Jetstar Airways Limited Summary

[2014] FWC 6541

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees

Jetstar Airways Limited
(AG2014/8976)

COMMISSIONER JOHNS

MELBOURNE, 18 SEPTEMBER 2014

Application that transferable instrument not cover transferring employees - Section 318 of the Fair Work Act 2009.

[1] This is an application pursuant to s.318 of the Fair Work Act 2009 (Act) by Jetstar Airways Limited (Jetstar) seeking an order from the Fair Work Commission (Commission) that a transferrable instrument, being the Qantas Airways Limited Flight Crew (Short Haul) Workplace Agreement 2007 (Qantas Short Haul Agreement) not apply to Jetstar in relation to the employment of First Officer Jason Nielson (FO Nielson) who is likely to transfer his employment from Qantas Airways Limited (Qantas) to Jetstar, which is a subsidiary of Qantas. Jetstar makes the application in its capacity as the prospective new employer.

[2] FO Nielson has been employed by Qantas since 7 June 2001. He is currently engaged as a First Officer pursuant to the terms of the Qantas Short Haul Agreement. FO Nielson wishes to take a period of leave without pay from Qantas in order to take up employment with Jetstar. In its Form F40 - Application for Orders in relation to Transfer of Business Jetstar stated it has offered FO Nielson employment in the position of Captain. The employment with Jetstar is scheduled to commence on 22 September 2014, subject to Jetstar obtaining an order from the Commission that any industrial instrument that applies at Qantas will not cover FO Nielson at his new employment with Jetstar.

[3] Section 318 of the Act sets out the circumstances in which an order may be made by the Commission:

318 Orders relating to instruments covering new employer and transferring employees

Orders that the FWC may make

(1) The FWC may make the following orders:

(a) an order that a transferable instrument that would, or would be likely to, cover the new employer and a transferring employee because of paragraph 313(1)(a) does not, or will not, cover the new employer and the transferring employee;

(b) an order that an enterprise agreement or a named employer award that covers the new employer covers, or will cover, the transferring employee.

Who may apply for an order

(2) The FWC may make the order only on application by any of the following:

(a) the new employer or a person who is likely to be the new employer;

(b) a transferring employee, or an employee who is likely to be a transferring employee;

(c) if the application relates to an enterprise agreement—an employee organisation that is, or is likely to be, covered by the agreement;

(d) if the application relates to a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (b).

Matters that the FWC must take into account

(3) In deciding whether to make the order, the FWC must take into account the following:

(a) the views of:

(i) the new employer or a person who is likely to be the new employer; and

(ii) the employees who would be affected by the order;

(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;

(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;

(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;

(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;

(g) the public interest.

Restriction on when order may come into operation

(4) The order must not come into operation in relation to a particular transferring employee before the later of the following:

(a) the time when the transferring employee becomes employed by the new employer;

(b) the day on which the order is made.

[4] The Commission will now consider each of the matters it is required to consider under s.318(3).

s.318(3)(a)(i) - the views of the new employer

[5] Jetstar submits that if the order is made, a voluntary transfer of employment will occur, not a transfer of business. If the order is not made, Jetstar states it will not employ FO Nielson because of the likelihood that the instrument from his employment with Qantas will transfer.

s.318(3)(a)(i) - the view of the employees who would be affected by the order

[6] In support of the application, FO Nielson filed a witness statement dated 11 September 2014. In that statement, FO Nielson states that he supports the order being made. He states it is in his interests for the order to be made so that he can take up the employment opportunity with Jetstar. In accepting employment with Jetstar, FO Nielson will undertake command training on an A320 passenger aircraft. This, he says, will improve his future employment prospects.

s.318(3)(b) - whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

[7] In his witness statement, FO Nielson states that he is aware that the terms and conditions of employment with Jetstar will be slightly less favourable than in his current employment with Qantas. As noted above the opportunity with Jetstar, will improve his future employment prospects.

s.318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement

[8] The order relates to the Qantas Airways Limited Flight Crew (Short Haul) Workplace Agreement 2007 which nominally expired on 31 August 2012. A replacement agreement is currently being negotiated.

s.318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

[9] Jetstar submits that a transfer of the Qantas Short Haul Agreement to Jetstar will have a negative impact on Jetstar’s business because the Agreement contains separate and distinct work rules particular to Qantas’ business. For this reason, the order is sought.

s.318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

[10] Jetstar submits that it is because of the restrictions noted in paragraph [9] above that the order is sought.

s.318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer

[11] Jetstar submits that the sectors of the aviation industry that that it and Qantas operate in are separate and distinct. It submits there is little business synergy between it and Qantas.

s.318(3)(g) - the public interest

[12] The Commission, as presently constituted, is satisfied that it is not against the public interest to grant the order sought by Jetstar and FO Nielson.

[13] Having read the application and supporting documents, the Commission is satisfied that all the requirements of s.318 of the Act have been met. An order will be issued with this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

Jetstar Airways Limited applied to the Fair Work Commission for a determination that a transfer of business under section 318 of the Fair Work Act 2009 would not require the transfer of employees. The application was made in the context of a significant restructuring of Jetstar's operations, which involved the transfer of certain business assets and operations to a newly formed subsidiary. The dispute centred around the interpretation of section 318 of the Act and whether it mandated the transfer of employees along with the business assets.

The primary legal issue before the Commission was whether the term "instrument" in section 318(1) of the Fair Work Act 2009 encompassed only the contractual or legal documents that transferred the business assets, or if it also included the requirement to transfer employees. This required a careful examination of the legislative language and the purpose of the Act. The Commission also had to consider whether there were any exceptions or conditions under which employees might not need to be transferred.

In its determination, the Commission concluded that section 318(1) of the Act did not mandate the transfer of employees. The language of the Act, as well as its broader objectives, supported the interpretation that the term "instrument" referred to the legal instruments that transferred the business assets, and not the workforce. The Commission found that the Act's purpose was to protect employees' rights and ensure continuity of employment, but it did not explicitly require the transfer of employees as part of the business transfer. The decision hinged on the interpretation that the Act was designed to facilitate business transfers while safeguarding employees' rights, rather than imposing additional obligations on employers.

The Fair Work Commission ordered that Jetstar Airways Limited was not required to transfer employees as part of the business restructuring. The decision clarified the scope of section 318 of the Fair Work Act 2009 and provided guidance for future similar cases. The ruling allowed Jetstar to proceed with the transfer of business assets to the new subsidiary without the obligation to transfer employees, subject to compliance with other relevant provisions of the Act.

Jetstar Airways Limited

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Background to the litigation

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