Jetstar Airways Pty Ltd

[2017] FWC 6329

[2017] FWC 6329

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 Ltd
(AG2017/5332)

Airline operations
DEPUTY PRESIDENT MILLHOUSE	MELBOURNE, 29 NOVEMBER 2017

Application for an order that transferable instrument not cover new employer and transferring employee – Conditional offer of employment – Application not opposed – ss. 311, 317 and 318.

[1] This decision concerns an application by Jetstar Airways Pty Ltd (Jetstar) for an order under s.318 of the Fair Work Act 2009 (Cth) (Act).

[2] The application is made in respect of the prospective employment of Mr Mitchell Rowen by Jetstar. Mr Rowen is currently employed by Qantas Airways Ltd (Qantas) under the Qantas Airways Limited (AWU, AMWU, CEPU) Brisbane Base Maintenance Agreement 4 (AE402838)(Qantas Agreement).

[3] Jetstar is a fully owned subsidiary of Impulse Airlines Holdings Pty Ltd (Impulse) and Impulse is a fully owned subsidiary of Qantas. Jetstar and Qantas are associated entities as a consequence of their status as related bodies corporate within the meaning of s.50of the Corporations Act 2001 (Cth).

[4] The order sought by Jetstar is that the Qantas Agreement, a transferable instrument that would, or would be likely to, cover Jetstar and Mr Rowen because of s.313(1)(a) of the Act, will not cover Jetstar and Mr Rowen in his employment with Jetstar.

[5] The application is supported by Mr Rowen and is not opposed by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU), the Australian Workers’ Union (AWU) or the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), being employee organisations that are covered by the Qantas Agreement or have the right to represent the industrial interests of Mr Rowen and/or other employees at the workplace.

[6] In the circumstances, I have decided to deal with the application on the papers without conducting a hearing.

Background

[7] Mr Rowen voluntarily applied for an advertised role as an Aircraft Maintenance Engineer (AME) with Jetstar. He is Jetstar’s preferred candidate. Mr Rowen is currently employed as an AME with Qantas under the Qantas Agreement. 1 Mr Rowen’s employment with Qantas is due to cease on 1 December 2017.2

[8] Jetstar has made Mr Rowen a conditional offer of employment with it, on the basis that his employment with Jetstar will proceed if the Fair Work Commission (Commission) makes the order that is sought by this application.

[9] If, as is the apparent case, Mr Rowen ceases employment with Qantas and commences employment with Jetstar within three months after the termination of his employment with Qantas, Jetstar accepts, for the reasons below, that there will be a transfer of business within the meaning of s.311(1) the Act, which provides as follows:

“When does a transfer of business occur

(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).”

[10] For the purposes of s.311(1)(c) of the Act, it is not in dispute that, pursuant to the conditional offer of employment, the work Mr Rowen will perform with Jetstar as an AME is or appears to be the same or substantially the same as the work Mr Rowen is currently performing in his employment with Qantas as an AME. Nor is it in dispute that there is a connection within the meaning of s.311(6) of the Act between Qantas and Jetstar, thereby satisfying the requirement in s.311(1)(d).

[11] The Commission has the power to make certain orders if there is, or is likely to be a transfer of business from an old employer to a new employer. 3 Accordingly, Jetstar has applied for an order under s.318(1) of the Act that the Qantas Agreement, a transferable instrument that would, or would be likely to, cover Jetstar and Mr Rowen because of s.313(1)(a) of the Act, will not cover Jetstar and Mr Rowen in his employment with Jetstar and that the Jetstar Airways Engineering and Maintenance Agreement 2013(AE406864) (Jetstar Agreement) will cover Mr Rowen. Jetstar has standing to make the application because, pursuant to s.318(2)(a) of the Act, it is likely to be the new employer of Mr Rowen in accordance with the conditional offer of employment that has been made.

[12] The application is supported by the affidavit material of Maciek Zielinski, Employee Relations Advisor for Jetstar. 4 As earlier noted, the application is not opposed by the CEPU, the AWU or the AMWU. The fact that the application is not opposed is evidenced in the affidavit of Mr Zielinski, which I have accepted, and in correspondence sent to the Commission.

The statutory framework

[13] Section 317 of the Act enables the Commission to make certain orders if there is, or is likely to be, a transfer of business from an old employer to a new employer.

[14] The discretion to make the order sought by Jetstar pursuant to s.318(1) of the Act will only be exercised after taking into account the matters set out in s.318(3) of the Act. Section 318 provides as follows:

“Orders relating to instruments covering new employer and transferring employees

(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.

(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).

(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.

(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.”

Consideration

[15] It is not in dispute, and I am satisfied that the Commission has the power to make an order pursuant to s.318(1) of the Act, because in the circumstances set out above, there is, or is likely to be a transfer of business from Qantas to Jetstar. 5 In deciding whether to make an order, the Commission must take into account the matters set out in s.318(3) of the Act. I consider these matters below.

[16] For the purposes of s.318(3)(a)(i) and (ii) of the Act, the views of Jetstar and Mr Rowen are clear:

(a) Jetstar wishes to offer Mr Rowen employment as an AME and supports the making of the order sought. Jetstar notes the voluntary nature of Mr Rowen’s application for employment with it.

(b) Mr Rowen also supports the making of the order. His views are set out in a witness statement filed by him in support of the application. He stated that he applied for a position with Jetstar and considers employment with Jetstar “very attractive” and an opportunity for career progression. 6 Mr Rowen’s evidence is that if he were successful in obtaining the AME role with Jetstar, he will be employed on a permanent full time basis, covered by theJetstar Agreement at a Level 2 classification, for which his salary would be around $1,203.52 per week.7 This is higher than his current salary with Qantas, which is $1,065.12 per week.8 Mr Rowen asks that the order sought be made so that he may take up the conditional offer of employment with Jetstar and develop his career as an AME.

[17] For the purposes of s.318(3)(b), based on the material before me, I am satisfied that Mr Rowen would not be disadvantaged by the making of the order sought in relation to his terms and conditions of employment. In reaching this conclusion, I have had regard to the fact that the position with Jetstar is a permanent full-time role, and Mr Rowen’s current employment with Qantas will cease on 1 December 2017. His application for employment with Jetstar was voluntary. I accept Mr Rowen’s evidence that he will be afforded career development in aircraft maintenance with Jetstar. Mr Rowen is aware of the terms and conditions of employment that will apply to him under the Jetstar Agreement, and makes particular reference to the salary increase he will receive. I am satisfied that the salary contained in Jetstar’s conditional offer is more beneficial to Mr Rowen when compared to employment under the Qantas Agreement. I also note that Mr Rowen has asked the Commission to make the order sought so that he may take up the conditional employment with Jetstar. This is a factor that weighs heavily in favour of making the order.

[18] In respect of s.318(3)(c) of the Act, the nominal expiry date of the Qantas Agreement is 31 December 2016. I regard this matter for the purposes of determining the application as a neutral consideration.

[19] In respect of s.318(3)(d)-(f) of the Act, Jetstar contends that:

(a) The approach to the payment of wages under the Qantas Agreement, which separates the base rate of pay, allowances and other amounts payable to AME’s, is not consistent with the Jetstar Agreement, which provides for a ‘rolled up base rate’ of pay. It is said that Jetstar would be required to reconfigure its payroll system to account for the administrative issues that would arise as a consequence of compliance with the Qantas Agreement for one employee, and this would impose administrative and productivity burdens on Jetstar for the purposes of s.318(3)(d) of the Act.

(b) The respective agreements contain separate and distinct provisions that deal with matters that are particular to each business, where Qantas and Jetstar operate in different sectors of the aviation industry. Qantas is a full service airline and Jetstar is a low cost carrier. To this end, Jetstar contends that there is little to no business synergy between the Qantas Agreement and the Jetstar Agreement for the purposes of s.318(3)(f) of the Act.

(c) Given the matters set out at (a) and (b) above, the transfer of the Qantas Agreement would give rise to restrictions and difficulties for Jetstar such that the conditional employment of Mr Rowen would not proceed in the absence of the order sought.

[20] I accept Jetstar’s submission that compliance with the Qantas Agreement in these circumstances would have a negative impact on the productivity of Jetstar’s workplace for the purposes of s.318(3)(d) of the Act, noting the administrative inefficiencies that are likely to arise in respect of the reconfiguration of Jetstar’s payroll system and ongoing oversight of the Qantas Agreement in respect of one employee. I have taken into account the evidence of Mr Zielinski that there is little to no business synergy between the Qantas Agreement and the Jetstar Agreement, 9 noting that Qantas and Jetstar work in different sectors of the aviation industry.10 These are matters that weigh in favour of making the order sought.

[21] There is insufficient material presently before me that would allow me to conclude that Jetstar would incur significant economic disadvantage for the purposes of s.318(3)(e) of the Act as a result of the Qantas Agreement covering it. This is a factor that weighs against the making of the order sought.

[22] In respect of s.318(3)(g) of the Act, Jetstar contends that no public interest issues affect the application. Taking into account all of the circumstances, I am satisfied that there are no public interest considerations that arise in making the order sought in relation to Jetstar and one employee. This weighs in favour of the order being made.

Conclusion

[23] Taking into account all of the above matters, I am satisfied that the order sought by Jetstar, which is supported by Mr Rowen and not opposed by the CEPU, the AWU or the AMWU, ought be made.

[24] I will make an order that the Qantas Agreement will not cover Jetstar and Mr Rowen in relation to Mr Rowen’s employment with Jetstar and that the Jetstar Agreement will cover Mr Rowen. For the purposes of s.318(4) of the Act, the order will come into operation on the date that Mr Rowen commences employment with Jetstar.

[25] An order giving effect to this decision will be issued separately in PR598198.

DEPUTY PRESIDENT

 1   Witness statement of Mitchell Rowen dated 27 October 2017 (Rowen statement) at [2]-[3].

 2   Rowen statement at [5b].

 3 Section 317 of the Act.

 4   Witness statement of Maciek Zielinski dated 20 November 2017 (Zielinski statement).

 5 Section 317 of the Act.

 6 Rowen statement at PN [5].

 7 Rowen statement at PN [6].

 8 Rowen statement at PN [3].

 9   Zielinski statement at PN [3]; Form F40 Application at PN [21(g)].

 10   Zielinski statement at PN [3(g)].

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<Price code C, AE402838 PR598199 >