Many were quick to criticise in October 2011 when Qantas CEO
Alan Joyce announced that he intended to ground the entire Qantas
domestic fleet, lock out approximately 3000 employees, and leave
potentially thousands of passengers stranded globally. As we know,
this forced the Australian Government to take action in Fair Work
Australia, which terminated Qantas' lockout and the unions'
industrial action following an urgent hearing.
But as the Fair Work Commission (as it is now known) yesterday
handed down its last workplace determination arising from that
action, it is difficult for an independent observer to characterise
the strategy of Joyce and Qantas as anything but a success.
Qantas took the action it did because the relevant unions were
causing it "death by a thousand cuts". In
particular, one tactic engineered by the Australian Licenced
Aircraft Engineers Association (ALAEA) and Transport Workers Union
(TWU) was causing Qantas significant damage. The tactic was to
notify Qantas of an impending stoppage, and after Qantas had
cancelled flights and rearranged schedules, cancel the stoppage.
The costs incurred by Qantas because of this tactic and the other
industrial action had reached $68 million and was threatening to
cause revenue losses of approximately $15 million per week.
Nonetheless, the industrial action was of itself not sufficient to
permit the intervention of Fair Work Australia. So Qantas did what
many observers thought was the unthinkable.
Qantas obtained the termination of industrial action - but what
was the outcome?
After Fair Work Australia terminated the industrial action, the
parties were required to try and finalise an agreement within a 21
day period (extendable to 42 days). Failing agreement Fair Work
Australia would arbitrate.
The outcome of all this was:
in December 2011 Qantas and the ALAEA reached a consent
position which did not contain the most significant job security
claims pushed for by the ALAEA and allowed Qantas to manage its
business, including offshoring of A380 maintenance;
in August 2012 Fair Work Australia rejected the TWU's
claims for a cap on Qantas' use of contractors and for
contractors to be given the same terms and conditions as Qantas
in January 2013 the Fair Work Commission rejected the claim by
the Australian and International Pilots Association (AIPA) for all
"Qantas flying" to be done by Qantas pilots or by persons
receiving Qantas terms and conditions.
In hindsight, who won the battle?
While the determinations carried some "wins" for the
unions, on balance each was a significant win for Qantas in terms
of resisting the key fetters the unions sought to place on
Qantas' ability to manage its businesses. The Qantas strategy
was a controversial and potentially risky one - but in hindsight it
was one that has paid off for Qantas. Its brand damage appears to
have been limited and temporary and Qantas appears to have achieved
what it wanted out of the workplace determinations. While the
grounding cost it a lot of money (Qantas reported over $120 million
in costs due to the grounding and lost forward bookings and
customer loyalty), it also stopped the ongoing losses caused by the
industrial action taken by the unions and prevented the losses that
may have flowed from giving in to the unions' key demands.
Lessons for employers
The Qantas strategy will not be one emulated often; it was a
high risk/high cost strategy but had high potential gain. It also
relied upon the significance of Qantas to the economy forcing the
Australian Government to take action and giving Fair Work Australia
the ability to terminate the industrial action. Not many other
employers will be in such a position. However the lesson for
employers should be that every possible alternative, no matter how
potentially risky or costly it may be, should at least be
considered when the employer is faced with industrial action.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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