Qantas Airways Limited

[2013] FWCA 5125

Note: An appeal pursuant to s.604 (C2013/5650) was lodged against this decision - refer to Full Bench decision dated 28 November 2013 [[2013] FWCFB 9368] for result of appeal.

[2013] FWCA 5125

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Qantas Airways Limited
(AG2013/1348)

QANTAS AIRWAYS LIMITED (AWU, AMWU, CEPU) ENTERPRISE AGREEMENT 9

Airline operations
VICE PRESIDENT WATSON	SYDNEY, 31 JULY 2013

Application for approval of the Qantas Airways Limited (AWU, AMWU, CEPU) Enterprise Agreement 9 - whether agreement genuinely agreed - whether group of employees to be covered fairly chosen - Fair Work Act 2009 - ss.186, 187, 188.

Introduction

[1] This decision concerns an application by Qantas Airways Limited (Qantas) pursuant to s.185 of the Fair Work Act 2009 (the Act) for approval of the Qantas Airways Limited (AWU, AMWU, CEPU) Enterprise Agreement 9 (the Agreement).

[2] The Australian Workers’ Union (AWU), “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) were bargaining representatives for the Agreement and support the approval of the Agreement.

[3] The Australian Licensed Aircraft Engineers Association (ALAEA) sought leave to intervene and opposes the approval of the Agreement on the basis that the requirements for approval in s.186 of the Act have not been met.

[4] At the hearing of the matter on 15 July 2013 in Sydney, Mr Y Shariff, of counsel appeared on behalf of Qantas, Mr A Slevin, of counsel appeared on behalf of the ALAEA, Ms Z Angus appeared on behalf of the AWU, Mr T McCauley appeared on behalf of the AMWU and Mr A Kentish appeared on behalf of the CEPU.

[5] Qantas led evidence from the following:

● Simon Brown, Industrial Relations Manager, Qantas;
● Hector Theuma, Manager Maintenance, Training and Development, Qantas; and
● Dennis Ratcliffe, former Group General Manager People, Qantas Engineering;

[6] The ALAEA led evidence from the following:

● Garry Norris, Senior Industrial Officer, ALAEA;
● Mark Gant, ALAEA Trustee and Qantas employee; and
● Stephen Re, Technical Officer, ALAEA.

[7] The AMWU led evidence from its Assistant National Secretary, Glenn Thompson, the AWU led evidence from Daniel Walton, National Industrial Officer and the CEPU led evidence from Matthew Murphy, National Industrial Officer.

The relevant legislation

[8] The ALAEA submits that the requirements in s.186(2)(a) and s.186(3) and (3A) of the Act have not been met. Section 186 relevantly provides:

“186 When the FWC must approve an enterprise agreement—general requirements

Basic rule

(1) If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Note: The FWC may approve an enterprise agreement under this section with undertakings (see section 190).

Requirements relating to the safety net etc.

(2) The FWC must be satisfied that:

(a) if the agreement is not a greenfields agreement—the agreement has been genuinely agreed to by the employees covered by the agreement; and

...

Note 1: For when an enterprise agreement has been genuinely agreed to by employees, see section 188.

...

Requirement that the group of employees covered by the agreement is fairly chosen

(3) The FWC must be satisfied that the group of employees covered by the agreement was fairly chosen.

(3A) If the agreement does not cover all of the employees of the employer or employers covered by the agreement, the FWC must, in deciding whether the group of employees covered was fairly chosen, take into account whether the group is geographically, operationally or organisationally distinct.

...”

[9] Section 188 of the Act provides:

“188 When employees have genuinely agreed to an enterprise agreement

An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if the FWC is satisfied that:

(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:

(i) subsections 180(2), (3) and (5) (which deal with pre approval steps);

(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and

(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and

(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”

Context

[10] At the heart of the arguments advanced by the ALAEA is a dispute over the scope and coverage of an existing instrument, the Licenced Aircraft Engineers (Qantas Airways Limited) Workplace Determination 2012 1 (the Workplace Determination). The dispute arises in circumstances of the implementation of a new licensing regime for aircraft engineers. Historically, Licensed Aircraft Maintenance Engineers (LAMEs) were licensed by the Civil Aviation Safety Authority (CASA) to perform, supervise and certify the completion of aircraft maintenance work. Unlicenced engineers, employed as Aircraft Maintenance Engineers (AMEs), performed a wide range of maintenance tasks. They were supervised and their work certified by appropriately licensed LAMEs.

[11] CASA has been promulgating new regulations that seek to harmonise the Australian aviation regulatory system with the European system. One aspect of the new system is the introduction of new licence categories. All LAME licences have been converted to either Category B1, B2 or C licences. They are given an aircraft rating signifying expertise to work on particular types of aircraft. A new Category A licence is to be issued by CASA following completion of Certificate II studies and two years practical experience. It is not trade related or rated for particular aircraft. Category A licence holders will be able to perform minor maintenance functions of a similar nature to those currently performed by AMEs. Category A licence holders will have a limited ability to certify work.

[12] LAMEs have traditionally been members of the ALAEA. AMEs have traditionally been members of the AMWU, CEPU or the AWU. Since 1998, AMEs have tended to be covered by different enterprise agreements to those applicable to LAMEs. The scope of the Agreement in this case is expressed as applying to employees covered by any one of the classifications referred to in Tables 1A, 1B, 2 or 3 in Appendix B. Table 1A covers AMEs. Table 1B covers other non-trades (aircraft workers/trades assistants). Table 2 covers Technical and Supervisory employees. Table 3 covers apprentices. The allowances in other tables in Appendix B include allowances for A Class Licence duties.

[13] During negotiations with Qantas in 2010-2011, the ALEA contended that Qantas should be prevented from engaging and utilising Category A licence holders unless they were already LAMEs. Qantas rejected this position and stated its intention of utilising Category A licence holders under revised agreements with the AMWU, CEPU and AWU. The ALAEA did not pursue its position in the ultimate making of the Workplace Determination. However the scope of the Workplace Determination is central to its arguments in this matter.

Genuine agreement

[14] The ALAEA submits that Qantas has not taken reasonable steps to ensure the terms of the Agreement, and the effect of those terms, were explained to the relevant employees. It submits that Qantas failed to explain that employees who obtain a Category A licence would not be covered by the Workplace Determination.

[15] The ALAEA submits that the Workplace Determination covers employees who undertake aircraft maintenance engineer licence training as per clause 21.3.5(c) and Table 6 to Appendix B of the Agreement. It submits therefore that employees who obtain a Category A licence and perform these tasks will be covered by the Workplace Determination.

[16] Qantas submits that the Workplace Determination does not apply to employees who are engaged as AMEs and hold a Category A licence and therefore no issue of there being genuine agreement arises.

Whether the group of employees to be covered fairly chosen?

[17] The ALAEA submissions in relation to whether employees to be covered by the Agreement were fairly chosen also centre on the coverage of Category A licence holders.

[18] The ALAEA submits that it is not fair to split the industrial regulation of employees who hold a Category A licence from other licence holders. It submits that the Workplace Determination contains terms and conditions that are superior to the terms of the Agreement and it would be unfair to introduce an industrial instrument with inferior terms that applies to some licence holders. It submits that this undermines ongoing terms and conditions by creating a competing regime for all licence holders.

[19] Qantas reiterates its submission that Category A licence holders are not covered by the Workplace Determination.

[20] In respect of the coverage of the Agreement Qantas submits that the group of employees to be covered is geographically and operationally distinct. It submits that the grant of a Category A licence to AMEs does not change the character of the work performed and does not lead to a conclusion that such work has become operationally and organisationally tied to the work of LAMEs. It relies on the history of separate coverage under agreements since 1998.

Does the Workplace Determination cover Category A licence holders?

[21] It will be evident from the above passages that the scope of the Workplace Determination is a central issue in these proceedings.

[22] Clause 4 of the Workplace Determination sets out its coverage. It relevantly provides:

4. PARTIES BOUND AND INCIDENCE OF WORKPLACE DETERMINATION

4.1 This Workplace Determination covers and applies to Qantas Airways Limited (Qantas), the Australian Licensed Aircraft Engineers Association (ALAEA) and all employees of Qantas employed in accordance with a classification specified in Tables 1 and 2 of Appendix B.

....”

[23] Tables 1 and 2 of Appendix B are in the following terms:

“1B.1 WAGE RATES

The salary rates are as follows:

TABLE 1

Level	Rate of pay first pay period on or after 1 Jan 2011	Rate of pay first pay period on or after 1 Jan 2012	Rate of pay first pay period on or after 1 Jan 2013	Rate of pay first pay period on or after 1 Jan 2014
$ per week	$ per week	$ per week	$ per week
1	1064.20	1064.20	1096.12	1096.12
2	1143.23	1143.23	1177.52	1177.52
3	1169.54	1169.54	1204.63	1204.63
4	1257.29	1257.29	1295.01	1295.01
5	1345.16	1345.16	1385.51	1385.51
6	1432.79	1432.79	1475.78	1475.78
7	1520.28	1520.28	1565.89	1565.89
8	1608.16	1608.16	1656.40	1656.40
9	1697.16	1697.16	1748.08	1748.08
10	1789.11	1789.11	1842.78	1842.78
11	1881.79	1881.79	1938.24	1938.24
12	1974.35	1974.35	2033.58	2033.58
13	2066.90	2066.90	2128.91	2128.91
14	2159.81	2159.81	2224.60	2224.60
15	2249.37	2249.37	2316.85	2316.85
16	2361.83	2432.69	2432.69
17	2554.32

1B.2 SUPERVISORY ALLOWANCES

TABLE 2

Rate of pay first pay period on or after 1 Jan 2011	Rate of pay first pay period on or after 1 Jan 2012	Rate of pay first pay period on or after 1 Jan 2013	Rate of pay first pay period on or after 1 Jan 2014
Senior LAME 1	$81.17	$83.61	$86.12	$88.70
Senior LAME 2	$112.41	$115.79	$119.26	$122.84
MS/TS	$224.81	$231.58	$238.53	$245.69
DMM/DTM/STS/CC	$306.00	$315.18	$324.64	$334.38

MS = Maintenance Supervisor/TS = Technical Specialist (including Fleet Technical Specialist)

DMM = Duty Maintenance Manager/DTM = Duty Technical Manager/STS = Senior (Licensed) Technical Specialist/CC = Check Coordinator

Note: The allowances for MS and DMMs (etc) were rolled up in EBA 8.”

[24] These provisions are of a long standing nature in predecessor enterprise agreements covering LAMEs employed by Qantas. Sub-clauses 16.1 and 16.2 of the Workplace Determination deal with entry into the classification structure in a similar manner to the provisions that have applied since 1997. They provide:

“16.1 Wage rates and supervisory allowances are specified in Tables 1 and 2 of Appendix B.

16.2 Entry level

16.2.1 From the first pay period on or after 1 January 2012, the entry points to the graded structure shall be:

Entry Point
Non-Group 20/21	Level 2
Group 20/21 Non-Company - less than 12 months experience	Level 3
Group 20/21 Non Company - 12 months or more experience	Level 4
1st Company Aircraft Rating	Level 5

16.2.2 LAMEs recruited externally by Qantas shall translate to a level in the wage structure commensurate with their licence qualifications.”

[25] Each of these levels refer to a licence with a rating to perform work on a particular type of aircraft. Progression through the classification structure is determined in accordance with sub-clause 16.4 which provides:

“16.4 Movement through the graded wage structure shall be by a points system determined by training and/or experience as a Qantas LAME as follows:

16.4.1 Four (4) points shall be required for a movement frm one level to the next higher level.

16.4.2 Except as provided for in the Tables of Appendix J, points accrue from 16 August 1997 as follows:

One year Qantas LAME experience	1 point
Full Qantas Aircraft Type license (Mechanical or Avionics)	4 points
Single Category Qantas Aircraft Type license (Engine, Airframe, Electrical or Instrument )	2 points
All applicable Qantas Radio Category and Groups	10 points

[26] The ALAEA submits that all employees of Qantas who hold licences are currently covered by the Workplace Determination. It submits that Category A licence holders will be covered by the wage rate structure in the Workplace Determination because they will hold a CASA issued aircraft maintenance engineer licence and the classifications are premised on obtaining such licences.

[27] Qantas submits that the ALAEA has misinterpreted the Workplace Determination in asserting that the Workplace Determination applies to any person that holds any licence issued by the CASA.

[28] Qantas submits that the fact that the Workplace Determination only covers employees who are employed in accordance with a classification contained in the tables above is important. It further submits that clauses 16.1 to 16.4 and Appendix J of the Workplace Determination are relevant. It submits that none of these levels, nor Appendix J is applicable to a Category A licence holder.

[29] Qantas submits that if it was the intention that the Workplace Determination cover Category A licence holders there would be an express provision to that effect. It submits that during negotiations leading to the making of the Workplace Determination one of the ALAEA’s substantive claims related to the imposition of restrictions upon Qantas’ use of Category A licences. It submits the ALAEA ultimately abandoned these claims and did not seek to regulate Category A licences within the Workplace Determination. It further submits that during the negotiations it expressly told the ALAEA’s representatives that the Workplace Determination would not cover Category A licence holders and it would be negotiating with the AWU, AMWU and CEPU in respect of this class of employees.

[30] During negotiations that led to the making of the Workplace Determination the ALAEA noted in an update to members:

“Qantas have claimed that their intended use of CAT A licences is none of our business because they would be covered by the AME unions and it may come as no surprise but the AME unions have agreed with them. They all claim they are just AME’s with licences, not LAMEs and can’t be covered by us because they only sign for their own work...” 2

[31] In a further update to members the ALAEA said:

“Yesterday a Fair Work Australia hearing was convened to set some dates for the Workplace Determination of our next Enterprise Agreement. A Workplace Determination is where three Commissioners decide what the outcome of our next Agreement will be. There is no vote by members and only the matters outstanding or unresolved during the negotiations will be determined. On Monday afternoon the parties finalised agreement on most matters that will be contained within the new Agreement to limit the scope of what would be decided by Fair Work Australia but key issues such as wages, rostering and the length of the Agreement remain. With regards to Job Security it has been agreed that the current Job Security clause 11 will remain unchanged. That is the retention of existing job functions subject to factors within the airlines control.” 3

[32] Qantas submits that the ALAEA has operated on the basis that the Workplace Determination does not apply to Category A licence holders and that its conduct such as an application to alter eligibility rules to enable it to represent the interests if Category A licence holders is telling in that it reveals that the ALAEA accepts that the Workplace Determination does not cover such employees.

[33] Qantas further submits that the work to be performed by AMEs who hold a Category A licence is the same as that which has been performed by AMEs. It submits the only difference is that such AMEs will now be permitted to certify the work performed by them. They will not be permitted to supervise other employees. It submits that no part of the Workplace Determination is intended to cover work that was and has been performed by AMEs.

[34] The AWU, AMWU and CEPU generally support the submissions of Qantas in respect of the coverage of Category A licence holders.

[35] It is common ground that the principles for interpreting the Workplace Determination are the same as those applying to Enterprise Agreements. As the Workplace Determination closely resembles the terms of the previous enterprise agreement and was essentially a consent document between the ALAEA and Qantas when it was ultimately made by the Full Bench this position is clearly correct. The principles include the need to construe the agreement in context, as a whole, and against the legislative background. 4

[36] A leading case in relation to the interpretation of commercial agreements is Codelfa Construction Pty Ltd v State Rail Authority of NSW. 5 The dicta of Mason J, as he then was, (and with whom Stephen, Aickin and Wilson JJ agreed) has frequently been adopted and applied in matters concerning the interpretation of enterprise agreements. In Codelfa Mason J said (at 352):

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”

[37] In my view a key to determining this matter is the notion of the Category A licence holders under the Agreement. Properly understood, they are AMEs who obtain additional qualifications. That they are not a variant of LAMEs is evident from the ALAEAs long standing opposition to their introduction. There has been a clear delineation between LAMEs and AMEs in union coverage and agreement coverage for many years. But there has been some overlap in their respective duties. The provisions of the Workplace Determination were formulated to cover LAMEs with respect to the work they are engaged to perform.

[38] I find that the terms of the Workplace Determination do not extend to Category A licence holders. Coverage by the Workplace Determination is dependent on coverage under the classification structure. This is formulated on the basis of the traditional notion of licensed aircraft maintenance engineers - not the recently modified and much more limited licensing arrangements for AMEs. I do not consider that, on their proper interpretation, the terms apply to Category A licence holders.

[39] Further support for this interpretation can be gained from a consideration of the mutual intent of the parties. The evidence establishes a clear intention by Qantas and the ALAEA that it and previous agreements not cover AMEs and Category A licence holders. The recent introduction of Category A Licence holders did not give rise to any modification of the Workplace Determination to cover them. As the ALAEA concedes, raising this issue would have only led to conflict because the ALAEA knew that Qantas had no intention of including them. Indeed I find that the arguments now advanced by the ALAEA are somewhat opportunistic. I cannot be satisfied that it was the mutual intention of the parties involved in consenting to the terms of the Workplace Determination or previous enterprise agreements that Category A licence holders be covered by these instruments. A consideration of the objective framework of facts at the time the Workplace Determination was made suggests that the presumed intention of the parties was not to include the Class A licence holders.

[40] I therefore find that the Workplace Determination does not cover AMEs who obtain a Category A licence, and the Agreement clearly does cover them. I apply this finding to the matters that fall for determination.

Leave to intervene

[41] The ALAEA submits that it has an interest in the matter beyond that of an ordinary person. It submits that this is due to the fact that the ALAEA is a party to the Workplace Determination which it submits applies to Category A licence holders.

[42] Qantas opposes leave to intervene being granted to the ALAEA. It submits the ALAEA has not established a statutory or other basis upon which it can seek leave to intervene in these proceedings.

[43] Qantas submits that the ALAEA does not have a right to represent AMEs who hold a Category A licence. It submits that this has been acknowledged by the ALAEA in proceedings before a Full Bench of Fair Work Australia and in undertakings to the Federal Court of Australia.

[44] Qantas further submits that the ALAEA has limited membership and can only represent Category B and C licence holders. It submits that such employees are not affected by the Agreement.

[45] In view of the complexity of the changes in licensing regulation and the potential overlap in duties between LAMEs and AMEs it is appropriate in my view to grant the ALAEA leave to intervene in the proceedings.

Approval requirements

[46] It follows from my finding on the alleged application of the Workplace Determination that there is no sound basis for concluding that there is no genuine agreement of employees. I also find that the class of the employees covered by the Agreement has been fairly chosen. There has been separate regulation of AMEs for some time and the planned introduction of training and licensing of AMEs with Category A licences does not alter the fairness of agreement coverage confined to that group of employees. This is especially the case when the Workplace Determination covering LAMEs is taken into account.

[47] I am satisfied that each of the requirements of ss.186, 187 and 188 as are relevant to this application for approval have been met.

[48] The AWU, AMWU and CEPU have given notice under s.183 of the Act that they want the Agreement to cover them. In accordance with s.201(2), I note that the Agreement covers these organisations.

Conclusion

[49] The Agreement is approved and, in accordance with s.54(1)(a) will operate from 7 August 2013. The nominal expiry date of the Agreement is 31 December 2016.

VICE PRESIDENT WATSON

 1   AG891046.

 2   ALAEA - Notice 042/2011 - All Qantas LAME Members - Negotiation Update, Exhibit Q1, Tab 5.

 3   ALAEA - Notice 55/2011: Qantas and Forstaff Qantas LAME EA Meetings, Exhibit Q1, Tab 7.

 4   Amcor v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241per Gummow, Hayne and Hayden JJ at [30].

 5 (1982) 149 CLR 337.

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