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					Supplementary Submission by Qantas

Response by Qantas Group to the submissions of the Australian and
International Pilots Association (AIPA) to the Fair Work Act Review

1. Good Faith Bargaining

At paragraphs 3.4 to 3.11 of its submission AIPA alleges that Qantas adopted an
adversarial approach in the bargaining for a new Workplace Agreement to cover long
haul Qantas pilots. These negotiations commenced in August 2010 and continued
until the bargaining period was terminated by Fair Work Australia on 31 October
2011. The only evidence advanced by AIPA for this allegation is the claim that
Qantas withheld financial information from AIPA relating to the performance of
Qantas mainline international operations. This allegation is not supported by the

During the early stages of bargaining AIPA received separate briefings on the
performance of the Qantas business by the Chief Executive Officer, the Chief
Financial Officer Qantas Airways and the Group Executive Qantas Airlines,
Commercial. Each of these meetings involved a full and frank discussion on the
performance of the business and the challenges faced by the international operation.

After Qantas released data on the financial performance of the international mainline
operation to the markets on 16 August 2011, the CFO met with the AIPA President
and a forensic accountant retained by AIPA to discuss the announcement with the
union and to explain the methodology used to assess the performance of the
international operation in some detail. Subsequently a copy of the presentation used
by the CFO at that meeting was made available to AIPA’s adviser (once a
confidentiality agreement had been signed).

During the section 240 conferences before FWA in September 2011 Qantas offered
a further briefing from the CFO that AIPA declined. The CEO also met with the
ACTU and relevant affiliates, including AIPA, and offered to engage either Deloitte,
PWC or Ernst and Young to conduct an ‘audit’ of the Qantas segment underlying
EBIT result for the FY ended 30 June 2011. This offer was subject to some
conditions around confidentiality and around the unions’ privy to the results
accurately reporting the results of the audit. The ACTU did not take up this offer on
behalf of relevant affiliates.

As can be seen, AIPA was given unprecedented access to senior personnel and to
information about the business, subject to normal disclosure requirements. Some of
these offers it chose not to take up. Hence there is no evidence for its allegations of
adversarial behaviour by Qantas. Equally, there is no evidence that additional
information would have lead to the level of ‘trust and understanding’ asserted by

Even if AIPA’s proposed change to the Act was supported by evidence of a problem
to be addressed (which in the view of Qantas it is not), the actual change proposed
by AIPA also raises very significant issues.

AIPA states in its submission that the purpose of the information sought by AIPA was
to allow AIPA to verify or audit the accuracy of public statements made by Qantas.
Qantas as a publicly listed company has clear disclosure obligations that are
supervised by the ASX and other regulatory authorities; not by AIPA. The AIPA

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proposal to remove the exemption from disclosure of ‘confidential or commercially
sensitive information’ suggests that a union is entitled to information that is not
available to the ASX, or alternatively that a Company should be obliged to release to
the ASX, and therefore to its competitors, any information sought by a union during
enterprise bargaining processes. This would be a fundamental and detrimental
change to the laws governing public and private corporations.

Finally it should be noted that at no time during the 14 months of bargaining on the
long haul workplace agreement did AIPA seek to obtain Good Faith Bargaining
Orders (for example, an order that Qantas provide particular information) from Fair
Work Australia (FWA) under the current provisions of the Act. Qantas rejects any
intimation that it failed to comply with its obligations or acted in bad faith during the
2010 - 2011 bargaining with AIPA.

No case has been made by AIPA to support its recommendation at paragraph 3.12
of its submissions.

2. Outsourcing of work to foreign wholly-owned subsidiaries or to foreign
subsidiaries controlled by Australian entities

At paragraphs 4.3 to 4.8 the AIPA submission refers to proceedings that it
commenced in FWA in 2011. Page 41 of the ACTU submission also contains a
reference to this case. The proceedings related to an AIPA claim that the Qantas
Short Haul Pilots Award be extended to cover New Zealand based employees of a
New Zealand Company that were already covered by an agreement made with the
relevant New Zealand union under New Zealand law. AIPA quotes extensively from
the minority decision in the case – that is, from a decision that did not have the
support of the majority of the Full Bench of FWA. AIPA’s arguments in the
proceedings were not successful and it has not sought to appeal the decision.

The change to the law that AIPA proposes would fundamentally change the settled
legal status of subsidiaries within a corporate group, with the only supporting
evidence for this change to the Act being that it might have helped AIPA succeed in
its proceedings before FWA. AIPA’s recommended change to the Act is not borne
out by any evidence, findings or decision of FWA (or any other Court or tribunal) that
Qantas (or any other employer) has sought to “avoid their employment obligations
under Australian law and Australian workplace instruments simply by setting up
wholly-owned foreign subsidiaries or subsidiaries over which they have control and
then outsourcing the work to these subsidiaries”. Qantas refutes any suggestion that
it has engaged in such conduct.

3. Application of the Fair Work Act to foreign based flight crew and cabin crew
who work in Australia on domestic flights

In paragraphs 5.1 to 5.4 AIPA selectively refers to proceedings before the Senate
Inquiry into the Air Navigation and Civil Aviation Amendment Act (Aircraft Crew) Bill
2011 and the Qantas Sale Amendment (Still Call Australia Home) Bill 2011; both Bills
are proposed by Senator Xenophon. The issues canvassed in these proceedings are

Mr Alan Joyce, CEO of Qantas Airways, together with senior Executives, appeared
before the Senate Inquiry on two occasions, once in 2011 and again most recently
on 6 February 2012. The Qantas Group also made a written submission to the
Inquiry that explains the highly adverse impact the proposed Bills would have on the
Qantas Group and the advantages that our foreign competitors would gain should

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either or both of the proposed Bills be enacted. Qantas relies on its submission and
statements to the Senate and on the answers provided to the more than 200
questions asked by members of the Committee.

In its submission to the Review on the selected evidence before the Senate Inquiry
AIPA makes three recommendations:

     Two contained in the body of the submission on page 10 that propose
      changes to the definition of the term “Flight Crew Officer” and new definitions
      of “Australian Domestic Aviation” and “ Australian Domestic Aviation
      Operator;” and

       AIPA recommendation 3 at Paragraph 5.5.

The changes proposed by AIPA do not relate in any way to the Panel’s role in the
Review (as Qantas understands the objectives of the review of the Fair Work Act).
Rather, they reflect narrow sectional and industrial interests of one union in one
industry, seeking industry specific regulation. AIPA’s recommendations would, if
adopted, have serious negative consequences for Qantas to the benefit of
competitor airlines and in particular airlines based overseas.

4. Termination of protected industrial action

Part 6 of the AIPA submission relates to the 2011 dispute between Qantas, AIPA,
the Transport Workers Union and the Australian Licensed Aircraft Engineers
Association and the subsequent termination of all protected industrial action in
relation to bargaining between Qantas and those unions by FWA.

While AIPA’s commentary on FWA’s decision to terminate the bargaining is not
accurate, it is not appropriate for Qantas to comment further on those matters, as
issues associated with FWA’s termination of protected industrial action are the
subject of proceedings brought by AIPA in the Federal Court of Australia.

Nevertheless, in advance of its appeal being determined AIPA                     makes
recommendations at paragraphs 6.17, 6.18 and 6.19 of its submission.

At paragraph 6.17 AIPA recommends that employer industrial action be subject to a
proportionality test. Given that a “Lock Out” is the only industrial action available to
an employer, in practice this is a proposal which places even further limits on when
such action can be used (it is already limited by being required to be in response to
union action, whereas unions can initiate protected industrial action). The proposal
is also not even handed given that no such test of proportionality, whatever that
might mean in practice, applies to union action. If such a recommendation were
adopted, it would have the consequence of creating an unbalanced bargaining
situation in which (in certain circumstances) employees could take industrial action
to place pressure on the employer, but the employer could not respond. Damage
could be done to an employer’s business without it having the ability to respond.

At paragraph 6.18 AIPA recommends that FWA be required to suspend action
before any decision to terminate action – rather than allowing FWA to make this
decision based on the a particular set of facts as apply at the time (as did apply in
the case in which AIPA was involved). AIPA presents no evidence supporting that
recommendation. If such a recommendation were adopted, it would lead to the
consequence that FWA would not have the flexibility to respond to particular
situations as they arise.

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At paragraph 6.19 AIPA recommends that employer response action be subjected to
the same period of notice as employee-initiating action. Such a recommendation
ignores the fact that employers can only take action in response to union initiated
action. AIPA presents no cogent arguments or evidence supporting why such a
proposal should be adopted.

5. Demotions and protection from unfair dismissal

In Part 7 of their submission, AIPA seeks to revisit the issues which arose in
proceedings brought by it and in which a decision has been given by FWA (Holland v
Qantas Airways Limited [2011] FWA 3778). In Qantas’ view, the Holland decision
was correctly decided and has not been appealed by AIPA.

Qantas does not support the recommendation put forward by AIPA at paragraph 7.7,
which is designed to render the provisions of clause 14.9 of the Qantas Long Haul
Enterprise Agreement, agreed between AIPA and Qantas, meaningless. That
provision provides for the Chief Pilot to demote a pilot on standards grounds after
following a detailed peer review process in which AIPA is represented.

Employees covered by a certified agreement that contains a right to demote are in a
different position to employees who are employed pursuant to a common law
contract of employment. The case law has long recognised the difference and is

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