Qantas Airways Limited v Australian and International Pilots Association

[2014] FWC 4267

[2014] FWC 4267

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

Qantas Airways Limited
v
Australian and International Pilots Association
(C2013/6746)

COMMISSIONER CAMBRIDGE SYDNEY, 1 JULY 2014

Dispute settlement procedure - dispute as to entitlement to back pay - back pay provisions included as part of an industrial action related workplace determination - workplace determination provisions regarding leave without pay - question of whether back pay should be made to employees on leave without pay - unusual leave without pay provisions - historical arrangements established in earlier enterprise agreements - obligation to pay back pay only arises if an employee on leave without pay and working for another employer returned to paid work for the applicant.

[1] This matter involves an application made pursuant to section 739 of the Fair Work Act 2009 (the Act), for the Fair Work Commission (the Commission), to deal with a dispute in accordance with a Dispute Settlement Procedure (DSP). The application was lodged at Sydney on 8 November 2013. The application was made by Qantas Airways Limited (Qantas) and taken against the Australian and International Pilots Association (AIPA).

[2] The Commission is empowered to deal with the matter by virtue of a DSP found at Clause 47 of the Qantas Airways Limited Pilots (Long Haul) Workplace Determination 2013 (the Determination). The Determination covers Qantas, AIPA, and all long haul pilots employed by Qantas. The Determination was made by a Full Bench of the Commission on 3 May 2013.

[3] The issue in dispute can be summarised as a claim by Qantas that it is not obliged to make payment of wage increases which clause 32 of the Determination stipulated to commence from 1 January 2012, in respect to pilots who have taken leave without pay, unless and until any such pilot returns from that leave and performs paid work again for Qantas. The AIPA contended that all pilots who were on leave without pay at the time that the Determination was made (and who worked for Qantas at some time after 1 January 2012), have an entitlement to the back dated wage increases applying from 1 January 2012 (the back pay), irrespective of whether such pilot returns to paid work with Qantas.

[4] The matter was the subject of unsuccessful conciliation and the arbitration of the substantive matter in dispute has involved a Hearing conducted in Sydney on 1 May 2014. At the Hearing, Mr F Parry, SC appeared for Qantas and he adduced evidence in the form of two uncontested witness statements together with copies of correspondence between the Parties which clarified the parameters of the issues in dispute. The AIPA was represented by Mr I Latham, counsel, who introduced an uncontested witness statement as evidence upon which AIPA resisted the application.

Background

[5] The Determination is one of a series of industrial instruments made by the Commission as a consequence of the Full Bench Decision of 31 October 2011, which, at the request of the then Minister for Tertiary Education, Skills, Jobs and Workplace Relations,terminated the protected industrial action which had been taken by various Unions who represented Qantas employees. Relevantly, the Full Bench Decision to terminate industrial action was made in relation to industrial action taken as part of enterprise bargaining in pursuit of, inter alia, a proposed enterprise agreement to replace the Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2005-2006 (EBA 7, as varied) (EBA7v).

[6] During 2012, a further Full Bench of the Commission conducted an extensive Hearing which involved both Qantas and the AIPA providing evidence in support of their respective proposals for the terms which should be included in any workplace determination. On 17 January 2013, the Full Bench issued a Decision 1 (the 17 January Decision), which determined the numerous contested aspects of the alternative terms proposed for the workplace determination. Qantas and the AIPA were required to provide a draft workplace determination document which reflected the determinations made by the Commission in the 17 January Decision. On 3 May 2013, the Full Bench issued a further Decision2 (the 3 May Decision), which resolved some outstanding issues and settled the final terms of the Determination as made on that day.

[7] One of the numerous contested issues resolved in the 17 January Decision involved the issues of wage increases and back pay. The Full Bench dealt with the competing approaches to the matter of wage increases and back pay in paragraphs [324] to [340] of the 17 January Decision, and the summary of the Full Bench deliberations involved the outcome set out in paragraph [340]. Subsequently, this outcome was translated into the terms contained in clause 32.3 of the Determination which sets out the pay rates effective from 1 January 2012, 1 January 2013 and 1 January 2014. Thus, the Determination made on 3 May 2013 included back pay for the two increases applying from 1 January 2012 and 1 January 2013.

[8] There was apparently some initial dispute about the implementation of the payment of the back pay for pilots who were working for Qantas when the Determination was made on 3 May 2013. Those matters were resolved, and the residual issue which underpins this matter is whether the back pay prescribed by the Determination should be paid to pilots who were on leave without pay when the Determination was made, but who had worked for Qantas at some period covered by the back pay, 1 January 2012 to 3 May 2013.

[9] The Determination includes two clauses, 40 and 41, which provide for leave without pay. These clauses are essentially a continuation of the terms contained in EBA7v. The 17 January Decision dealt with a claim made by the AIPA for change to these provisions in paragraphs [427] to [437] of the Decision. Clauses 40 and 41 of the Determination and paragraphs [427] to [437] (inclusive) of the Determination do not specifically deal with any requirement to pay the back pay to employees who were on leave without pay when the Determination was made but who had worked for Qantas at some period covered by the back pay.

[10] Qantas has decided that it will not make payment of the back pay to any pilot who was on leave without pay when the Determination was made (and who had worked for Qantas at some period covered by the back pay), unless and until such pilot returns to work for Qantas. The AIPA has disputed Qantas’ decision and it has sought back pay for pilots who had worked for Qantas at some period covered by the back pay but were on leave without pay when the Determination was made on 3 May 2013.

[11] Qantas has made application to the Commission to resolve the dispute by essentially requesting that the Commission endorse its decision to not make payment of the back pay to a pilot who had worked for Qantas at some period covered by the back pay, if that pilot was on leave without pay when the Determination was made (3 May 2013), unless and until such pilot returned to work for Qantas under the Determination.

The Qantas Case

[12] Mr Parry, who appeared for Qantas, made verbal submissions which elaborated upon a written outline and reply materials. The submissions made on behalf of Qantas firstlyrecounted the relevant history of the events which led to the making of the Determination.

[13] Mr Parry submitted that the dispute in question involved obligations that were said to arise from the Determination. Specifically, these obligations related to pilots who had worked for Qantas during the back pay period between 1 January 2012 and 2 May 2013, but who were on leave without pay on 3 May 2013. It was submitted by Mr Parry that there was no obligation upon Qantas to make payments of back pay to pilots who were on leave without pay at the time that the Determination was made unless such pilot returned to work for Qantas.

[14] The submissions made by Mr Parry included explanation of what he described as the long-standing feature of industrial arrangements at Qantas which provided for the somewhat unusual arrangements surrounding extended leave without pay for pilots. Mr Parry said that these long-standing arrangements, which were broadly embodied in clauses 40 and 41 of the Determination, allowed for extensive periods of leave without pay to facilitate pilots working for airlines other than Qantas. Mr Parry further submitted that these arrangements were unusual and that in the normal world of employment such circumstances would ordinarily mean that the employment relationship with Qantas would cease. However, for reasons which suited both Qantas and the pilots, the industrial instrument contained provisions which provided for extensive periods of leave without pay and which contemplated employment with another airline.

[15] Mr Parry made further submissions regarding the appropriate construction and interpretation that should be given to the operation of clauses 40 and 41 of the Determination when considered in conjunction with the terms of the Determination which provided for increases in wage rates during the period from 1 January 2012 to 3 May 2013. Mr Parry submitted that the operation of clauses 40 and 41 meant that the remaining terms of the Determination had no application to those persons who were on the leave without pay pursuant to those clauses. This meant that the wage increase provisions of clause 32 had no application to a pilot on leave without pay under either clause 40 or 41 of the Determination.

[16] It was further submitted by Mr Parry that the correct approach to the operation of clauses 40 and 41 of the Determination led logically to the prospect that all of the other provisions of the Determination would be re-enlivened in the event that a pilot returned to work for Qantas after a period of leave without pay. Notwithstanding what Mr Parry asserted to be the correct application of clauses 40 and 41 of the Determination, he said there were other historical and practical reasons to support such an interpretation.

[17] Mr Parry submitted that there had been long-standing arrangements whereby increases included in earlier enterprise agreements and which involved some element of back pay, had only been provided to pilots who were on leave without pay upon their return to work with Qantas. Further, Mr Parry said it was relevant that the leave without pay arrangements benefited pilots and it was almost invariably a matter of choice for a pilot to exercise the provisions of clause 40 or 41 and undertake work for another airline. In addition, Mr Parry mentioned that there would be some impracticality attached to the prospect that Qantas would be required to pay wages to a pilot working for another airline and who might never return to work for Qantas.

[18] In summary, Mr Parry submitted that the Commission should confirm that the increased wage rates prescribed in sub clauses 32.3.2 and 32.3.3 of the Determination are not payable in respect of work performed in the period 1 January 2012 to 3 May 2013, where a pilot, as at 3 May 2013, had commenced a period of leave without pay, save that such pilot would be eligible for payment of the increased wage rates upon return to work for Qantas under the Determination.

The AIPA Case

[19] The AIPA was represented by Mr Latham who made verbal submissions in amplification of a written outline of submissions.

[20] The submissions made by Mr Latham commenced by referring to clause 1 of the Determination which deals with the parties bound by the Determination. Mr Latham stressed that clause 1.2 made it clear that the Determination covered all long haul pilots employed by Qantas and pilots who had taken leave without pay under either clause 40 or 41 remained as long haul pilots employed by Qantas and covered by the terms of the Determination. Therefore, according to the submissions of Mr Latham, all long haul pilots employed by Qantas as at the date of the making of the Determination, were covered by the Determination and therefore entitled to the wage rates set out in clause 32.

[21] Mr Latham made further submissions which rejected the operation of clauses 40 and 41 of the Determination as asserted on behalf of Qantas. Mr Latham submitted that clauses 40 and 41 provided for the suspension of salary and other payments during a period of leave but did not necessarily operate to suspend or otherwise avoid application of all other relevant terms of the Determination. In order to support his submissions, Mr Latham used the example of a person who may have been on unpaid parental leave on 3 May 2013 but had worked at some time during the period covered by the back dated wage increases. Mr Latham said that in such a case, the entitlement in respect of the increased wages prescribed in the Determination for the period from 1 January 2012 to 3 May 2013, would be clearly established.

[22] Consequently, Mr Latham said that any person who was on a period of leave without pay at the time that the Determination was made, could not be denied an entitlement arising under the Determination simply because they were on that period of leave. Further, Mr Latham rejected that there was any reason for there to be a qualification that the entitlement would only arise when the person returned from the period of leave without pay. Mr Latham said there was an anomaly when one considered that a pilot who did not take leave without pay prior to the Determination would receive the back pay while a pilot who took leave without pay prior to the Determination was denied the back pay.

[23] Mr Latham also submitted that the Commission should reject the general proposition advanced on behalf of Qantas that the operation of clauses 40 and 41 of the Determination removed any application of any of the other terms of the Determination. In this regard, Mr Latham submitted that there are a large number of aspects of the Determination which still applied to people who were on leave without pay.

[24] It was also submitted by Mr Latham that the Commission should reject the proposition that on a question of fairness the position of Qantas should be endorsed, as there had been a long standing industrial practice of only applying back pay for people on leave without pay when they returned to Qantas. Mr Latham submitted that there had been no evidence of these previous arrangements put before the Commission.

[25] Mr Latham made further submissions regarding the proper interpretation of the terms of the Determination. Mr Latham referred to the approach to interpretation of Industrial Awards and Agreements as has been established by authority such as that found in the case of Kucks v CSR 3 (Kucks). Mr Latham said that it was widely accepted that the Commission should adopt a commonsense industrial approach to the interpretation of the terms contained in the Determination, but that this would not extend to the prospect of a conclusion which was contrary to the text of the particular provisions of the Determination.

[26] In summary, Mr Latham submitted that the correct interpretation that should be given to clause 32 of the Determination is that the rates of pay therein represent an entitlement payable to any pilot who commenced a period of leave without pay prior to 3 May 2013 and who was employed by Qantas on 3 May 2013, in respect of any work done in the long haul operations in the period between 1 January 2012 to 3 May 2013. Mr Latham urged the Commission to make an Order which required Qantas to make back pay plus interest, to pilots who satisfied these conditions.

Consideration

[27] The dispute in this matter has involved a contest about the construction and application which should be given to various terms which appear in a workplace determination. The approach to interpretation of industrial instruments is not a matter of strict statutory interpretation. Although the words in an industrial instrument may be given their plain literal meaning, it is well established that often it is appropriate to adopt a contextual and purposive approach broadly based upon authority established by a body of decision-making which is well summarised in a Decision of a Full Bench of Fair Work Australia in,Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Silcar Pty Ltd  4(Silcar).

[28] The particular terms of the Determination which are the subject of contest involve the question of whether back pay should be paid to pilots who were on leave without pay at the time that the Determination was made, 3 May 2013. Clause 32 of the Determination contains pay tables which prescribe rates of pay effective from 1 January 2012, 1 January 2013 and 1 January 2014. On one reading, a literal interpretation of the provisions of sub clause 32.3 of the Determination would mean that these rates must be applied to any work performed under the Determination at the relevant time. Such a literal approach would interpret the terms as if they were akin to the terms of a common rule Award.

[29] Neither Qantas nor the AIPA sought to have the terms of clause 32 interpreted in a manner which was akin to a common rule Award, that is, that the rates were payable in respect to any and all work performed during the relevant periods. The Parties were of the joint view that the Determination could only apply to pilots who were employed by Qantas at the time that the Determination was made, 3 May 2013.

[30] Consequently, the joint position of the Parties was that any pilot who had performed work for Qantas in the period after 1 January 2012 but was no longer employed by Qantas on 3 May 2013, had no entitlement to the higher rates of pay which the Determination had fixed to apply on and from 1 January 2012. This position was supported by the following sentence contained in paragraph [331] of the 17 January Decision: “Nor do we see any merit in the proposition within clause 32.3.3 of the CWD [that] the pay increases be applied in respect of pilots [who] are no longer employed under the workplace determination.”

[31] Similarly, the Parties were also in agreement that the increased pay rates which the Determination prescribed from 1 January 2012 and 1 January 2013, were to be paid to all pilots who performed any actual work for Qantas under the Determination. In addition, it appeared that Qantas accepted that any pilot who was on leave without pay at and after the time of the making of the Determination (3 May 2013), and was not engaged in paid work for another employer, was also entitled to the back pay. One example of a pilot on extended maternity leave provided an example where the back pay was paid to a pilot who was on one particular form of unpaid leave at the time the Determination was made.

[32] The distillation of the dispute was therefore identified to be confined to whether a pilot who was on leave without pay and working for another employer, was entitled to the back pay before they returned to perform work for Qantas as a long haul pilot.

[33] There were various arguments advanced on behalf of Qantas as basis to support that any entitlement to back pay only arose when a pilot on leave without pay (and in paid employment elsewhere), returned to work for Qantas. However, perhaps the most persuasive support for Qantas’ position can be found by way of an inconsistency which can be identified by hypothetical adoption of the position advocated by the AIPA.

[34] The inconsistency which emerges is that if the entitlement to the back pay is established before a pilot returned to work for Qantas, and then that pilot left employment with Qantas, the back pay would have been made to a person who never worked under the Determination. This outcome would create a strange inequity when considered against a person who had also worked for Qantas during the back pay period but had left employment with Qantas before the Determination was made on 3 May 2013. Both cases involved work during the back pay period and both pilots never performed work under the Determination.

[35] Notwithstanding any inconsistency and or inequity associated with having a person on leave without pay whilst working for another employer, become entitled to back pay by virtue of remaining employed by Qantas under the leave without pay provisions of the Determination, without that person returning to perform any actual work under the Determination, the prospect of there being such an entitlement might jeopardise the long standing and unusual leave without pay entitlements.

[36] The leave without pay provisions of clauses 40 and 41 of the Determination are unusual. The terms of these clauses were taken from EBA7v and reflect the historical development of mutually beneficial arrangements which have been tailored for the particular circumstances applicable to international airline pilots and Qantas.

[37] One particularly unusual aspect of these arrangements is the accommodation for extensive periods of absence which involve paid employment with another airline. If, whilst engaged in paid employment with another airline, a pilot who retained employment status with Qantas, was to receive a payment derived as an entitlement from the applicable Qantas industrial instrument, the coverage of the Qantas instrument may be perceived to as have extended beyond its stated terms of coverage. At very least, the prospect that Qantas would be required to pay wages to an employee at the same time that the employee was engaged in paid employment with another airline, might make the leave without pay and approval of other paid employment arrangements unpalatable for Qantas.

[38] The long standing, mutually beneficial arrangements which have facilitated the unusual circumstances whereby a Qantas pilot may be employed for extensive periods by another airline, have included certain understandings which are of a fundamentally practical application. Historically, the Parties have accepted that a pilot who has taken leave without pay to work for another airline will not be entitled to any benefit that may arise from the Qantas industrial instrument unless and until that pilot returns to work as a Qantas pilot. If that pilot does not return to work with Qantas, any benefits which may have been derived from the Qantas instrument are essentially forfeited, as would apply to a pilot who severed employment with Qantas. This understanding represents a practical arrangement to avoid the prospect that the terms applicable to a Qantas pilot on leave without pay and working for another airline are inequitably more attractive than a pilot who leaves Qantas to work for another airline.

[39] The argument advanced by the AIPA against the application of the Determination in a manner consistent with the practical and historical approach to only back pay pilots on leave without pay when they returned to work as a Qantas pilot, correctly identified a distinction which should be made between leave without pay which involves paid employment elsewhere as opposed to leave without pay that did not coincide with employment elsewhere. The example of a pilot on unpaid parental leave, who was not engaged in other paid employment, represented a circumstance which established an entitlement to payment of the back pay before any return from parental leave to work again as a Qantas pilot. In the event that the pilot on parental leave resigned from employment before any return to work as a Qantas pilot, that particular circumstance can be distinguished from the pilot who was engaged in paid employment during the period of leave without pay.

[40] Although the position adopted by the AIPA correctly identified the distinction required if a pilot was on leave without pay and not engaged in other employment, in other respects the interpretation of the Determination as urged by the AIPA was erroneously confined to a literal interpretation of the coverage terms contained in sub clause 1.2.3. If this sub clause was read in isolation and as urged by the AIPA, all long haul pilots employed by Qantas as at 3 May 2013, would be entitled to the back pay regardless of whether any such pilot was on leave without pay, working for another employer, and who never returned to work as a Qantas long haul pilot.

[41] An interpretation which adopted such a confined, literal adoption for the terms of sub clause 1.2.3 would be manifestly blind to the terms of clause 40 and 41 of the Determination and ignore the past, practical conduct of the Parties. Thus, the interpretation as urged by the AIPA would fail to have proper regard for the “practical bent of mind” identified in the following extract from the Kucks Judgment:

“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon.”

[42] One further issue arose in respect to the potential loss of entitlement to any back pay once the Determination had ceased to operate. The application of sub section 276 (3) of the Act may create the prospect that a pilot on leave without pay and working for another airline, who returned to work as a Qantas pilot after the date on which the Determination had ceased to operate, may have lost all entitlement to the back pay. An outcome of this nature would be contrary to the past conduct of the Parties and contrary to the proper interpretation of the Determination during its period of operation.

[43] The most obvious practical means to redress this potential problem would involve the Parties agreeing to essentially “quarantine” the back pay as a term to be included in any industrial instrument which operated after the Determination ceased to operate. The Parties are therefore urged to adopt an understanding that a term would be included in any instrument that replaces the Determination so as to provide that any pilot who returned to work as a Qantas pilot after a period of leave without pay which involved working for another employer, and for which a back pay entitlement would have arisen under the Determination, shall retain such an entitlement notwithstanding that the Determination had ceased to operate.

Conclusion

[44] The resolution of this dispute has required the Commission to settle competing positions regarding the construction and application which should be given to various terms which appear in a workplace determination. In short summary, the particular terms of the Determination which are the subject of contest involve the question of whether back pay should be paid to pilots who were on leave without pay at the time that the Determination was made, 3 May 2013.

[45] In broad terms, my consideration has led me to conclude that the terms of the Determination when properly assessed in context and with regard for the historical practices of the Parties, provide that the entitlement for back pay for any pilot on leave without pay and engaged in paid employment with another employer, does not arise unless and until such pilot returns to work as a Qantas long haul pilot.

[46] Expressed in more specific terms, the increased wage rates prescribed by sub clauses 32.3.2 and 32.3.3 of the Determination are not payable to a pilot in respect to long haul duties performed during the period between 1 January 2012 and 3 May 2013, where that pilot was, on 3 May 2013, on leave without pay and working in paid employment with another employer, unless and until such pilot returns to work as a Qantas long haul pilot.

[47] The application is determined accordingly and the proceedings are concluded.

COMMISSIONER

Appearances:

Mr F Parry SC and Mr R Dalton of counsel, appeared for Qantas;

Mr I Latham, counsel, appeared for the AIPA.

Hearing details:

2014.

Sydney:

May, 1.

 1   [2013] FWCFB 317.

 2   [2013] FWCFB 1706.

 3 Kucks v CSR Limited [1996] IRCA 166 (19 April 1996), 66IR182.

 4   Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Silcar Pty Ltd [2011] FWAFB2555.

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