Australia: The Qantas dispute: employer's lockout, ministerial intervention and Fair Work Australia's decision

Last Updated: 20 April 2013
Article by Graham Smith and Leigh Howard

Most Read Contributor in Australia, November 2017

Key Points:

The Qantas dispute demonstrates the need for legislative change to make it easier for an affected party to apply for suspension or cooling-off of protected action.

The jurisdiction of Fair Work Australia (FWA) to suspend or terminate protected action under the five grounds provided for under the Fair Work Act 2009 (Cth) was discussed in the April issue of the Employment Law Bulletin.1 It explored how FWA has administered their powers in 18 decisions handed down to date. This article examines the decision of FWA in Re Minister for Tertiary Education, Skills, Jobs and Work­place Relation (Qantas),2 one of the 10 successful applications, which was brought in dramatic circum­stances by the federal minister under section 424(1)(d) of the Fair Work Act.

The Qantas dispute: background

On Saturday, 29 October 2011 Qantas issued a media release announcing that from 8:00 pm on Monday, 31 October 2011, it would lock out, in effect, all of its licensed engineers, ramp staff and baggage handlers and Australian and international pilots. The media release went on to state that aircraft currently in the air would complete their sectors but that there would be no further Qantas domestic departures or international departures anywhere in the world. Qantas stated that the lockout would continue until the relevant unions (the Australian Licensed Aircraft Engineers Association (ALAEA), the Transport Workers Union (TWU) and the Australian and International Pilots Union (AIPA)) dropped their "extreme demands that have made it impossible for agreements to be reached".3

The lockout was a bona fide "employer response action" legally brought under the Fair Work Act. For legal purposes, it was "in response" to protected action being taken by all three unions; being one hour stoppages proposed by the ALAEA, the various work bans and stoppages proposed by the TWU, and a ban on comply­ing with Qantas' in-flight announcements taken by the AIPA.4 In reality, the lockout was a response to a "slow-bake" tactic engineered by the ALAEA and TWU. The tactic was to notify Qantas of a pending stoppage, and after Qantas had cancelled flights and rearranged schedules, cancel the stoppage.5 The costs incurred by Qantas because of this tactic had reached $68 million and approximately $15 million per week in loss of revenue. Approximately 7,000 passengers had been affected and 600 flights had been cancelled.6

Practitioners and Human Resources professionals in aviation will be attuned to the crucial importance labour cost commands in the industry. As Doganis observes:

"because the unit price of labour differs significantly between airlines — even neighbouring airlines on the same conti­nent — labour cost is a major factor in differentiating costs between competing airlines. In short, reducing labour costs is critical because they are the highest single cost and because they are a major cost differentiator between airlines."7

Sue Bussell, Group General Manager of Industrial Relations for Qantas, has stated that labour cost:

"rather than any particular ideological or political perspec­tive, drives Qantas' industrial relations policy as the airline addresses how to best operate under the rules that apply on any given day. Our objective is to maintain a competitive advantage and to provide a sustainable rate of return to fund investment, maintain job security and reward investors."8

The protected action taken by the union parties leading up to the proposed lockout was in pursuit of aforementioned job security. According to Qantas, it was pursued by the three unions in a number of ways:

  1. in relation to the ALAEA:
    1. that Qantas build a fully tooled and staffed heavy maintenance facility;
    2. that third party labour providers be controlled and restricted;
    3. that Qantas' access to productivity improve­ments, including those conferred by technology and regulatory changes, be restricted;
    4. that other unions' members in competition with the ALAEA be excluded from undertaking certain functions;
  1. in relation to the TWU:
    1. that third party labour providers be controlled and restricted;
  1. and in relation to AIPA:
    1. that terms and conditions of employment of employees who work for other companies (whether associated entities of Qantas or not) be regu­lated by Qantas; and
    2. that terms and conditions of other Qantas employees, including those who reside over­seas, be overridden or supplemented by the agreement at hand.9

Considering the wide scope of these claims, their likely negative impact on Qantas' flexibility and profit­ability, as well as the questionable legality of some of them,10 is unsurprising that Qantas vigorously opposed their inclusion in the agreements throughout the 14 months of negotiations. Viewed in this context, it is tolerably clear that Qantas instigated the lockout to force a termination so that the agreements could be arbitrated by FWA where it thought better outcomes could be achieved rather than through bargaining with the unions.

The hearing before FWA

Qantas' lockout, and its obvious consequences for the economy, forced the hand of the Federal Minister to intervene in dramatic circumstances in the evening of Saturday, 29 October 2011. FWA listed the matter before a Full Bench (Giudice J, Watson SDP and Roe C) for 10:00 pm that night, and initial arguments were heard until 2:00 am the following morning. The matter resumed on 2:00 pm that afternoon and judgment was handed down at 2:00 am on Monday, 31 October 2011. The Minister and the four respondents (ie. Qantas and the three unions) were joined by the Victorian, New South Wales and Queensland Governments, as well as the Australian Council of Trade Unions (ACTU), who all intervened to make submissions.

The Minister led evidence from Mike Mrdak, Sec­retary, Department of Infrastructure and Transport and Drew Clarke, Secretary, Department of Resources, Energy and Tourism to establish the extent the extent of damage the Australian economy would suffer if the lockout proceeded. Collectively, the Secretaries testified that:

  1. Qantas accounts for 65 percent of domestic aviation capacity, 20 percent international capac­ity and 80 percent of airfreight delivery services;
  2. the aviation sector directly employs 50,000 Aus­tralians and the downstream effects of employ­ment in the aviation industry represents up to half a million Australians employed in tourism and other sectors;
  3. in-bound tourists contribute $24 billion to the Australian economy per annum;
  4. any reduction in aviation capacity has immediate and severe impacts on all sectors of the economy; and
  5. if the proposed lockout was not put to an end within 24 hours, the tourism sector and the wider economy would suffer because of reduced inter­national and domestic bookings.

This evidence, not unexpectedly, went unchal­lenged.11 The significance of the damage to the Australian economy was not in dispute. What was in dispute was whether FWA should suspend or terminate the lockout and the unions' protected action. The union parties argued for a suspension of 90 or 120 days. The Federal Minister's submission for termination, or suspension for 90 days in the alternative, was supported by the Queensland Government.12

Findings of FWA

FWA's decision to publish reasons when handing down judgment, rather than making an order and pub­lishing reasons later, meant the reasoning and legal analysis in the decision is minimalist. The decision may not be of significant precedential value for the future, but that said, the inferences drawn from it will.

Firstly, the Full Bench concluded that it was "unlikely" that the protected action that had been taken by the three unions, even taken together, was threatening to cause significant damage to the tourism and aviation indus­tries.13 Qantas' losses of $68 million and $15 million per week in revenue, together with the cancellation of 600 flights affecting 7,000 passengers, did not amount to damage of the requisite significance. Thus, a suspension based on the unions' protected action alone would not have succeeded.

In terms resonating with Woodside, the Full Bench opined:

"There is a need to balance this issue against the fact that protected industrial action is permissible under our system and has been now for many years and has been taken relatively frequently in the airline industry with successive bargaining rounds. It is also important that encouragement of enterprise bargaining is also part of the system. In that respect, what we have heard indicates there are still prospects for a satisfactory negotiated outcome in all three cases. The prospect of a negotiated resolution in relation to the three proposed enterprise agreements still remains."

It was Qantas' lockout, and its effect on consumers of airline passenger and cargo services, that satisfied the Full Bench that significant damage was being threatened in the tourism industry, the aviation industry and indus­try more generally.14 FWA's jurisdiction to suspend or terminate pursuant to section 424(1)(d) was therefore enlivened, and in coming to their decision to terminate, the Full Bench held:

"It is apparent that a suspension of all action on an interim or short term basis is not appropriate and in the end no party supported that course. Some of the principal issues in the negotiations have so far proved very difficult to resolve. Other matters may be easier to resolve.

On the evidence there is significant uncertainty arising from the protected action initially of the unions but in particular arising from the lockout and the grounding of the airline. We should do what we can to avoid significant damage to the tourism industry.


We have decided that in the particular circumstances of this case, which on the evidence include the particular vulner­ability of the tourism industry to uncertainty, suspension will not provide sufficient protection against the risk of significant damage to the tourism industry and aviation in particular. Suspension is necessarily temporary — it leaves open the possibility there may be a further lockout with its attendant risks for the relevant part of the economy. That is, a risk the situation we are now dealing with will recur."15

The aftermath

By obtaining the termination, Qantas was able to bring an end to the protracted negotiations and trigger arbitration of the agreements. Since then, Qantas and the ALAEA were able to reach agreement, which was treated as a consent-based workplace determination before the Full Bench at the arbitration hearing.16 Predictably, the ALAEA did not achieve many of its bargaining objectives, and the workplace determination more or less replicates the previous Qantas-ALAEA agreement.17

At the time of writing, the TWU and AIPA have yet to reach agreement with Qantas. FWA is expected to arbitrate the Qantas-TWU agreement in March 2012 and the Qantas-AIPA agreement in April 2012.18 However, AIPA has appealed FWA' s decision to terminate to a Full Federal Court, arguing that Qantas' lockout was not a "protected" employer response action under the Fair Work Act. AIPA contend that Qantas' lockout was dispropor­tionate to the AIPA members ban on complying with Qantas' inflight announcements, and as such, was unprotected action, thereby disentitling FWA to order the termination.19 While novel, such an interpretation is not immediately evident within the scheme enacted by the Fair Work Act, and it is doubtful that a proportionality test comes within the legal meaning of "in response".

It is too early to infer whether Qantas has emboldened other employers to exercise their ability to lockout in response to protected action, despite such claims.20 That said, a lockout followed by an application to terminate it occurred in Schweppes Australia v United Voice21 (Schweppes), approximately one and a half months following Qantas. In that case, Schweppes sought termination of its lockout to force a workplace determination of a pro­tracted dispute concerning shift patterns, which had resulted in various forms of protected action taken by employees.22 It was an inventive, and perhaps ironic, application as Schweppes initiated the lockout then sought to terminate it on the ground that it would cause significant economic harm to employees. Despite its inventiveness, it failed on evidentiary grounds as Schweppes was not able to furnish direct evidence of employee harm to FWA. A petition signed by a large majority of locked-out employees showed that the employees made arrangements to be able to meet their financial commit­ments.23 However, termination was eventually ordered upon FWA's own motion, after 58 days of lockout, as canvassed in Part I of this article.


Qantas' high risk, high reward strategy to lockout their employees is symptomatic of the high bar to relief established by the Fair Work Act, as typified by decisions such as Woodside and Schweppes. It is clear that Qantas had been suffering severely as a consequence of the slow bake executed by the unions, and it is unfortunate that Fair Work system was unable to adequately respond. In the view of the authors, the Qantas dispute demonstrates the need for legislative change to make it easier for an affected party to apply for suspension or cooling-off of protected action.

A fine balance is required to provide respite from protected action while allowing parties to use it as a coercive tool, in a policy sense. As Kaufman SDP in Schweppes aptly articulated:

"For over a century, prior to the WorkChoices amendments to the Workplace Relations Act 1996, the 'rude and barbarous expedient of strike and lockout' was replaced by the power of the Australian Industrial Relations Commis­sion and its predecessors to settle industrial disputes by compulsory arbitration. The wheel has almost come full circle as Fair Work Australia no longer has that power, except in certain confined circumstances, one of which is the making of a workplace determination after protected industrial action has been terminated.


Enterprise bargaining is now the primary means whereby employers and employees secure terms and conditions of employment beyond, or different from, those contained in modern awards. Importantly, to advance their claims, employees are entitled to take protected industrial action, provided that certain procedural steps have been taken. Protected industrial action in support of claims for an enterprise agreement, as authorized by the Act, is the only lawful mechanism available to employees to achieve improve­ments in wages and conditions that an employer is not otherwise prepared to agree to."24

At the time of writing, the Gillard Government has appointed a review panel (consisting of Emeritus Professor Ron McCallum, former Federal Court Justice Michael Moore and Reserve Bank Board Member John Edwards) to report on the operation of the Fair Work Act, including the provisions considered by the authors in this article. That review, in conjunction with the Qantas dispute, has firmly replaced Australia's industrial rela­tions system back on the national agenda. The panel is due to report to Government by 31 May 2012. It remains to be seen whether legislative change will emerge from that review.


1Dr G Smith and L Howard "Terminating and Suspending Industrial Action in the Post-Qantas Environment" (2012) ELB 17(10).
2Re Minister for Tertiary Education, Skills, Jobs and Workplace Relation [2011] FWAFB 7444.
3Qantas, "Qantas Responds to Industrial Action" (Media Release, 29 October 2011).
4Minister's Form F37 Application in Qantas, Attachment 1.
5Such a tactic is permissible under the Fair Work Act: see Re Boral Resources (NSW) Pty Ltd (2010) 193 IR 286; [2010] FWAFB 1771.
6Qantas, above n 2.
7Rigas Doganis, The Airline Business (Routledge, 2nd ed, 2006) 119, cited in Sue Bussell and John Farrow, "Continuity and Change: The Fair Work Act in Aviation" (2011) 24(3) Journal of Industrial Relations 392, 393.
8Bussell and Farrow, above n 7, 393.
9Qantas, Qantas Group Submission to the Review of the Fair Work Act (17 February 2012) Fair Work Act Review.
10As "permitted matters" allowed to be included in agreements under the Fair Work Act: see s 172(1)(a). The legality of the unions' claims is outside the scope of this paper. See generally Australian Industry Group v ADJ Contracting Pty Ltd [2011] FWAFB 6684, which is subject of a Full Federal Court appeal at the time of writing.
11Qantas at [9].
12Qantas at [10].
13Qantas at [10].
14Qantas at [10].
15Qantas, [12]–[13], [15].
16ALAEA v Qantas Airways Ltd [2012] FWAFB 236.
17C/f ALAEA v QantasAirways Ltd [2012] FWAFB 236 at [11] and [17] for a comparison between the claims that remained outstanding after the lockout and what was eventually agreed. On the whole, Qantas was more successful during this nego¬tiating period.
18Workplace Express, "Qantas-TWU arbitration to begin in March, pilots in April, as ALAEA asks members to consider status quo on job security", Workplace Express (online), 25 November 2011.
19Workplace Express, "Pilots' union challenges FWA's Qantas ruling", Workplace Express (online), 10 November 2011.
20Ewin Hannan and Amanda O'Brien, "Firms get Qantas 'bottle' as Schweppes locks out 150", The Australian (online), 16 December 2011.
21Schweppes Australia v United Voice [2011] FWA 9329.
22Schweppes at [16], [22].
23Schweppes at [64].
24Schweppes at [54]–[55].

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. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions