Qantas subsidiary’s NZ pilots not under Australian IR laws

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Qantas subsidiary’s NZ pilots not under Australian IR laws

By 2:1, a Full Bench of Fair Work Australia has ruled that pilots employed by an overseas subsidiary of Qantas are not subject to the Australian industrial relations system

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By 2:1 a Full Bench of Fair Work Australia has ruled that pilots employed by an overseas subsidiary of Qantas are not subject to the Australian industrial relations system

[Full Bench of this decision: Australian and International Pilots Association v Qantas Airways Limited and Jetconnect Limited [2011] FWAFB 3706 (6 September 2011)]

Justice Boulton and Commissioner Hampton rejected the application by the Australian and International Pilots Association to vary a transitional instrument, the Qantas Shorthaul Pilots’ Award, 2000 [Transitional] (the Award), so as, in effect, to cover pilots employed by Jetconnect, a wholly-owned subsidiary of Qantas Airways Limited, and engaged in trans Tasman services operated for Qantas.
 
Senior Deputy President Drake dissented and found the award was binding upon Qantas, and on Jetconnect as its agent, in respect of pilots employed by Qantas and by Jetconnect, in Qantas short-haul operations, which operations include trans Tasman flights operated by Jetconnect. There was no ambiguity and the award did not require amendment, in the view of Drake SDP.

Decision of Boulton J and Hampton C
 
The majority found that for the application to succeed, it must meet the requirements of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and the Workplace Relations Act 1996, which define the scope for the variation of awards that are ‘transitional instruments’. The majority continued:
‘Having carefully considered the relevant legislative provisions and the submissions and evidence presented in the proceedings, and for the reasons given, we are not satisfied that the jurisdictional and other express statutory requirements for making the variations to the Award sought by AIPA have been met. In these circumstances, it is not necessary to consider further the wider issues raised by the AIPA application. Such an exercise would entail consideration of a broad range of matters in deciding, as a matter of arbitral discretion, whether the Award should cover the Jetconnect pilots.

In our view, the Operating Agreements between Qantas and Jetconnect and the employment contracts entered into between Jetconnect and its pilots cannot be held to be shams.

Even though Qantas exercises a considerable degree of control and influence over the operation of its subsidiary, this is not sufficient to disregard the separate legal personality of the subsidiary. For this to be done, it would need to be shown that there is a mere sham or facade in which the company is playing a role or that the creation or use of the company was designed to enable a fiduciary obligation to be evaded or a fraud to be perpetrated …

… On the evidence in this case, it cannot be concluded that the Operating Agreements and arrangements between Qantas and Jetconnect are a sham. The Agreements established Jetconnect as a wet lease operator of trans Tasman services for and on behalf of Qantas. They involved Jetconnect in maintaining and complying with its AOC, operating and maintaining aircraft and providing pilots and cabin crew for such services. The obligations of Qantas included the provision of aircraft to Jetconnect, the payment of fees and expenses and providing routes for Jetconnect to fly. Indeed on the evidence in this case the Operating Agreements have been implemented by the parties …

… It is also clear from the evidence that Jetconnect is more than a labour hire company, having an AOC and operating and maintaining aircraft. There is no doubt that the arrangements established around 2003 between Qantas and Jetconnect have been continued and expanded to take advantage of the lower cost base of Jetconnect’s operations partly due to its recruitment of New Zealand-based pilots. This might be a consideration going to the merits of granting the AIPA application in the present matter. However it does not provide a basis, according to the authorities cited, for finding that the relevant arrangements between Qantas, Jetconnect and its pilots are to be treated as a sham and therefore to warrant looking behind the corporate veil and determining that the Jetconnect pilots are employees of Qantas.

It may be that Qantas and Jetconnect are conducting a common enterprise. However this would not of itself be a sufficient basis for lifting the corporate veil. In our view Jetconnect has not abandoned its corporate/commercial existence to the extent that would warrant a finding that Qantas was the employer of the Jetconnect pilots …’
Dissent by Drake SDP

Senior Deputy President Drake considered Qantas had ‘total control’ over the subsidiary company and so employees of the subsidiary were effectively employees of Qantas:
‘The primary issue for determination in this application is the status of Jetconnect Limited (Jetconnect). I have read the reasons for decision of Justice Boulton and Commissioner Hampton but, with respect, I am not able to agree with them on this issue. I am not persuaded that His Honour’s and the Commissioner’s conclusion is available on the facts.

The areas where Qantas holds total control are too numerous to list. It is simpler to examine the limited number of factors which speak against the conclusion that Jetconnect is the agent of Qantas and weigh them in the balance. These factors are Jetconnect’s incorporation in New Zealand, Jetconnect’s compliance with the statutory and regulatory requirements of New Zealand’s aviation and industrial laws, and Jetconnect’s contractual arrangements and certified agreement with pilots. These arrangements were and are necessary to achieve Qantas’ purpose which I am satisfied is to reduce costs by reducing the wages of pilots whilst still operating its trans Tasman route. These arrangements comply with New Zealand statutory obligations but I am satisfied that behind them Jetconnect operates as Qantas’ agent.

I have concluded that Qantas Airways Limited (Qantas) does not exercise “a very high degree of control” or “a considerable degree of control” in relation to Jetconnect. I have concluded that Qantas’ control over Jetconnect is total ...

The award is binding upon Qantas, and on Jetconnect as its agent, in respect of pilots employed by Qantas and by Jetconnect, in Qantas short haul operations, which operations include trans Tasman flights operated by Jetconnect. There is no ambiguity. The award does not require amendment.’
 
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