Qantas Group Submission to the Review of the Fair Work Act
1. BACKGROUND
This submission is made on behalf of the Qantas Group. The Qantas Group comprises a number of companies the most prominent of which are:
· Qantas Airways Limited;
· Jetstar;
· Qantaslink;
· Qantas Catering;
· Qantas Freight; and
· Qantas Frequent Flyer.
The listing of all the controlled entities is provided at pages 94 to 97 of the Qantas Annual Report 2011.
The Qantas Group has over 32,000 (full time equivalent) employees (Qantas Annual Report 2011) of which over 90% are employed in Australia.
The Qantas group is highly unionised. It has 48 Enterprise Bargaining Agreements (EBAs) and regularly deals with the following unions:
· AIPA (Australian International Pilots Association)
· AFAP (Australian Federation of Airline Pilots)
· ASU (Australian Services Union)
· ALAEA (Australian Licensed Aircraft Engineers’ Association)
· AMWU (Australian Manufacturing Workers’ Union)
· AWU (Australian Workers’ Union)
· CEPU (Communications Electrical & Plumbing Union)
· FAAA Long Haul (Flight Attendants Association of Australia Long Haul)
· FAAA Short Haul (Flight Attendants Association of Australia Short Haul)
· United Voice (formerly LHMWU)
· NUW (National Union of Workers)
· TWU (Transport Workers Union).
A list of EBAs is included at Attachment A.
This submission is made in response to a number of questions raised in the Fair Work Act Review Background Paper, January 2012 (Background Paper). The questions addressed in this submission are based on our experience of the operation of the Fair Work Act (FW Act) to date.
2. RESPONSE TO SPECIFIC QUESTIONS
2.1 General
Question 2. Can the Fair Work Act provide flexibility for business and is this being achieved? If so, how? If not, why not?
In our experience the Fair Work Act (FW Act) has had the effect of limiting business flexibility. This is particularly because of the operation of the following features of the FW Act:
· Adverse Action provisions;
· Transfer of business provisions; and
· Removal of prohibited content from enterprise agreements.
Our experience with these provisions is set out in more detail in response to specific questions. A number of the questions dealing with productivity have been answered as a set.
2.2 Bargaining and Agreement making
Question 5. Has the Fair Work Act’s focus on enterprise collective bargaining helped to achieve productivity and fairness?
Question 6. What has been the impact if any, of the Fair Work Act on labour productivity?
Question 20. Does the bargaining framework promote discussion and uptake of measures improves productivity?
Question 21. How have employers pursued productivity improvements during bargaining for a new enterprise agreement? Are there any obstacles to achieving productivity improvements in bargaining legislation? How do these obstacles differ from the situation that existed prior to the Fair Work Act?
Question 23. What has been the impact of allowing a wider range of matters to be included in enterprise agreements by removing the “prohibited content” provided under the Workplace Relations Act? What has been the impact on bargaining and productivity? What has been the impact on the employees’ capacity to be represented in the workplace?
The Qantas Group is not in a position to comment on the impact of the FW Act on productivity at a system wide level. However, we can comment on the issue so far as it applies to the Qantas Group.
The Qantas Group has a long history of enterprise bargaining with unions. Qantas Airways Limited was an early adopter of enterprise bargaining when provisions formalising bargaining were first introduced under the then Industrial Relations Act 1988. We have some 20 years of experience in enterprise bargaining with a variety of unions. The major focus of Qantas Group enterprise bargaining has been to negotiate fair wages and conditions in a highly competitive industry with significant exposure to the global economy.
Our approach to enterprise agreement negotiations is to ensure that the outcomes take account of the challenges facing the airline industry, are fair to our employees and do not undermine our competitiveness. Our competitiveness relies upon strong fiscal management including providing a sustainable return on invested capital to underpin fleet renewal, maintaining our investment grade credit rating (Qantas is one of only two airlines in the world to have this rating) and protecting the capacity of the business to improve productivity and respond flexibly to changing circumstances.
The key issue for Qantas is not how to use the provisions of the FW Act to enhance productivity but rather how to resist the attempts by a number of unions to use the provisions of the FW Act to control business strategy and to obstruct change. This has come about as a direct result of the ‘prohibited content’ provisions being removed in the FW Act.
In practical terms this has meant that over the last two years Qantas has been faced with three strategically positioned unions (TWU, ALAEA, AIPA) using protected industrial action (PIA) to attempt to prevent Qantas using contract labour and or to use Qantas enterprise bargaining to set the rates in labour hire firms (‘site rates’). It has lead to industrial action seeking to influence investment decisions and to industrial action seeking to use workplace agreements in Qantas to set labour conditions in related entities regardless of whether those entities already have their own workplace agreements. In addition, at least one union (AIPA) has lobbied for further legislative change that would directly interfere in the labour arrangements made within the Group in accordance with current legislation. This experience is detailed further in the case study below.
It should be noted that this negative experience relates to a small number of powerful unions that represent a minority of Group staff. This is in contrast to previous enterprise bargaining experience, and recent experience with most unions representing Group staff, under the FW Act and the previous Workplace Relations Act 1996 (WRA) Industrial Relations Act 1988 (IRA), where the Group has successfully negotiated workplace agreements, covering a traditional range of terms and conditions, usually without industrial action.
Question 29. How have the good faith bargaining requirements affected enterprise bargaining agreement negotiations?
a. Are there ways in which the good faith bargaining requirements could be improved to better facilitate bargaining?
b. Are the powers possessed by FWA adequate to remedy breaches of good faith bargaining requirements?
Other than addressing the issue of a union notifying and then cancelling industrial action as a form of ‘industrial action’ in its own right (see below), in the view of Qantas the good faith bargaining provisions in the current FW Act do not need to be supplemented by further prescriptive rules regarding.
The Group has some experience with bargaining in overseas jurisdictions. In particular our experience of the more prescriptive good faith bargaining provisions under the otherwise simple and flexible New Zealand legislation has been that these provisions tend to lead to a focus on process at the expense of expedition and outcomes. The good faith obligation also, prior to the recent amendments to the New Zealand legislation, seriously inhibited an employer’s ability to communicate directly with its employees.
2.3 Transfer of Business
Question 34. Does the new broader definition of transfer of business help to clarify when a transfer occurs?
Qantas provides a good example of the bureaucratic hurdles facing large companies that seek to provide employees with opportunities across a range of related entities. Qantas had long standing arrangements, in some cases included in industrial agreements, for staff to apply for positions between entities that each have their own workplace agreements. This includes pilots moving from Qantas to Jetstar, pilots and cabin crew moving between QantasLink and Qantas and customer service and engineering and supervisory staff moving between entities. Under the FW Act Qantas has been required to make numerous costly and resource intensive applications to Fair Work Australia (FWA) for case by case orders to prevent the transfer of instruments in these circumstances. In some cases staff have lost opportunities as a direct result of these provisions because of the time periods involved in seeking union cooperation in any approach to FWA. No Qantas application has been rejected; equally each application takes considerable resources to process for what, in all cases, are voluntary moves.
In the view of the Qantas Group there should be no transfer of instruments where an employee voluntarily transfers his or her employment between related entities (that is there should be no requirement in this circumstance for either an application to FWA for an order waving the transfer of instrument, or for a three month break in employment).
Question 35. What has been the effect of the new transfer provisions on corporate restructuring activities such as in sourcing and out sourcing?
The provisions have created a difficult environment in which to make these decisions Qantas supports the BCA submission on this issue.
2.4 General Protections
Questions 37 – 40.
We note that none of the questions is structured to elicit an answer on whether or not the protections are necessary or operate in an inappropriate way for business decision-making.
Qantas supports the BCA recommendation to restore the sole and dominant test.
The current adverse action provisions are an impediment to business transformation for established firms within Australia. In our observation these provisions do far more than protect individuals from discrimination on the basis of union or non-union membership. These provisions in effect favour new market entrants or the provision of goods or services by overseas companies over established companies seeking to become more competitive onshore.
2.5 Industrial Action
59. What has been the effect of the removal of the mandatory four-hour minimum deduction of pay for protected employee industrial action?
Qantas considers that the removal of this provision has significantly changed the balance in bargaining, especially for service-based industries. Qantas’ view is that the four hour minimum deduction for an employee engaged in any form of industrial action should be reinstated.
Taking Qantas as an example, a one hour stoppage by engineers, ramp employees, pilots, cabin crew or customer service staff has a direct and significant impact on operations, schedules and customers, requiring adjustment to schedules and often causing ‘knock on‘ delays throughout the network that extend well beyond the period of the stoppage. In short, the impact on the employer and on customers is out of all proportion to the one hour deduction from pay that would occur under the current rules.
Likewise in service based industries bans that do not involve stoppages can also be very damaging to the business without any real countervailing consequence for employees.
The ALAEA during the 2011 dispute in Qantas provided an extreme example of how the current rules can be exploited. In this dispute the union notified a one minute stoppage, knowing presumably that the administrative cost of making the required one minute deduction from pay would exceed the actual amount of the deduction, while also exposing the employer to the risk of prosecution for any error in calculating the numerous deductions involved.
Another tactic used by both the ALAEA and the TWU in Qantas in 2011 was to repeatedly notify a stoppage and then cancel the action at the last minute, after schedules had been recut, passengers advised and other staff disrupted from their normal rosters. Such capricious behaviour caused significant cost to the employer, inconvenienced customers and other staff and came at no cost to the union or its members directly involved in the ‘action’. As one example of this tactic, the TWU notified a two hour stoppage for all airports to take place between 16:00 to 17:59 on 7 October 2011. The notice was subsequently withdrawn, but the timing of the notification and withdrawal still meant that this ‘action’ by the TWU still affected 4,343 passengers and resulted in the cancellation of 17 flights and the rescheduling of 19 other flights. As a second example, the ALAEA provided separate notices of four hour stoppages at different times of the day in Brisbane, Sydney and Melbourne. Each of these notices was subsequently withdrawn but this ‘action’ by the ALAEA still affected 8,318 passengers and resulted in the cancellation of 38 flights and the re-scheduling of 27 flights. The average delay for re-scheduled passengers was 95 minutes.
In the 2011 disputes this ‘reversal’ action was also coupled with public threats of more significant action in the future causing a loss of confidence in Qantas’ reliability and a reduction in forward bookings. Lists of the short duration and notified and then cancelled notices of PIA are included at attachments B (ALAEA PIA) and C (TWU PIA).
The scope for some unions to use the current provisions of the FW Act in these ways supports an argument for both reinstating the minimum four hour deduction for PIA. In this context Qantas also supports the BCA recommendations that employer claim action be available in circumstances where employee claim action has been authorised by a protected action ballot.
17 February 2012 1
Qantas Group Submission to the Review of the Fair Work Act
Attachment A: List of Qantas Group Workplace Agreements
ENTERPRISE BARGAINING AGREEMENT TITLEAustralian Services Union (Qantas Airways Limited) Agreement
Qantas Flight Catering Limited Enterprise Agreement
National Union of Workers Qantas Airways Limited – Enterprise Agreement
Qantas Airways Limited(CEPU,CPSU)Enterprise Agreement
Qantas Airways Limited (CEPU) Brisbane Heavy Maintenance
ETOMS ALHMWU (Qantas Airways Limited) Enterprise Agreement
Licensed Aircraft Engineers (Qantas Airways Limited) Enterprise Agreement
New South Wales Nurses’ Association (Qantas Airways Limited) Enterprise Agreement
Flight Attendants Association Of Australia – Short Haul Division (Qantas Airways Limited) Enterprise Agreement
Flight Attendants Association Of Australia – International Division (Qantas Airways Limited) and QF Cabin Crew Australia PTY Ltd
Qantas Airways Limited (AWU, AMWU) Enterprise Agreement
Transport Workers Union (Qantas Airways Limited) Enterprise Agreement
Professional Engineers (Qantas Airways Limited) Enterprise Agreement
Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement
Qantas Airways Limited Flight Crew (Short Haul) Workplace Agreement
Qantas Airways Limited (Technical Salaried Staff) Enterprise Agreement
Australian Services Union (Qantas Information Technology Limited) Managers & Technical Consultants Enterprise Agreement
SUBSIDIARY BUSINESSES