Jetstar Airways Pty Limited T/A Jetstar
[2020] FWC 3526
•3 JULY 2020
| [2020] FWC 3526 |
| 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 Pty Limited T/A Jetstar
(AG2020/1678)
Airline operations | |
DEPUTY PRESIDENT CLANCY | MELBOURNE, 3 JULY 2020 |
Application for an order relating to instruments covering new employer and transferring employees from an associated entity - whether a transfer of business - Application that transferable instrument not cover transferring employees - Application granted.
[1] Jetstar Airways Pty Limited T/A Jetstar (Jetstar) has made an application to the Fair Work Commission (the Commission) pursuant to s.318 of the Fair Work Act 2009 (the Act) for an order that a transferable instrument, the Eastern Australia Airlines Pty Limited Pilots Enterprise Agreement 2015 (Eastern Agreement) does not and will not cover Jetstar and Mr Mr Laurence McMahon in respect of Mr McMahons’ work as a pilot (including under training) with Jetstar.
[2] Jetstar makes the application in its capacity as the new employer.
[3] Eastern Australia Airlines Pty Limited (Eastern) trading as QantasLink is an airline carrier operating regional flights from hubs to regional outports within New South Wales, Queensland, Victoria, South Australia and the Australian Capital Territory.
[4] Eastern and Jetstar are associated entities within the meaning given by s.50AAA of the Corporations Act 2001 (Cth) (Corporations Act).
[5] The Eastern Agreement covers Eastern, pilots employed by Eastern, the Australian Federation of Air Pilots and the Australian and International Pilots Association.
[6] Mr McMahon was employed by Eastern on a permanent basis from 15 January 2018 as a First Officer. Mr McMahon's position at Eastern was covered by the Eastern Agreement.
[7] Mr McMahon was offered and has accepted a permanent position at Jetstar within three months of ceasing employment with Eastern. Specifically, Mr McMahon's employment with Eastern ended on 14 February 2020 and he commenced employment with Jetstar on 4 May 2020.
[8] Jetstar notes that, due to stoppages arising from the impact of the COVID-19 pandemic on Jetstar’s international and domestic operations, Mr McMahon has been stood down since the commencement of his employment on 4 May 2020.
[9] In order to join Jetstar, all pilots are required to commence as First Officers (Level One).
[10] The Jetstar Airways Pilots Agreement 2015 (Jetstar Agreement) covers the work of First Officers, Second Officers and other pilots within Jetstar’s operations.
[11] Jetstar submitted a witness statement of Mr McMahon in support of the application and also a witness statement of Mr Faulkner, Employee Relations Manager of Flying Operations of Jetstar.
[12] The Australian Federation of Air Pilots was provided with a copy of the application filed by Jetstar. In the absence of any objection to the application, I have proceeded to determine the matter by reference to and reliance upon the grounds, submissions and other materials filed with the application.
The relevant legislation
[13] Part 2-8 of Chapter 2 of the Act describes when a transfer of business occurs and s.312(1) of the Act provides for the transfer of enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from one employer to another employer.
[14] Section 311 of the Act relevantly provides:
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
…….
New employer is an associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employer by the new employer.”
[15] Sections 317 and 318 of the Act relevantly provide:
“317 FWC may make orders in relation to a transfer of business
This Division provides for the FWC to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.
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;
(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;
(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.
Transfer of Business?
[16] I am satisfied that has been a transfer of business from Eastern to Jetstar and that Jetstar is a “new employer” pursuant to s.311(1) of the Act, having regard to the material before me by virtue of:
a) the employment of Mr McMahon with Eastern having been terminated (s.311(1)(a)).
b) Mr McMahon having become employed by Jetstar within three months after the termination, (s.311(1)(b));
c) the work Mr McMahon will perform for Jetstar being the same, or substantially the same, as the work he performed for Eastern (s.311(1)(c)); and
d) there is a connection between Eastern and Jetstar (s.311(1)(d)), as described in s.311(6), in that the new employer was (and remains) an associated entity of the old employer when Mr McMahon became employed by the new employer. Eastern and Jetstar are associated entities within the meaning given by section 50AAA of the Corporations Act.
[17] As I am satisfied Jetstar is a “new employer” as defined pursuant to s.311(1) of the Act, it may apply to the Commission under s.318 of the Act for orders relating to a transferable instrument.
Transferable instrument
[18] As it is an enterprise agreement that was approved by the Commission on 29 September 2015, the Eastern Agreement is a transferable instrument pursuant to s.312(1)(a) of the Act.
[19] Section 313 of the Act provides that the Agreement covers Eastern and the transferring employees, subject to any order of the Commission under s.318(1) of the Act.
Who may apply for an order?
[20] As stated above, the application has been made by Jetstar, the new employer. This meets the requirements of s.318(2) of the Act.
[21] Jetstar seeks orders that the Eastern Agreement does not and will not cover Jetstar and Mr Laurence McMahon in respect of his work as a pilot with Jetstar.
Matters that the FWC must take into account- Section 318
Section 318(3)(a) the views of the new employer or a person who is likely to be the new employer and the employees who would be affected by the order
[22] Jetstar, the new employer, has made the application under s.318 of the Act and Mr McMahon supports the making of the order sought.
[23] In its material lodged with the application Jetstar submits that as the new employer it has already offered Mr McMahon, and Mr McMahon has accepted, the offer of employment. Further, Mr McMahon’s employment with Jetstar has commenced in accordance with the terms and conditions set out in the offer of employment.
[24] Jetstar is of the view that the proposed order should be made as it will provide Jetstar with certainty, consistency and efficiency in respect of the application of industrial instruments to Jetstar’s operations. The orders would also recognise Jetstar’s need to operate its business in a way that meets its specific needs in the market in which it operates.
[25] Jetstar also submits that if the order is not made, it will pose significant difficulties to Jetstar to apply the Eastern Agreement to the work undertaken at Jetstar particularly in relation to rostering, managing unforeseen changes, managing work and flying hour limitations, and it will impose significant cost in terms of IT infrastructure. Jetstar submits it may not be possible to continue with Mr McMahon’s employment with Jetstar after the stand down period ends and it may impact on future transfers within the wider Qantas Group.
[26] Mr McMahon has accepted employment with Jetstar in full knowledge that the Jetstar EA will need to apply to his employment. Mr McMahon has declared his support for this application and consents to the Order being made and submits that it is in his interests that the Order is made. Mr McMahon applied for permanent employment with Jetstar as it better suits his personal and professional circumstances.
[27] Having regard to these matters, I have formed the view that this factor weighs in favour of granting the Order.
Section 318(3)(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[28] Mr McMahon commenced his employment as a First Officer (Level One) with Jetstar on a base salary above that which he received at Eastern. He also has good prospects of promotion in the future through the categories and ranks available within the Jetstar fleet, well beyond what could be expected in his role at Eastern. 30. Allowances under the Jetstar EA are generous. For example, the average annual salary for First Officer at Jetstar (including allowances) for the 2018 financial year was $168,000.
[29] Jetstar submits that Mr McMahon applied for (and accepted) the role at Jetstar for personal and career reasons. The ability to be promoted through long haul and short haul fleets is not available at Eastern, which has smaller aircraft types. This reflects the different type of aviation operations, when comparing Eastern to Jetstar.
[30] Jetstar also submit that Mr McMahon will be provided with training and experience that is much more transferable for other international airlines if he looked for other opportunities in the future.
[31] Mr McMahon submits that the terms and conditions under the Jetstar Agreement will be more beneficial overall than under the Eastern Agreement.
Section 318(3)(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement
[32] The nominal expiry date of the Agreement is 31 December 2018. This does not weigh against the granting of the Order sought.
Section 318(3)(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace
[33] Jetstar submits that the Eastern Agreement will have a negative impact on Jetstar’s business because the Eastern Agreement has separate and distinct work rules particular to Eastern's operations as a regional airline which are not suited to the business Jetstar operates in and which involves long haul flying to international routes.
[34] Further, Jetstar submits that if the Eastern Agreement transfers to Jetstar, either Jetstar’s rostering system must be adapted to accommodate the Eastern work rules, or Qantaslink’s rostering system must be adapted to Jetstar’s operation. Either of these options would require a significant IT implementation project. Such a project would take at least 6 months to complete, would be complex and come at a significant financial cost to the business. Further, it is submitted that there would be a negative impact on Jetstar’s productivity in that there would be the need to administer different terms and conditions of employment for employees performing the same work. This will cause confusion both administratively and among the broader pilot group.
[35] I accept these submissions have merit and have formed the view that this factor weighs in favour of granting the Order sought.
Section 318(3)(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer
[36] In relation to this factor, Jetstar submits that due to the restrictions and difficulties that the transfer of the Eastern Agreement would create in rostering Mr McMahon for flying duties as outlined in [33] and [34] above, it may not be possible for Jetstar to continue his employment after the stand down period ends.
[37] Noting there would be costs associated with an IT overhaul and administering two systems of work, I consider there would be sufficient economic disadvantageif the Eastern Agreement covers Jetstar, such that this factor weighs in favour of granting the Order sought.
Section 318(3)(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer
[38] Jetstar submits that the Eastern Agreement is reflective of Eastern’s position as an airline carrier that operates mainly regional services, which is substantially different from Jetstar’s position as an international and domestic airline. There is no or very little business synergy between the Eastern Agreement and the Jetstar Agreement given the different rostering practices and systems adopted by the instruments.
[39] I consider this factor weighs in favour of granting of the Order sought.
Section 318(3)(g) the public interest
[40] Jetstar submits that it is not contrary to the public interest to make the Order proposed in the application. Having regard to all the material before me, I am not of the view there are public interest reasons that weigh against making the Order sought.
Conclusion
[41] Having considered each of the matters set out in s.318(3) of the Act, I am satisfied that the following order should be made, with immediate effect (s.318(4)):
• The Eastern Australia Airlines Pty Limited Pilots Enterprise Agreement 2015 will not cover Jetstar Airways Pty Limited and Laurence McMahon in respect of his employment with Jetstar Airways Pty Limited.
[42] An Order to this effect will be issued along with this decision.
DEPUTY PRESIDENT
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