therefore, according to the submissions of the FAAA, the Le Mare methodology was incapable of addressing the failures associated with the unavailability of meals between the hours of 2300 and 0559. The attendant failures included the costs associated with travelling via taxi to and from external restaurants and the costs associated with in-room dining.

[13] As a consequence of these asserted failures of the Le Mare methodology as it would be applied to the Marriott location, the FAAA submitted that the original dollar amount of $183.32 should be restored to the flight crew along with reimbursement of that higher figure from 1 October 2013. Alternatively, the FAAA proposed that a revised figure which was adjusted for a higher incidental component and which also included reference to room service menu prices, would establish a LAX allowance of an amount of $169.06 which should similarly be applicable from 1 October 2013.

The Employer’s Case on Review of the LAX Allowance

[14] The submissions made by the employer in respect to the review of the LAX allowance acknowledged that it had not complied with the consultation obligations of the Agreement when it had determined the LAX allowance applicable from 1 October 2013 (USD$150.00). However, the employer submitted that its deficiency in consultation had ultimately been without consequence and that, upon review, there was no identifiable error with the LAX allowance figure of USD $150.00 for the Marriott location.

[15] The employer made submissions which were critical of the approach of the FAAA in respect to the review of the LAX allowance. In particular, the employer submitted that the matters referred to by the FAAA as being relevant to some adjustment of the LAX allowance, were not factors relevant to the change to crew hotel. Instead, the employer submitted that the approach taken by the FAAA to the review of the LAX allowance, involved an attempt to re-argue the Le Mare methodology and to essentially ignore the Le Mare methodology and use different factors and considerations to arrive at a different figure.

[16] The submissions made by the employer rejected that there were any circumstances present in respect to the Marriott Hotel location which had not been appropriately accommodated by utilisation of the Le Mare methodology. The employer submitted that it had properly applied the Le Mare methodology and that no methodology could take into account all potential choices and arrangements that might be applicable at a particular location. Further, the employer submitted that the allowance that had been fixed in this instance at USD$150 was more than sufficient to cover the relevant costs of a layover in Los Angeles.

[17] The employer submitted that its decision should not be abandoned or departed from unless there was evidence that it had acted in bad faith, or unreasonably, in setting the figure of the LAX allowance for the Marriott Hotel at USD$150. The employer submitted that the Commission should endorse the LAX allowance as had been determined by it at the figure of USD$150.

Consideration

[18] This aspect of the dispute in this matter has involved a requirement for the Commission to resolve a contest about the actual amount of the LAX allowance which, following a review conducted in accordance with the requirements of the Agreement, has been unable to be settled and agreed between the parties.
[19] The review has now been properly conducted in accordance with the terms of the Agreement particularly the provisions of clause 46.7. Importantly, the review was conducted via the VACC Council which met on 4 and 11 July 2014.

[20] As was determined in the June Decision, the review of the LAX allowance should use the Le Mare methodology as a framework formulation which is to be adapted to incorporate particular factors relevant to the circumstances of the change to crew hotel. As part of its approach to the review, it has become clear that the FAAA has advocated for, inter alia, the adoption and utilisation of room service menu prices upon which to recalculate the LAX allowance. An examination of the components of the Le Mare methodology as set out in the letter of 10 August 2011, reveals that the methodology utilises figures obtained from particular restaurant menus and it makes no mention of reference to any room service menus.

[21] Consequently, the FAAA approach to the review which sought to reference and utilise room service menu prices has involved a departure from the Le Mare methodology rather than any adaptation of that methodology. The FAAA departure from the Le Mare methodology is conveniently encapsulated by the following words contained in the FAAA correspondence of 11 July 2014 to the employer wherein it was stated: “... we have preferred a method of calculating the allowances based on room menu prices ...” The FAAA “preference” for something other than the Le Mare methodology represents an approach to the review of the LAX allowance which is contrary to the June Decision and is rejected accordingly.

[22] Further, the prospect that there may be particular difficulties associated with an absence of dining options at particular hours of the day or night would represent a predictable problem inherently associated with accommodation arrangements for international flight crews on layovers in foreign ports. As such, the Le Mare methodology represents a means by which an allowance figure is determined so as to address and broadly compensate for the predictable costs, inconvenience and other contingencies associated with international accommodation during the layovers in foreign ports. Although the FAAA may not prefer the Le Mare methodology it represents a practical and reasonable rationale which the June Decision determined should be used for the review.

[23] A significant proportion of the FAAA submissions represented complaint and dissatisfaction with the Le Mare methodology. For instance, the FAAA submitted “... we strongly assert that the Le Method [sic] ought not be binding on the Agreement or the review process... and ...the Le Mare method should be treated as a starting point.” The June Decision established that the Le Mare methodology was to be used to determine the LAX allowance. The FAAA was therefore obliged to accept and apply the Le Mare methodology and not to depart from it and seek to apply some other methodology that it might prefer.

[24] The FAAA may disapprove of the Le Mare methodology despite its members having benefited from the employer's generous application of that methodology during the negotiations which led to the Agreement being made in 2011. In the period since the June Decision the Agreement has passed its nominal expiry date and consequently the FAAA can seek to establish that any replacement for the Agreement includes a method for fixing international allowances on arrangements which are different from the Le Mare methodology.

[25] However, as a practical observation, it would seem to be unlikely that any approach to departing from the Le Mare methodology would result in cabin crew securing higher international allowances than those that were paid to pilots. As may be alternatively expressed in blunt but easily understood language; what basis could there conceivably be for flight attendants to be paid higher travel allowances than those paid to pilots?

[26] It is understandable that the FAAA may be dissatisfied because the Le Mare methodology was developed without the involvement of the FAAA. However, the application of that methodology provided a significant improvement in the amount of international allowances paid to flight attendants. It would seem that the outcome of an improved benefit for flight attendants should prevail over any “offence” that may have been felt by the process that led to that benefit being secured.

[27] The FAAA also sought to have the incidental component of the LAX allowance adjusted by reference to a figure contained in the reference instrument Modern Award, which was then converted to a USD figure determined upon a particular AUD/USD exchange rate of 0.941773. There are obvious difficulties arising from fluctuations in international monetary exchange rates associated with this proposition. The proposition provides potential for significant fluctuations which ultimately may see significant reduction in the amount of the incidental component if it is derived from an AUD figure (taken from the Modern Award) which is then converted to a USD figure.

Conclusion

[28] The determination of this aspect of the dispute in this matter has involved analysis and consideration of the respective positions advanced by the Parties undertaking a review of the LAX allowance as was required by the June Decision. The review of the LAX allowance was, on this occasion, undertaken in accordance with the relevant consultation provisions of the Agreement.

[29] My consideration leads me to conclude that the approach to the review of the LAX allowance as advanced by the FAAA has been fundamentally inconsistent with the determinations contained in the June Decision of the Commission. In particular, the FAAA has attempted to depart from the Le Mare methodology rather than adapt that methodology as it may apply to particular circumstances identified at the Marriott Hotel.

[30] Consequently, there has been no case made out which could provide basis to alter the determination made by the employer which fixed the LAX allowance in respect to the Marriot Hotel and a figure of USD$150.00.

[31] The application is determined accordingly and the proceedings are concluded.

COMMISSIONER

Final written submissions:

Flights Attendants’ Association of Australia: 10 October 2014

Virgin Australia Airlines Pty Ltd t/a Virgin Australia: 3 October 2014

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<Price code C, PR560398>