The Australian Licenced Aircraft Engineers Association v Qantas Airways Limited (No.2)
[2013] FCCA 1696
•28 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THE AUSTRALIAN LICENCED AIRCRAFT ENGINEERS ASSOCIATION v QANTAS AIRWAYS LIMITED (No.2) | [2013] FCCA 1696 |
| Catchwords: INDUSTRIAL LAW – Penalties – contraventions of s.280 of the Fair Work Act 2009 (Cth) – failure to consult in accordance with Workplace Determination – failure to provide information relevant to consultation in accordance with Workplace Determination – imposition of penalty – factors relevant to calculation of penalty. |
| Legislation: Fair Work Act 2009 (Cth), ss.280, 546(2) Workplace Relations Act 1996 (Cth), ss.170FA, 170GA(2) |
| Australian Licenced Aircraft Engineers Association v Qantas Airways Limited [2013] FCCA 592 Mason v Harrington Corporation Pty Limited [2007] FMCA 7 Comcare v Commonwealth [2007] 163 FCR 207 Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union v Qantas Airways Limited (PR971590) The Australian Licenced Aircraft Engineers Association v Qantas Airways Limited [2012] FMCA 711 Gibbs v The Mayor, Councillors and Citizens of the City of Altona [1992] 37 FCR 216 |
| Applicant: | THE AUSTRALIAN LICENCED AIRCRAFT ENGINEERS ASSOCIATION |
| Respondent: | QANTAS AIRWAYS LIMITED |
| File Number: | SYG 1477 of 2012 |
| Judgment of: | Judge Raphael |
| Hearing date: | 15 October 2013 |
| Date of Last Submission: | 15 October 2013 |
| Delivered at: | Sydney |
| Delivered on: | 28 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Moses SC, Mr D Mahendra |
| Solicitors for the Applicant: | Australian Licenced Aircraft Engineers Association |
| Counsel for the Respondent: | Mr F Parry SC, Mr S R Meehan |
| Solicitors for the Respondent: | Ashurst |
ORDERS
The Respondent pay a penalty of $24,750.00 for the breach of s.280 of the Fair Work Act 2009 (Cth) set out as Declaration (1) in the Court’s orders of 24 June 2013.
The Respondent pay a penalty of $16, 500.00 for breach of s.280 of the Fair Work Act2009 (Cth) set out in Declaration (2) of the Orders of 24 June 2013.
The said penalties be paid to the Applicant within twenty-eight days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1477 of 2012
| THE AUSTRALIAN LICENCED AIRCRAFT ENGINEERS ASSOCIATION |
Applicant
And
| QANTAS AIRWAYS LIMITED |
Respondent
REASONS FOR JUDGMENT
The Court is required to determine penalties for two breaches of s.280 of the Fair Work Act 2009 (Cth)[1] found to have occurred following the introduction by Qantas of a new system for the maintenance of aircraft known as Maintenance on Demand.[2] The findings of contravention were made following a very lengthy hearing that took place over five days in March and April 2013. In those proceedings, brought by the applicant union, a larger number of contraventions was alleged. In particular, it was argued that the introduction of MoD in itself constituted a contravention of Clause 11 of the Licenced Aircraft Engineers (Qantas Airways) Limited Workplace Determination 2012[3]. The Court did not uphold that allegation or many of the allegations of failure to consult in relation to the implementation of the MoD system but it did make two declarations of contraventions with which it is concerned today. These are:
“(1)That in failing to consult with the applicant upon its decision contained in a letter from Susan Bussell dated 16 February 2012 to make approximately 30 LAME positions redundant, the respondent was in breach of Cl. 47.2 of the Licensed Aircraft Engineers (Qantas Airways Limited) Workplace Determination 2012. The Respondent is thus in breach of s.280 of the Fair Work Act 2009 (Cth).
(2)That in failing to provide the applicant with information concerning details of leave (leave availability) in each line maintenance cost centre the respondent was in breach of Cl. 47.2.3 of the Licensed Aircraft Engineers (Qantas Airways Limited) Workplace Determination 2012. The Respondent is thus in breach of s.280 of the Fair Work Act 2009 (Cth).”
[1] “Act”
[2] “MoD”
[3] “WD”
Full details of the factual matrix within which these contraventions occurred can be found by reading the Court’s decision Australian Licenced Aircraft Engineers Association v Qantas Airways Limited [2013] FCCA 592 but put shortly the first contravention occurred because Qantas had determined that upon the introduction of MoD thirty positions would be made redundant. In the substantive judgment the Court, after considering the evidence, stated at [89]:
“[89]I am satisfied, on the strength of this evidence, that despite the apparent ambiguities in communications between Qantas and the applicant – communications which were vetted by IR and legal teams[4] – the redundancies were a foregone conclusion, regardless of the consultation process that would occur. I believe that Qantas approached the consultation in regards to redundancies as a means to assess who would be willing to make themselves voluntarily redundant and to inform LAMEs of their rights and opportunities in this respect. Consequently, even though the ALAEA approached the consultations in a negative manner, due to their belief that the decision to implement MoD had itself been incorrectly made, I am satisfied that Clause 47.2.1 was breached in that Qantas did not genuinely consult with the applicant in regards to the decision to make 30 LAMEs redundant, that being an effect of the introduction of MoD on employees.”
[4] See T293-294.
The second contravention relates to the individual failure to provide certain information required by Clause 47.2.3 of the WD. That information was required by the union in order to assist it in the consultation process. The finding the Court made was set out at [155 – 157] of the judgment:
“[155]It is apparent from Ms Bussell’s 8 March 2013 affidavit that Qantas took the approach that such information may be relevant in the case that compulsory redundancies were required. She attested (at [13]):
“I said words to the effect:
We will provide it if it becomes necessary. At the moment we are going through an EOI process [for voluntary redundancies]. We think we will get enough volunteers but if we don't we will have to look at how we mitigate.”
[156]In my opinion, if the information was considered to be relevant to mitigating the effect of the introduction of MoD in the case that the Qantas-assigned-number of voluntary redundancies was not met, then it is difficult to see how this would not have been relevant had the requirement for 30 redundancies itself been in issue – as I have found it should have been. It is evident that Qantas was prepared to provide the information at some point, hence I am not prepared to find that the information fell within the exception found in clause 47.2.3.
[157]What is also evident from Ms Bussell’s statement is that the information was not provided. In the circumstances, I believe that relevant information which should have been provided was not provided. In this instance there was a breach of clause 47.2.3.”
The Court has been provided with helpful written submissions from both parties. It is accepted that the maximum penalty that can be imposed upon a corporation for contraventions under s.546(2) of the Act at the relevant time was $110.00 per penalty unit or a total of $33,000.00. The parties also accept the non-exhaustive list of factors potentially relevant to the imposition of a penalty summarised by Mowbray FM in Mason v Harrington Corporation Pty Limited [2007] FMCA 7 at [26 – 59] and adopted by Tracey J in Kelly v Fitzpatrick [2007] 166 IR 14 at [14]:
“2.5A non-exhaustive list of factors potentially relevant to the imposition of a penalty have been summarised by Mowbray FM (as his Honour then was) in Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 (Mason), [26] – [59], and adopted by Tracey, J in Kelly v Fitzpatrick (2007) 166 IR 14 at [14], as follows:
(a)the nature and extent to the conduct which led to the contraventions;
(b)the circumstances in which the conduct took place;
(c)the nature and extent of any loss or damage sustained as a result of the contravening conduct;
(d)whether there had been similar previous conduct by the Respondents;
(e)whether the contraventions were properly distinct or arose out of the one course of conduct;
(f)the size of the business enterprise involved;
(g)whether or not the contravening conduct was deliberate;
(h)whether senior management was involved in the contravening conduct;
(i)whether the party committing the contravening conduct had exhibited contrition;
(j)whether the party committing the contravening conduct had taken corrective action;
(k)whether the party committing the contravening conduct had cooperated with the enforcement authorities;
(l)the need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements; and
(m)the need for specific and general deterrence.”
The Court accepts the submission made by the applicants at 2.6 of their written submissions:
“2.6While the summary is a convenient checklist, it does not prescribe or restrict the matters which may be taken into account in the exercise of the Court’s discretion: Sharpe v Dogma Enterprises Pty Ltd [2007] FCA 1550 at [11]; Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [91]; Rojas v Esselte Australia Pty Limited(No 2) (2008) 177 IR 306 at [65].”
Before embarking upon consideration of the relevant factors I should make one thing clear. That is, that the views which I expressed as to the adequacy of penalties under the Act at the hearing have not in any way influenced my decision. I do, however, have very serious concerns that the maximum penalty, even at the new level of $170.00 per penalty unit, is hardly a deterrent to a major Australian public company from breaching what is a very important law. It could be considered by some companies, and I do not include Qantas in this, as a cost of doing business and a very cheap cost at that. I would echo the views expressed by Madgwick J in Comcare v Commonwealth [2007] 163 FCR 207 when he said at [134]:
“[134]The present state of the law is not such as to engender public confidence that proper legal standards of protection of Commonwealth employees, including our service people, are rigorously required of their superiors, on pain of consequences that will really bite.”
The relevant factors
a)The nature and extent of the conduct which led to the contraventions.
Qantas determined to introduce a new maintenance system for its more modern aircraft known as “MoD”. The Court found that it was entitled to do that under the provisions of the WD but what it was required to do was to consult with the Union on the effects of that decision. The most serious effect of that decision was the loss of thirty LAME jobs. That was the pre-determined effect that was not the subject of consultation and should have been. Qantas did hold discussions with the Union about mitigating the effect of that decision by, inter alia, a voluntary redundancy scheme but the Union never had an opportunity to discuss with Qantas whether it was really necessary to make thirty positions redundant or some lesser figure. I described that failure as a serious one in my judgment and I hold to that view. Even if thirty people happily took voluntary redundancy there were then thirty positions less available to be filled for engineers, a ripple on the pond of skilled employment within Australia. Qantas had made it clear that they will not seek to appeal my findings of fact in relation to the contravention. These include my finding of an admission by Ms Bussell that the figure of thirty redundancies was pre-determined. However, I do not accept the inference made by the applicants in its submissions that Qantas somehow misled the Union. All the evidence points to the number thirty not being something that was open for negotiation.
b)Circumstances in which the conduct took place
The dispute between Qantas and its workforce that resulted in the lockout of 29 October 2011 is notorious. The WD, the subject of this proceeding, came about after the conclusion of the post industrial action negotiating period and was set by the Full Bench of Fair Work Australia. The clause in question was one that had been in previous workplace agreements between the Union and Qantas and was not one of the outstanding matters that had to be dealt with by the Full Bench. The Full Bench determination was made on 23 January 2012. The decision to implement MoD was revealed to the Union on 16 February 2012. In that letter Ms Bussell told Mr Purvinas that the thirty positions would become redundant.
c)Nature and extent of loss or damage
All redundancies required by the imposition of MoD were voluntary. The Union sought to make an argument that even though this was the case it would result in the imposition of compulsory redundancy in other areas of Qantas Engineering. This was a submission which I rejected at the main hearing and I cannot now accept it. What I can accept is that there are now thirty less positions available in Qantas Engineering, either for persons transferring within the organisation or for new employees and that is a serious consequence. What I cannot say is whether, if the Union had had the opportunity to consult with Qantas, the result would be any different. I do not consider that there was any significant loss or damage arising out of the second contravention. The information would only have been of assistance if the Union could consult on the number of redundancies.
d)Similar previous conduct
The applicant cites a decision of the Australian Industrial Relations Commission (Commissioner Raffaelli) in Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union v Qantas Airways Limited (PR971590) in which the Commission found that Qantas had not, as soon as practicable after a decision to make 344 persons redundant, given the Union relevant information and an opportunity to consult with it on measures to avert or minimise the terminations as it should have done. The respondent argues that reliance on that decision is misplaced because it was an application by the Union for an order pursuant to ss.170FA and 170GA(2) of the Workplace Relations Act 1996 (Cth) and did not involve a finding as to whether Qantas had contravened an obligation to consult with the AMWU. It involved an exercise by the Commissioner of a discretionary power. Qantas argues that the essential difference between the two cases is that in the AMWU case there was a requirement to give the Union an opportunity to consult in order to avert the terminations. At [39] in its submissions Qantas says:
“[39]In the present case the Court held that the consultation that is envisaged by the Workplace Determination is on the matters set out in clause 47.2.1 and is essentially consultation in order to avert or mitigate the prejudicial effects of the decision that had already been made. Qantas was not required to provide the ALAEA with an opportunity to persuade the company that it should not go ahead with the introduction of MoD.”
To my mind, Qantas is, in this paragraph, conflating my finding that Qantas was not obliged to consult with the Union about the decision to bring in MoD with its own decision not to consult with the Union about the effect of that decision, namely thirty redundancies. I have found that it did have that obligation. This seems to be an obligation similar to the one found by Commissioner Raffaelli and so I believe there is some relevance in the case. The second matter referred to me was my own decision in The Australian Licenced Aircraft Engineers Association v Qantas Airways Limited [2012] FMCA 711. That was a case in which a Qantas employee had been the subject of duress as a result of his exercising a workplace right. In my view the case is only relevant to the extent that it indicates that Qantas’ IR managers are not as on top of the requirements of the Acts they administer as they should be. In all other ways the actions are so different that the existence of this additional contravention does not weigh heavily with the Court.
e)Size of business
Qantas Airways Limited is a substantial public company employing a large number of people and, in most years, is making excellent profits. It has a substantial industrial relations department and is constantly dealing with a unionised workforce.
f)Deliberateness of the contraventions
I have no doubt that the action of Qantas in not consulting with the Union concerning the number or redundancies following the introduction of MoD was deliberate in that the evidence revealed the company had made the decision before negotiations between it and the Union commenced and there were no negotiations on the number.
g)Involvement of senior management
I am satisfied that the decision to make thirty LAMES redundant following the introduction of MoD was one made by senior management of Qantas and carried out by senior management of Qantas. The decision to implement MoD was announced by the Chief Executive Officer, Mr Joyce, and the letter written to the Union concerning its implementation was written by Ms Bussell, the most senior HR executive of the company. Ms Bussell was also involved in the decision not to provide the information concerning details of leave (leave availability) in each line maintenance cost centre, as was Mr Harris, who was the head of line maintenance operations for Qantas Engineering.
h)Contrition co-operation with enforcement authorities and corrective action
The applicant submits that Qantas did not put forward any evidence indicating contrition or corrective action. At the hearing the company indicated that it would not be appealing the Court’s decision on contravention and that it had noted the error it had made. Counsel pointed out that as regard to a later allegation of failure to consult heard contemporaneously with the main proceedings, the Court had found that there was no failure because consultations were already taking place and to that extent it was suggested that Qantas had learned something from the enforcement action. The authorities indicate that where contrition and corrective action were taken a discount on penalty is usually provided. In my view the actions of Qantas in this matter are not such as to warrant any discount.
i)Ensuring compliance to the minimum standards
The applicant’s submissions in this regard are:
12.1The Privy Council said in Port Louis Corporation v Attorney General of Mauritius [1965] AC 1111 at 1124; [1965] 3 WLR 67:
“The requirement of consultation is never to be treated perfunctorily or as a mere formality…”
12.2The importance of consultation concerning the termination of employee’s employment should not be downplayed. It is a serious obligation with serious ramifications if not met. Consultations are of very real value in enabling points of view to be put forward which can be met by modifications as to how a scheme is to be implemented and sometimes even by its withdrawal. Consultation is the “very stuff” of a responsible and balanced industrial relations system in the modern economy.
12.3The Court would consider the failure by the Respondent to properly consult about the number of positions it decided to make redundant as a significant failure on the party of the Respondent, which is amplified by its failure to provide information concerning details of leave (leave availability in each line maintenance cost centre.)”
At the hearing the Court made it clear that it did not consider that the contravention of failing to provide information concerning details of leave, (leave availability) did exacerbate a failure to consult which it believes was a separate and distinct contravention. The failure to provide the information was a failure in respect of consultations that were taking place.
j)General and specific deterrence
The Court considers that if parties enter into an obligation to consult with one another on important matters of industrial relations those obligations should be honoured. Not to honour them not only brings into disrepute the laws under which the agreements are created but also damages the fabric of the IR system. If the parties cannot be trusted to abide by their agreements then the agreements themselves will fall in value. It is for this reason that penalties for contraventions such as the ones under consideration here must be such as to deter parties immediately concerned and others within the industry from taking a course of action that leads to contravention. It is the Court’s view that deterrence is one of the more significant factors to take into consideration in a matter such as this involving a company of the size of Qantas.
The penalty to be imposed
There are two separate contraventions. The Court has indicated that it believes that the contravention of failing to consult is the more serious of the two. This contravention involved a deliberate action by a large corporation failing to honour its obligations under a WD which resulted in the loss of thirty positions. The Court believes that the appropriate penalty must reflect these matters and also the need to deter both Qantas from repeating this error and other parties from adopting it. The Court would have liked to have seen more of an acknowledgment of wrongdoing and perhaps a protocol for avoiding it in the future. Taking all these factors into account the Court is of the view that any penalty to be imposed should be within the high range. The applicants have suggested a penalty of 240 penalty units being $26,400.00 (80% of the maximum). The respondent argues for a more modest penalty citing the Court’s decision in The Australian Licenced Aircraft Engineers Association v Qantas Airways Limited [2012] FMCA 711 where a penalty of $13,200.00 was imposed. However, as noted earlier in these reasons the Court does not consider the two cases comparable and notes particularly the involvement of much more senior management in the instant case than in that earlier one. The Court’s independent view is that the appropriate penalty is 225 penalty units or $24,750.00.
In regard to the penalty for failing to provide information, the applicant’s submission is that it should be within the mid range and suggests a figure of $16,500.00 being 150 penalty units. It is the Court’s view that this is an appropriate figure.
The respondent accepts the applicant’s submission that the Court should order that the penalties be paid to the applicant following the views expressed by Gray J in Gibbs v The Mayor, Councillors and Citizens of the City of Altona [1992] 37 FCR 216 at [223]. In the instant case the Union has expended considerable funds in bringing the matter to the Court and has been partially successful. It is the Court’s view that it would be appropriate for the penalty to be paid to the applicant.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Date: 28 October 2013
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