Australian and International Pilots Association v Jetstar Airways Pty Ltd

REASONS FOR JUDGMENT 1 The Australian and International Pilots Association ("the Association") together with six individuals seek remedies in this proceeding ("the Association proceeding") against Jetstar Airways Pty Ltd ("Jetstar") for alleged breaches of the Jetstar Airways Pilot Agreement 2008 ("the Jetstar Enterprise Agreement") and of s 325(1) of the Fair Work Act 2009 (Cth) ("the Fair Work Act 2009") arising from training charges which Jetstar sought to recover from the second to seventh applicants. Jetstar challenges the standing of the Association, a challenge which the applicants accept, to apply for remedies for breach of the Jetstar Enterprise Agreement, but does not challenge its standing to apply for remedies under s 325(1) nor does it challenge the standing of the other applicants to bring the proceeding. 2 The Association proceeding was heard together with VID 797 of 2012 ("the Federation proceeding") and the evidence tendered in each proceeding was taken as evidence in the other to the extent relevant. The circumstances of the second applicant, Mr Brendan Kent, were the same in respect of the claim for breach of the Jetstar Enterprise Agreement as that of the pilots in the Federation proceeding, and counsel in the Association proceeding adopted the submissions which had been made by counsel in the Federation proceeding. The lawyers for Jetstar in both proceedings were the same and adopted in the Association proceeding the submissions they had made in the Federation proceeding without repetition. The position of each of the third to seventh applicants ("the cadets") in the Association proceeding was not the same as that of Mr Kent. 3 Mr Kent had been made a conditional offer of employment by Jetstar on 2 December 2009. The commencement date for employment was stated in the letter of offer to be 15 February 2010. Amongst the matters stated in the letter to Mr Kent was the following: This offer of employment and your subsequent employment is conditional upon and subject to the following fundamental conditions: […] you signing and returning the enclosed Endorsement Agreement, or you undertaking to [Jetstar] that you will arrange and pay for necessary training and associated costs to obtain the appropriate aircraft endorsements; […] Mr Kent did not have the appropriate aircraft endorsement at the time the offer of employment was made but he was given the choice by Jetstar of either undertaking endorsement training with the funding assistance of Jetstar pursuant to an endorsement agreement or to arrange and himself to pay for the necessary training to obtain the endorsement, and to provide an undertaking to that effect if he chose to make his own arrangement to fund the training he needed to secure the endorsement. Mr Kent elected to take the first option and on 2 December 2009 signed the endorsement agreement that had been provided to him by Jetstar. He did not, therefore, undertake to arrange and to pay personally for the training he needed, or to pay the associated costs, to obtain the appropriate aircraft endorsement which he needed to take up the position which had been offered to him. 4 The endorsement agreement signed by Mr Kent recorded in a recital that he had applied for a position as pilot with Jetstar which required him to obtain an endorsement to fly an A320 aircraft. Clause 1.1 of the endorsement agreement was headed "Jetstar to assist pilots to meet cost of training" and provided that Jetstar would "authorise and advance payment for training sessions on behalf of the pilot where the pilot [required] endorsement training conditional on the Pilot agreeing in writing to repaying the Training Amount described in [the] agreement". The Training Amount for these purposes was described in the endorsement agreement to include Jetstar's facilitation costs and the amount invoiced by the provider of the training. Jetstar agreed by cl 1.2(b) of the endorsement agreement to pay the invoiced amount to the training provider on the basis that the pilot would repay that amount to Jetstar and would comply with the conditions in the agreement. The parties anticipated that the cost would be a specific amount but their agreement provided that it was subject to change. On that basis they provided for an agreed monthly instalment repayment plan based upon the estimate. Clause 2(c) of the endorsement agreement authorised Jetstar to deduct the training amount in monthly instalments from Mr Kent's salary. His training for the Airbus A320 endorsement commenced on 4 February 2010 and finished on 14 February 2010. He commenced employment with Jetstar on 15 February 2010 and on 12 March 2010 Jetstar informed him that the endorsement costs to be recovered from him were a total of $37,939.13 comprising the training amount of $34,489 and a 10% facilitation fee of $3,448 to be paid in 33 monthly instalments of $1,149.61. Those deductions were made by Jetstar and came to an end in November 2012 when the full amount was paid. 5 The position of the cadets was that they applied to participate in the Advanced Cadetship Program at one of either CTC Aviation or the Oxford Aviation Academy in 2011. Each of the cadets attended interviews to assess their suitability to commence the Advanced Cadet Program in the knowledge that they needed to complete an Airbus A320 endorsement course as part of that program before being offered employment with Jetstar. Each knew that such a course required funding which was to be, or could be, provided by Jetstar and would subsequently be recovered from them. Each undertook endorsement training around September and October 2011. On 31 October 2011 each of the cadets commenced employment with Jetstar and, at that time, each was provided with draft employment contracts. On 3 November 2011 Jetstar made an offer of employment to each of the cadets upon the terms contained in a contract of employment that was attached to the letter offering employment. Clause 2.1 of each contract of employment stated that, subject to acceptance of its terms, employment with Jetstar was to commence on 31 October 2011 or on such other date as was agreed. Clause 9.1 of the contract of employment stated that it was subject to fundamental conditions, one of which was that the pilot held "the appropriate aircraft endorsement to which the Contract relates prior to [the] commencement with [Jetstar]". Each of the cadets entered into an agreement which provided for Jetstar to fund ("the funding agreement") what was described as a Skills Program Amount in respect of a skills program which was defined in each agreement to include the program of training provided by Oxford Aviation or CTC, including for an A320 endorsement. Each of the cadets undertook training within that definition. 6 Clause 2.2 of each of the funding agreements entered into by the cadets provided that the skills programme amount was to be $36,000 but that amount, by cl 2.2(c), was stated to be subject to change. Clause 2.3 provided that each of the cadets agreed to repay to Jetstar the Skills Program Amount in accordance with the funding agreement for either the amount specified or the amount as varied. Clause 3.3 made provision for an agreed method of repayment which included monthly deductions from pay. 7 Jetstar informed the fourth and seventh applicants in letters dated 21 October 2012 that the endorsement costs to be recovered by it from each of them was a total sum of $48,400 comprising a "Training Amount" of $44,000 and a 10% facilitation fee of $4,400 to be paid in 24 monthly instalments of $2,016.16. The third, fifth and sixth applicants were informed by letters dated 21 October 2012 that the endorsement costs to be recovered from each of them was a total sum of $44,145 comprising a "Training Amount" of $41,950 and a 10% facilitation fee of $4,195 to be paid in 24 monthly instalments. Jetstar deducted the relevant monthly instalments from the pay of each of the third to seventh applicants from November 2012 in accordance with the funding agreement which each had entered into. 8 The applicants contend that Jetstar has breached cl 19.1.7 of the Jetstar Enterprise Agreement and s 325(1) of the Fair Work Act 2009. Clause 19.1.7 of the Jetstar Enterprise Agreement provides: Jetstar may require a pilot to enter into a training bond or endorsement agreement for a term no greater than 36 months, for an amount set at the time vacancies are advertised and set in accordance with Attachment 2. Attachment 2 relevantly provides that a pilot could be required to pay a maximum cost of $36,000 as the "initial rating" where a pilot entered into a training bond under cl 19.1.7. The amount in Attachment 2 appeared in a table under which there appeared the following: The costs shown above are maximum costs and actual will be dependent on the amount of training required by each pilot. These rates will be adjusted and published each year in accordance with best available rates negotiated by Jetstar. The applicants contend that these provisions have been breached by requiring the second to seventh applicants to repay training costs for their respective A320 endorsements in excess of $36,000 and to pay the facilitation fee of 10%. It is also contended that s 325 of the Fair Work Act 2009 was breached by requiring each of the second to seventh applicants to spend part of an amount payable to them in relation to the performance of work where the requirement was said to be unreasonable in the circumstances because part of the repayment was the 10% facilitation fee. 9 Mr Kent's claim depends in part upon the same issues as were considered in the Federation proceeding and, to that extent, his claims in this proceeding must fail. That is because he was not an employee within the meaning of the Jetstar Enterprise Agreement at the relevant time and, therefore, it did not apply to him. Accordingly, his claim to the extent that it is based upon a breach of clause 19.1.7 will be dismissed, leaving his claim against Jetstar for breach of s 325 of the Fair Work Act 2009. The position of the cadets in respect of clause 19.1.7 of the Jetstar Enterprise Agreement, however, is different from that of Mr Kent because, as a matter of timing, in each case funding agreements were signed by them after commencement of their employment. Some of the cadets had signed funding agreements before they had commenced employment but the funding agreements had subsequently been replaced with others after employment had commenced. In each case, Jetstar conceded that the cadets were relevantly employees who were able to rely upon the Jetstar Enterprise Agreement but Jetstar contended that the training they obtained did not come within the terms of clause 19.1.7 and Attachment A. In the case of the cadets, therefore, the issues are both whether the requirement to make the payments in excess of $36,000 was in breach of clause 19.1.7 of the Jetstar Enterprise Agreement and whether it was contrary to s 325 of the Fair Work Act 2009. 10 Jetstar submitted that it did not breach cl 19.1.7 in requiring the cadets to pay more than $36,000 because any limitation in cl 19.1.7 of the Jetstar Enterprise Agreement upon the amount it could require its employees to pay was limited to the training required during the course of employment with Jetstar and not to the initial endorsement training that was necessary to secure endorsement to commence employment. I accept Jetstar's contention that cl 19.1.7 and the limitation in Attachment 2 do not apply to the training required to be undertaken to qualify for employment. The Jetstar Enterprise Agreement was the product of negotiations and bargaining in an industrial context. The Jetstar Enterprise Agreement, for the reasons set out in the Federation proceeding, applies to employees and not to those who seek to become employees. Attachment 2 relevantly applies where a pilot enters into a training bond under cl 19.1.7. That clause provides: Jetstar may require a pilot to enter into a training bond or endorsement agreement, for a term no greater than 36 months, for an amount set at the time vacancies are advertised and set in accordance with Attachment 2. The requirement which the clause contemplates that Jetstar may impose is one upon pilots already employed by Jetstar in respect of training or endorsement which may be required in addition to their initial qualification. The clause presupposes a person's existing employment as a pilot with the necessary qualification for that relationship. The cap on costs in Attachment 2 applies to requirements arising from cl 19 of the Jetstar Enterprise Agreement which is concerned with skills acquisition and personal development of pilots during their employment with Jetstar and not for the training needed to secure the initial position as a pilot. Clause 19 is headed "Mutual obligations to training" and clause 19.1 is headed "Training and Personal Development". Clause 19.1.1 provides that training and personal development are an important part of a pilot's employment with Jetstar and the clause is directed to ongoing obligations between Jetstar and its existing employee pilots during the course of, and in the performance of, an established employment relationship. The obligations upon Jetstar, for example, to provide reasonable access to training in cl 19.1.2, is an obligation which falls upon it to provide access to training to its existing employees and not to others who may not yet be employed by Jetstar. 11 In some cases the cadets who signed the endorsement agreement had, before their employment, previously signed an endorsement agreement, or had been aware of Jetstar's requirement for payment of the amounts payable under the endorsement agreement. The endorsement agreements which were entered into after the commencement of their employment were substitutes for earlier agreements which had been entered into, but in each case related to the funding for training which had occurred before employment. The training undertaken for which the endorsement agreement was signed, and for which payment sought, was not training of the kind contemplated by cl 19.1 as part of the pilot's employment with Jetstar. 12 An argument relied upon by the Association against this construction depended upon the presence of the word "vacancies" in cl 19.1.7. The applicants contended that the reference to "vacancy" in the clause contemplated the possibility of training needing to be undertaken in order for a position to be secured for which there was a vacancy that was applied for by someone other than an existing employee. However, the possibility of "vacancies" being available to be filled does not require the conclusion contended for by the applicants. The clause may sensibly enough extend to such vacancies as may be available for existing employees to apply for. There was, indeed, evidence of such vacancies arising for which existing employee pilots had applied. The fact that cl 19.1.7 and Attachment 2 applies to new positions for which existing employees could apply does not mean that the clause was intended to apply to the training required by these applicants to obtain the necessary qualification to become employees. The Jetstar Enterprise Agreement does contemplate existing employees applying for new positions for which training may be required. Thus, cl 19.3.9 deals with transfers by pilots between wide and narrow bodied aircraft undertaken at the request of an existing pilot. In that case cl 19.3.9(b) specifically provides that the cost of the training is to be recovered from the pilot as provided for in Attachment 2. The overall purpose and effect of the Jetstar Enterprise Agreement is to provide for matters arising in the course of employment in a position with Jetstar as a pilot rather than for the initial qualification which may be needed to become an employee. 13 It is, therefore, unnecessary to consider whether the terms of Attachment 2 were breached had it applied to the cadets, but it may be desirable to express some view about the contentions which were made. It was argued for Jetstar that Attachment 2 did not impose a maximum amount that could not be exceeded but that it was only an indicative amount. I would reject Jetstar's construction to that effect if it were necessary to decide that issue. The Attachment does use the word "indicative" to describe the cost schedule in Attachment 2 but the other terms of the Attachment make it clear that what was indicated was the "maximum" cost and specifically made provision for adjustment and variation of that maximum cost over time. 14 The applicants' alternative claim under s 325(1) of the Fair Work Act 2009 relied substantially upon the fact that Mr Kent and the cadets were required to pay an amount of 10% by way of a facilitation fee which was, on any view, in addition to a refund of the cost of the training which had been advanced by Jetstar in payment to a third party. Section 325(1) provides: An employer must not directly or indirectly require an employee to spend any part of an amount payable to the employee in relation to the performance of work if the requirement is unreasonable in the circumstances. It was common ground between the parties that the section applied to the amounts paid by the cadets and by Mr Kent, and that the only issue in the context of s 325(1) was whether the facilitation fee of 10% was "unreasonable in the circumstances". 15 The basis of the contention that the 10% facilitation fee was "unreasonable in the circumstances" was essentially that the fee was not paid for the training. There was, however, evidence that assisting those who undertook the training involved Jetstar in administrative tasks and organisation, as well as, some cost in financing the amounts advanced. Mr Matthew Bell was cross-examined on the administrative aspects associated with the facilitation of training for prospective pilots. Mr Bell is the flight operations resources manager at Jetstar and was asked about the activities undertaken by Jetstar for which the fee was charged. He agreed that the fee was not for the actual provision of training, but that Jetstar, depending upon the trainee, needed to undertake ancillary activities to facilitate the training such as providing transport, arranging airfares, and booking the training. In re-examination he added that there was "a lot of administration organising the course, co-ordinating with the pilot to make sure he knows what he needs to do for the course. It takes a fair bit of time." 16 There was insufficient evidence to know how Jetstar arrived at the figure of 10% or to evaluate whether 10% was unreasonable in all the circumstances. The burden fell upon the applicants to establish that the requirement to pay the facilitation fee of 10% was unreasonable and they have not done so. The fee is paid for the facilitation of the training which was made available for prospective pilots through third parties. The amount was paid to cover administrative costs and funding arrangements for those who were offered employment. The amount charged by way of facilitation fee is a percentage imposed upon an amount paid to one of two third parties for the training services they provided. There is nothing inherently unreasonable in Jetstar seeking to cover its costs by a percentage charge upon what it had advanced for the benefit of the prospective employees and there is nothing inherently unreasonable on the percentage being 10%. 17 Accordingly the proceeding will be dismissed. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.