Qantas cabin crew agreement 'negotiations' show that wages won't grow without structural reform

This latest guest contribution on the Labour Law Down Under Blog is by Corey Rabaut, National Industrial Officer and Lawyer at the Australian Services Union. 

The Coalition Government’s Federal Budget included the ambitious forecast that the Wage Price Index (WPI) will grow at a rate greater than the Consumer Price Index (CPI) for the next four financial years. Despite the rhetoric, the budget does not provide for any wage growth and grossly ignores a significant impediment in enterprise bargaining that leads to wage suppression – the erosion of worker protection.

Recently, Qantas and the Flight Attendants Association of Australia (FAAA) were negotiating a new cabin crew Enterprise Agreement. Following negotiations, Qantas threatened to terminate the current Enterprise Agreement after the workers rejected the airline’s initial offer. The consequence of termination would have seen about 2500 workers’ wages and conditions cut and drop to the minimum amounts in the Aircraft Cabin Crew Award 2010. If Qantas were successful in its actions, it would have meant that many workers faced a pay cut of close to 40%.

The Fair Work Commission must terminate an Enterprise Agreement if it is satisfied that the termination is not contrary to the public interest and considers it appropriate to do so while considering the views of workers, unions, and the employer and the likely effect should the termination occur. Following a Full Bench decision in Re Aurizon Operations [2015] FWCFB 540, the law has developed to significantly emphasise the employer’s quest for productivity and efficiency as a factor in the public interest. In Aurizon, the Full Bench reasoned that workers’ power is not diminished by agreement termination because they continue to be able to exercise industrial action. Unfortunately, this decision has come at the expense of workers achieving strong pay outcomes during negotiations. The approach by employers to terminate Enterprise Agreements fundamentally shifts bargaining power to the employer and often leaves workers in a defensive position to maintain the status quo.

In the case of Qantas and its cabin crew Enterprise Agreement, the airline’s action in threatening the FAAA with termination of the cabin crew agreement creates a power imbalance in favour of the company. Workers are faced with the option of reaching a deal with Qantas or facing a significant loss of working conditions. In Re Odyssey Marine Pty Ltd [2020] FWA 5101, the Fair Work Commission rejected the union’s argument that a termination would be contrary to the public interest because it was likely to substantially affect the overall wages for employees. The Commission was not convinced that the proposed termination would be responsible for a further decline in market wages. Despite the Commission’s reasons, the connection between terminations and wage suppression is clear. 

If employers can terminate agreements successfully, it will be their strategy to create an ‘impasse’ during negotiations, followed by an application to terminate at the Commission. It forces workers to decide whether to accept a lower offer or risk being on award conditions while engaging in industrial action. Qantas and the FAAA reached an agreement for new working conditions, which applied the airline’s wages policy of a two-year pay freeze followed by 2% pay increases. This outcome falls well short of the Morrison Government’s forecasts for the WPI and CPI.

Qantas’ approach is not without scrutiny. In a recent Senate Committee into “The future of Australia’s aviation sector, in the context of COVID-19 and conditions post-pandemic“, Qantas said the application to terminate the cabin crew Enterprise Agreement occurred due to deadlock with the FAAA and that the company had to respond quickly in a volatile market. The Committee did not accept that Qantas’ approach was necessary to survive COVID-19 as other airlines have had to make difficult decisions without needing to “abandon the fair and balanced bargaining process”. It ultimately made recommendations that the Government address wage decline in the aviation sector.

The Australian Services Union, Australian Council of Trade Unions and Transport Workers’ Union of Australia have all called for the establishment of a Safe and Secure Skies Commission. The independent Commission would, amongst other things, provide for enforceable terms and conditions for all aviation workers to correct the power imbalances and any volatility within the sector. It would be used as a check and balance against threats to working conditions and curtail unlawful actions, such as when Qantas outsourced its ground handlers to avoid enterprise bargaining (see https://labourlawdownunder.com.au/?p=980).

The Federal Government’s Budget failed to invest in changes that support wage growth in aviation. Workers will therefore continue to experience real wage cuts. Without changes to the Fair Work Act to end easy corporate access to agreement terminations, and in the absence of a Safe and Secure Skies Commission, the industrial framework sits far too comfortably in employers’ favour.