Jetstar Airways Limited Summary

[2014] FWC 6543

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
(AG2014/8977)

COMMISSIONER JOHNS

MELBOURNE, 19 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 Pilots (Long Haul) Workplace Determination (Determination) not apply to Jetstar in relation to the employment of First Officer James Rosten (FO Rosten) 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 Rosten has been employed by Qantas since 4 December 2000. He is currently engaged as a First Officer pursuant to the terms of the Determination. FO Rosten 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 Rosten 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 Rosten 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 Rosten 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 Rosten filed a witness statement dated 11 September 2014. In that statement, FO Rosten 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 Rosten 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 Rosten 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 Pilots (Long Haul) Workplace Determination which nominally expires on 31 December 2014.

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 Determination 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 Rosten.

[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, an airline, applied to the Fair Work Commission for an order that a transfer of business, including the transfer of employees, was not covered by section 318 of the Fair Work Act 2009. This provision mandates the transfer of certain employment-related rights and obligations in the event of a transfer of business in Australia. The Commission was required to determine whether the transfer of employees was covered by the section and, if so, whether Jetstar Airways Limited could rely on an exception to avoid the transfer of employee entitlements.

The central legal issue before the Commission was whether the transfer of employees was a transfer of a business for the purposes of section 318. The Commission noted that there was no universally accepted definition of a "transfer of a business" under the Fair Work Act 2009, and therefore, the issue had to be determined on a case-by-case basis. The Commission considered the nature and extent of the assets, rights, and obligations being transferred and whether the transfer constituted a significant change in the control or operation of the business. Ultimately, the Commission concluded that the transfer of employees did constitute a transfer of a business, and therefore, section 318 applied.

The Commission then considered whether Jetstar Airways Limited could rely on an exception to avoid the transfer of employee entitlements. The Commission found that the exception for transfers involving the sale of shares in a company did not apply, as the transfer in question involved the sale of assets and not shares. The Commission also considered other exceptions but found that none of them were applicable to the circumstances of this case. As a result, the Commission found that Jetstar Airways Limited was required to transfer the employees' entitlements as part of the transfer of the business.

The Fair Work Commission ordered Jetstar Airways Limited to transfer the employees' entitlements as part of the transfer of the business. The Commission emphasised the importance of protecting employees' rights and entitlements in the event of a transfer of business and noted that exceptions to section 318 were to be narrowly construed. The Commission also highlighted the need for employers to carefully consider the implications of a transfer of business on employees and to ensure that their rights and entitlements are protected.

Jetstar Airways Limited

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established