Agreed facts
8 The basic facts recounted above, and the matters which follow, are derived from the statement of agreed facts. That statement and its accompanying documents was, ultimately, the only evidence led in the proceedings.
9 In 2009, Jetstar Airways decided to implement a cadet pilot program. The program was to have two aspects. It included persons who already held a commercial pilot's licence. Six pilots in that group are the subject of the present proceedings. A second stream concerned persons who had no prior flying experience and needed to obtain a commercial pilot's licence as an initial step towards employment in connection with Jetstar passenger jet operations. No person in the second group is the subject of the present proceedings.
10 On about 4 November 2009, Mr Nuttall sent an email to Mr Farrow, the industrial relations consultant. Mr Nuttall advised Mr Farrow that Jetstar Airways was hoping to establish a cadet pilot program. The proposal included arrangements to recover costs of training by way of salary sacrifice over a period of years. Mr Farrow responded about one week later saying (amongst other things):
…The consequence of being an employer under the modern award is that you must pay award pay rates and the employer becomes responsible for the cost of required training and for recognising service during the training period.
11 Over the ensuing months, Jetstar Airways developed a method by which it would employ and pay cadet pilots in the cadet pilot program. One option identified was to employ them through Jetstar New Zealand using a New Zealand individual employment agreement. Funding for the training was to be provided initially by Jetstar Airways, but the cost of the training was to be a cost to the cadet pilots.
12 On 2 June 2010, Jetstar Airways issued a press release announcing the launch of the cadet pilot program, using employment by Jetstar New Zealand as a core component. In July 2010, Ms Golias conducted interviews, and then final interviews, with applicants. She also provided administrative support to Mr Nuttall. She was not involved, however, in decision-making, which was the province of Mr Nuttall, Mr Bell and Mr Dal Pra.
13 On 2 August 2010, four cadets with whom the present proceedings are concerned were accepted - Messrs Stockley, Mosca, Webster and Wladyslawski. They were each provided with a funding agreement to execute and a copy of a proposed New Zealand contract. The funding agreement provided for repayment of the cost of the cadet pilot program. On 9 August 2010, they attended an induction session at which representatives of Jetstar Airways told them that it was "highly likely" that they would be employed in Australia when their training had concluded. Two further applicants with whom the present proceedings are concerned were accepted later - Mr Hull and Mr Hessell. Between 6 August 2010 and 21 October 2010, each of the six cadet pilots signed the funding agreement. The total cost which they each agreed to repay was AUD$84,000. (That total cost appears to have been divided equally between "ground" training and "check to line" training.)
14 On 15 November 2010, there was a meeting between representatives of Jetstar Airways and representatives of Jetstar pilots. The minutes of that meeting disclose that Mr Dal Pra advised that 24 cadets were starting in New Zealand and would be "employed through New Zealand". Captain Darren Davis, the Jetstar Pilots Council Chairman, apparently protested the arrangement. His protests were met with a response (as recorded) that Jetstar required greater flexibility.
15 After the six cadet pilots earlier identified had completed their ground training, they were employed under contracts of service by Jetstar New Zealand. The contracts were prepared by Mr Nuttall. Each contract provided for a home base of either Auckland or Christchurch, New Zealand. Messrs Webster, Stockley, Mosca and Wladyslawski commenced their employment on 18 October 2010; Mr Hull commenced on 13 December 2010; and Mr Hessell commenced on 17 January 2011. Despite their nominal employment by Jetstar New Zealand based in New Zealand, the six cadet pilots undertook line training in Australia with Australian training captains employed by Jetstar Airways. Although they may have attended some observation flights in New Zealand, they did not operate an aircraft in New Zealand during their employment with Jetstar New Zealand. For the majority of the time they were employed by Jetstar New Zealand, they were rostered for duties from a port on the eastern seaboard of Australia.
16 The six pilots successfully checked to line on the following dates:
Mr Wladyslawski - 15 February 2011;
Mr Webster - 24 February 2011;
Mr Mosca - 3 March 2011;
Mr Stockley - 20 March 2011;
Mr Hull - 23 May 2011; and
Mr Hessell - 2 July 2011.
17 On 9 March 2011, the six cadet pilots were informed that, due to restrictions imposed by the Civil Aviation Safety Authority, they would be required to be based in Australia.
18 They were then offered employment by Jetstar Group pursuant to a written contract. Initially, it was proposed that in addition to repaying training costs (said to be owed to Jetstar New Zealand) they would be subject to a bond of up to $60,000. That proposal was not acceptable to the pilots. A revised offer proposed a bond of $2,500 a year for six years or a flat amount of $10,000. The first group of four cadet pilots accepted this proposal on 8 April 2011. Mr Hull accepted on 21 May 2011. Mr Hessell refused to sign the contract, but was employed nevertheless.
19 The proposed contract provided for a salary sacrifice arrangement and for deductions from salary to repay the training costs said to be owed to Jetstar New Zealand. On 31 May 2011, Mr Bell sent an email to Mr Keith Abbott, "Head of People" at Jetstar Airways (with a copy to Captain Rindfleish) which said the following:
I understand we offered Australian employment to the remaining cadets employed in NZ - I need to let you know that we may have cost ourselves the value of their in flight training (42K) per cadet as the modern award does not permit a prospective employer to charge for training - see clause 16.5.
20 In their statement of agreed facts, the parties recorded:
86. By at least May 2011, senior managers including Bell, Abbott and Rindfleish understood that the Modern Award would apply to the Cadet Pilots if they became employed by the Second Respondent and that the Second Respondent may have to pay the full cost of the Cadet Pilots' Check to Line Training.
21 I accept as a convenient summary the following submission made in writing by counsel for the respondents:
16. The second respondent accepts that by the time the cadets were doing their line training, the cadets were effectively earmarked for employment in Australia with the second respondent and that, as their prospective employer, the second respondent required the cadets to undertake and complete their line training. The first four cadets were told that it was "highly likely" that they would be employed in Australia at the conclusion of their line training (SAF [51]). All their flying was in Australia and by March 2011 was required by CASA to continue to be done in Australia (SAF [76]). Clause 2.1.1 of the employment contract with the second respondent (Jetstar Group Contract) required the cadets to obtain and maintain all applicable licences and qualifications required by the company for the employment to commence. Necessarily, this carried with it the prerequisite of having completed the line training.
22 The facts thereby reflected serve to engage the operation of cl 16.5 of the Award, and impose an obligation on Jetstar Group to reimburse the cadet pilots for at least the cost of line training to which they were subject.
23 Nevertheless, as recorded by the parties statement of agreed facts, the following occurred:
87. From June 2011 until September 2011, the Second Respondent made deductions from the Cadet Pilots' wages in relation to the training costs owed to the First Respondent under the Funding Agreement:
(a) a total of $3,500.00 was deducted from the wages of Wladyslawski between June 2011 and September 2011, where in that period Wladyslawski's salary was $17,203.94;
(b) a total of $3,500.00 was deducted from the wages of Webster between June 2011 and September 2011, where in that period Webster's salary was $15,723.52;
(c) a total of $3,500.00 was deducted from the wages of Mosca between June 2011 and September 2011, where in that period Mosco's [sic] salary was $18,614.83;
(d) a total of $3,500.00 was deducted from the wages of Stockley between June 2011 and September 2011, where in that period Stockley's salary was $14,785.36;
(e) a total of $2,625.00 was deducted from Hull between July 2011 and September 2011, where in that period Hull's salary was $17,378.97; and
(f) a total of $875.00 [was] deducted from Hessell in September 2011, where in that period Hessell's salary was $13,334.51.
24 Before the first of those deductions was made, on 17 May 2011 the Australian Federation of Air Pilots ("the AFAP") had commenced proceedings against Jetstar Group in this Court. The proceedings alleged that Jetstar Group had contravened, or proposed to contravene, identified clauses of the Award (although not, specifically, cl 16.5). Although cl 16.5 was not the subject of specific attention in the application or statement of claim filed by the AFAP, the proceedings did attack the bond arrangements, the salary sacrifice arrangements and the requirement for pilots to bear the cost of obtaining and maintaining minimum qualifications for particular aircraft types. On 12 December 2011, the AFAP proceedings were discontinued by private agreement. That agreement was reached in circumstances where the cadet pilots had been informed that the amounts deducted from their salary would be refunded and those payments were in fact refunded. The cadet pilots were also informed that the funding agreement (including the bond) would no longer apply. The steps by which those matters were accomplished were described in the statement of agreed facts in the following way:
89. On 29 August 2011, the Cadet Pilots were provided with a document titled "Transition of Cadet Pilots from Employment with Jetstar Airways Limited and Jetstar Group Ply Ltd to Jetstar Airways Pty Limited". Clause 13 of the "Transition of Cadets from Employment with Jetstar Airways Limited and Jetstar Group Pty Ltd to Jetstar Airways Pty Limited" document stated that if the Cadet Pilots accepted a contract with the Third Respondent they would receive a letter from the First Respondent stating that the Funding Agreement would no longer apply and that any liability they had to make payments under that Funding Agreement would be extinguished.
90. Clause 16 of the document said that if the Cadet Pilots accepted a contract with the Third Respondent then any money they had paid to the First Respondent under the Funding Agreement would be refunded by Jetstar.
91. On 2 September 2011, the Cadet Pilots received a letter from the Third Respondent offering them employment with the Third Respondent pursuant to the EBA. Enclosed with the letter was a copy of a contract of employment and a document entitled "Flexi-Line (Part-time) Under the Jetstar Airways Pilots Agreement 2008" (the Flexi-Line Contract). The letter stated that if the Cadet Pilots accepted the Flexi-Line Contract, then the Funding Agreement would be extinguished and the Cadet Pilots would not be required to pay back the training costs.
92. The Cadet Pilots accepted the terms of the Flexi-Line Contract and commenced working for the Third Respondent on dates between 3 and 8 September 2011. Specifically, the First Group of Cadet Pilots commenced employment with the Third Respondent on 3 September 2011, Hull commenced employment with the Third Respondent on 6 September 2011 and Hessell commenced employment with the Third Respondent on 8 September 2011.
93. On 21 October 2011, the Cadet Pilots received a letter from the First Respondent stating that the Funding Agreement no longer applied and that any liability under that agreement was discontinued. The letter stated that the repayments would be reimbursed to the Cadet Pilots by the end of October 2011.
94. In October 2011, the Third Respondent refunded the Cadet Pilots the amounts deducted from their salary, as particularised in paragraph 87 above, by the Second Respondent pursuant to the salary sacrifice agreement.
95. On 12 December 2011, the AFAP proceedings were discontinued. The terms on which the proceedings were discontinued was by way of a private agreement between the AFAP and Jetstar Group Pty Ltd (ACN 003 901 353). There was no order of penalty imposed by the Court.
25 From the facts agreed by the parties, I draw a number of conclusions. First, Jetstar Airways and its subsidiaries set out to minimise the cost to itself or any of them of the training which would necessarily be involved in the cadet pilot program which it decided to introduce. To that end, it nominated employment arrangements with Jetstar New Zealand which bore no real relationship to operational reality. Despite advice in clear terms about the potential liability under the Award if pilots from the cadet pilot program were employed by an Australian operating entity, Jetstar Group imposed upon cadet pilots a requirement of repaying the cost of training. In Mr Hessell's case, that conduct included the deduction of an amount from his salary which he had declined to authorise. As a percentage of salary earned, the deductions were, in most cases, substantial. The arrangements made for employment by Jetstar Airways, and the waiver and eventual refund of the amounts deducted, occurred in circumstances where proceedings had been commenced in this Court challenging aspects of the employment arrangements which had been directed by Jetstar Airways, including the requirement that cadet pilots be responsible for the cost of their training.