Fair Work Act 2009

s.394 - Unfair dismissal

National Jet Systems Pty Ltd T/A Cobham Aviation Services Australia - Airline Services

Termination of employment - jurisdiction - demotion.

[1] This decision concerns an unfair dismissal remedy application made by Ms Meaghan Kinnaird (Ms Kinnaird or the Applicant) under section 394 of the Fair Work Act 2009 (the Act). The respondent is National Jet Systems Pty Ltd T/A Cobham Aviation Services Australia - Airline Services (NJS or the Respondent).

[2] The Respondent has raised a jurisdictional objection to the application on the grounds that the Applicant's employment was not terminated at the initiative of the employer.

[3] Ms Kinnaird was employed in 1994 by the Respondent as a First Officer.

[4] In 1999 she became a Captain.

[5] In June 2008 she became a Line Check Captain and in August 2008 she became a Simulator Check Captain based in Perth.

[6] Her remuneration as a Simulator Check Captain was $209,700. Currently the National Jet Systems Pty Ltd Pilot Enterprise Agreement 2012 [AE401161] (the 2012 Agreement) applies to Ms Kinnaird.

[7] In 2016 the Respondent reviewed the Training and Checking Department of its operations across Australia. One outcome was a decision that all Simulator Checking and Training roles, which included the Simulator Check Captain roles, would be relocated to Brisbane. The number of Simulator Check Captain roles was also reduced from 9 to 5.

[8] Following a national consultation process the Respondent then advised Ms Kinnaird in November 2016 that she would no longer be a Simulator Check Captain. Ms Kinnaird protested this change but remained in employment and since 3 December 2016 has been working in the role of an Aircraft Check Captain which has lesser remuneration than a Simulator Check Captain.

[9] The Applicant argues that what occurred was a demotion and that she has been dismissed and the dismissal was unfair. The Respondent denies there has been a demotion and denies that the Applicant has been dismissed.

[10] Relevantly the evidence is that Ms Kinnaird was employed in August 1994 by the Respondent as a First Officer.

[11] As her employment progressed she worked in various roles each involving an associated salary increase. She worked in the roles of BAe146 Captain from 1999, Senior Base Pilot - Darwin from November 2000 and BAe146 Training Captain from August 2000.

[12] She was then in the role of a Boeing 717 Training Captain, a B717 Check Captain from 13 June 2008 and then a B717 Simulator Check Captain from 5 September 2008.

[13] Each new role involved higher status, greater responsibility and more remuneration.

[14] These steps are generally recognised as a career path.

[15] Notwithstanding this progression the ability for Ms Kinnaird to carry out the duties of the prior roles remained.

[16] The role of Simulator Check Captain has the highest level of status and responsibility in the Respondent's Pilot structure. The critical qualification to be eligible to be appointed by the Respondent as a Simulator Check Captain is to be approved by CASA to act as their delegate. When conducting a simulator check on a Pilot a Simulator Check Captain holding such a delegation is essentially acting as CASA's representative.

[17] Ms Kinnaird was appointed to the position of Simulator Check Captain in September 2008 by Mr David MacKerras (Mr MacKerras) who was at that time the Head of Training and Checking for the Respondent.

[18] Mr MacKerras gave evidence in support Ms Kinnaird's application. His employment with the Respondent ended in 2010.

[19] His and other evidence shows that a Simulator Check Captain was a full-time role.

[20] Check Captains, which include Simulator Check Captains, were available for no more than half the equivalent flying workload of an ordinary Line Pilot.

[21] Mr MacKerras in his evidence, based on what Ms Kinnaird had advised him of the changes to the Respondent's training and checking arrangements, expressed highly critical personal opinions of the Respondent's actions.[1] He also expressed similarly highly critical personal opinions of the Respondent's submissions in his evidence.[2]

[22] Mr MacKerras's evidence was that the appointment of Check Captains including Ms Kinnaird to the Simulator Check Captain role was "permanent".[3] Much of his evidence in support of this point referred to "long-standing arrangements" and "custom and practice".

[23] The evidence is that in the past there has been a Simulator Check Captain who worked in the role for 25 years.[4]

[24] Mr MacKerras's evidence was that in his view an allowance being paid to a Check Captain continued indefinitely because appointment to the position of Check Captain involved unlimited tenure and the employer could not change this. However his evidence was that Check Captains were free to relinquish their appointments and opt out of being a Check Captain if they wished.[5]

[25] Ms Kinnaird's evidence was that at the time she was appointed to the Simulator Check Captain role Mr MacKerras's spoke to her and expressly explained to her that this was "permanent".

[26] Ms Kinnaird's evidence was she understood this to mean that her appointment did not have an end date; it did not have a fixed time frame in any way.[6]

[27] Her evidence was that Mr MacKerras explained to her, her obligations in terms of maintaining the position permanently and the most important thing that came out of that was that she was expected to pass all her checks and if she failed a check the Respondent will have to review the permanency of her position.[7]

[28] In July 2016 the Respondent's CEO emailed all staff regarding a 10 year extension of the Boeing 717 contract.

[29] Shortly thereafter further correspondence was sent to employees regarding a review of the Check and Training Department structure.

[30] A process of consultation followed with Pilots across the country.

[31] Ms Kinnaird was dissatisfied at various points with the consultation process as it applied to her.

[32] By email on 4 November 2016 she was advised by the Respondent that as a result of the restructure decided upon she and some other Simulator Check Captains would no longer have this role. The email explained that consequently it was likely that the allowance of the 25% additional salary she had been receiving in the role of a Simulator Check Captain may be removed. She along with others was invited to provide an expression of interest for other roles with the Respondent.

[33] On 20 November 2016 Ms Kinnaird sent an email letter to the Respondent contesting what the Respondent had decided in terms of her situation and arguing she was being demoted from her permanent position as a B717 Simulator Check Pilot. She referred to the Respondent's previous correspondence and advised that she was expressing an interest in the position of Aircraft Check Captain-Perth. Her email stressed however that this expression of interest was being made very much under duress and she does not accept the Respondent's demotion of her. She stated she wished to retain her current position and remuneration.[8]

[34] Ms Kinnaird's evidence was that she has not been made redundant by the Respondent. The Respondent has however in her words pushed her out of her permanent position into a lower paid position.[9]

[35] Evidence for the Respondent was given by Mr Simon Ewart (Mr Ewart) the Head of Flight Operations and Chief Pilot at NJS.

[36] Mr Ewart has been employed with the Respondent in various roles for 25 years. Between 2006 and 2009 he was a Check Captain reporting to Mr MacKerras when Mr MacKerras was the Head of Training and Checking for NJS.

[37] In 2005 when the B717s were introduced there were two types of Check Pilots; being a Line Check Pilot and a Dual Qualified Line and Simulator Check Pilot. Following the B717 introduction there was only one type of Check Pilot that being the Dual Qualified Line and Simulator Check Pilot. As a consequence of that reorganisation some Line Check Pilots were returned to Line Pilot roles.

[38] The bases of operation following the introduction of the B717 were Perth, Darwin and Cairns. At that time the Respondent required the Dual Qualified Check Pilots to be located in each of those locations, whilst the simulator duties were carried out in Brisbane because that was the location of the B717 simulator.

[39] Since 2013 there has been an expansion of the fleet and operations have been re-established at a Brisbane base along with a number of other East Coast locations being Sydney, Hobart and Canberra. Because the majority of Simulator Check Pilots were based other than in Brisbane this involved considerable costs and inefficiency.

[40] The Respondent chose to make changes following the signing of the new contract in 2016, one of which involved the relocation of all Simulator Check Pilots to Brisbane.

[41] Mr Ewart agrees that all Check Pilot positions are full-time positions, which is a requirement of the CASA regulations. Those regulations however do not use the word "permanent" but do use the words "full-time". In his view these words are not interchangeable and this does not mean the positions are permanent in perpetuity or that this has any effect on their employment contract.

[42] Whilst Mr Ewart agrees that Mr MacKerras was for a period employed as the Head of Training and Checking his belief was that even if at some point he acted in the role of Head of Flying he is not aware that he had any delegation to employ any person because this was exclusively the role of the General Manager for the Business Unit or the Head of Flying. He agreed under cross-examination that he had no knowledge of the circumstances surrounding Ms Kinnaird's appointment to the Simulator Check Captain role in 2008.

[43] All Check Captains, which included Simulator Check Captains, were counted as part of their home base and a factorised amount of flying by a Simulator Check Captain was allowed for in the headcount of Pilots at their home base.

[44] Mr Ewart's evidence was that employment issues are separate from the Respondent's operations manuals. In any event the operations manuals say nothing about employment conditions and Mr MacKerras is incorrect when he states that these refer to the appointment of Check Captain as being "permanent".

[45] Payment of Check Captains by an additional allowance on top of their salary was not mere administrative convenience but reflected the applicable industrial instrument at the time.

[46] His evidence was that the 2012 Agreement provides allowances for Check Captains that are paid and can be removed in an appropriate manner and similarly Pilots can withdraw from Check Captain duties and revert to being a Line Pilot if they wish.

[47] He disputes the evidence by Mr MacKerras that the allowance paid to Check Captains can only be taken away through redundancy events. He knows Pilots that have returned to full-time Line Pilot duties in circumstances where there was no redundancy.

[48] Evidence for the Respondent was also given my Mr Darren Justice (Mr Justice) the Head of Training and Checking at NJS. Mr Justice began his career as a Pilot in 1996 and has been employed at NJS for 16 years. He has been in his current role since August 2016 and prior to that was the Deputy Head of Flight Operations for four years and prior to that held the positions of Chief Pilot of NJS Special Mission for five years.

[49] He has performed the role of a Simulator Check Captain since 2004 and recently gained approval as a B717 Simulator Check Captain.

[50] Mr Justice was centrally involved in the consultation with employees affected by the review and ultimately the changes to the Check and Training structure.

[51] The final decision following the consultation was advised to employees with the specifics of the new structure on 2 November 2016.

[52] Mr Justice's evidence was that the restructuring did not result in any redundancies because it applied to recognised additional duties and not the substantive job role of Captain Pilots. NJS sought to retain their employees and their skills and aptitudes within the changes required.

[53] Relevant documentary evidence before the Commission includes a partial copy of an Australian Workplace Agreement signed by Ms Kinnaird (nee McConachy) on 20 July 2005 and signed by the Executive General Manager Operations of National Jet Systems Pty Ltd, Captain John Seibert, on 1 August 2005.[10]

[54] That signatory page includes the following header,

"Classification: You will be classified as a B717 Captain (wef Check to Line)"

[55] Noting that the document provided is a partial copy only it relevantly includes the following provisions,

27.1 The Pilot shall, in consideration of the performance of his duties under this agreement, and subject to clause 27.4 be entitled to a gross annual salary as specified in clause (1) of Schedule 1."

29.10 The Pilot, shall be entitled upon such conditions as the employer may determine to allowances including the following:

(3) if the Pilot is a Simulator Check Captain, appointed by the GMFO, an additional 18% of the annual salary prescribed in clause (1) of Schedule 1.

[56] A letter dated 13 June 2008 addressed to Ms Kinnaird on NJS/Cobham letterhead reads as follows,[11]

In accordance with the approval issued by CASA, you are appointed as a Boeing 717 Check Pilot within the CAR (88) 217 Training and Checking Organisation for National Jet Systems. This appointment is subject to continued approval by CASA and is effective from the 5 June 2008.

In this role you will be supervised by me, as Manager Flight Training, until such time as a Head of Pilot Training B717 is appointed.

Your employment conditions of service are as per your 2005 AWA and your additional salary component to your base salary will be as follows:

Congratulations on your attainment of this professional qualification.

Your CASA Instrument No. MATFO 116/08 is attached and remains valid until 31 March 2009.

[57] The Applicant and NJS signed an Australian Workplace Agreement Termination Agreement respectively on 1 September 2008 and 2 September 2008. This states that the termination of the Applicant's Australian Workplace Agreement becomes effective from the date the Workplace Authority receives the employer's declaration and the Termination Agreement.[12]

[58] A letter dated 5 September 2008 addressed to Captain Kinnaird on NJS/Cobham letterhead reads as follows,[13]

In accordance with the approval issued by CASA, you are hereby designated as a B717 Simulator Check Pilot within the CAR (88) 217 Training and Checking Organisation for National Jet Systems. This approval is valid until the end of March 2009, and in this role you will be supervised by me, as Manager Flight Training, until such time as a Head of Pilot Training B717 is appointed.

Your employment conditions of service are as per your NJS Pilot Collective Agreement, and your additional salary component to your base salary will be as follows:

Simulator Check Captain Allowance of 25 % of salary

Congratulations on your attainment of this professional qualification.

CASA Instrument No. MATFO 198/08 is attached, which revokes CASA instrument No. 116/08 is attached.

[59] CASA Instrument No. MATFO 198/08 referred to in the above is headed "Approval - Appointment of Check Pilot" and was signed on 26 August 2008. The approval instrument states that the approval stops having effect at the end of 31 March 2009.[14]

[60] A letter dated 4 November 2008 was sent to Ms Kinnaird from the Respondent's Human Resource Manager which rather confusingly states,[15]

"Your AWA ceased operating on 29 October 2008 when the Workplace Authority Issued an Approval Notice terminating your AWA. From this date you became party to the National Jet Systems Pty Ltd Pilot Collective Agreement 2007 - 2012 (N JS ECA)

You became covered by the Agreement on 5 September 2008. "

[61] Whilst this correspondence raises some doubt as to actual date when the National Jet Systems Pty Ltd Pilot Collective Agreement 2007 - 2012 [AC312845] (the 2007 Agreement) began applying to the Applicant I accept that this enterprise agreement was applicable to the Applicant from at the latest 29 October 2008.

[62] On 15 May 2013 a replacement enterprise agreement was approved by the Commission and came into operation, the 2012 Agreement. This replaced the 2007 Agreement.

[63] On 4 November 2016 the Mr Justice, Head of Training and Checking Airline Services, wrote to Ms Kinnaird.[16] The letter referred to previous advice as to the company's decision to implement a revised structure which would consolidate Flight Examiner Simulator/Simulator Check Captain responsibilities to Brisbane. The letter explains the initial personal implications of the restructure for Ms Kinnaird. The letter states,

"Currently you are provided with an allowance of 25% of gross annual salary to undertake additional duties as designated by the Head of Flight Operations as a Flight Examiner Simulator/Simulator Check Captain as detailed in the National Jet Systems Pty Ltd Pilot Collective Agreement 2007 - 2012 (PEA).

The company's decision is to implement a revised Pilot Training structure with a transition to the new structure to occur over coming months. The desired date of implementation is 1 January 2017.

You are advised that you are provided notice that the company decision to allocate all SIM training duties to Brisbane based Pilots means that should you elect to not seek a vacant Captain role in Brisbane, your designation and associated allowance as a Simulator Check Captain will be removed as at a date to be determined. Formal notice will be provided should this apply to you and notice will be provided as soon as date is determined.

You are invited to consider Pilot vacancies at alternative bases and opportunities to continue your involvement in Pilot Training as detailed in published Pilot Training opportunities communication to Pilots. The opportunities are for Aircraft Check Pilots and Flight Examiners Simulator."

[64] The letter went on to explain that,

"In the event that the allowance for undertaking additional duties as a Flight Examiner Simulator/Simulator Check Captain being withdrawn as a result of the revised training structure, the company will implement the following transition arrangements which will result in the allowance you currently receive being reduced to nil over a 16 week period;..."

[65] The 16 week transition period involved 25% of the Simulator Check Captain allowance being withdrawn every four weeks until it was no longer being paid.

[66] A subsequent letter dated 9 December 2016[17] advised Ms Kinnaird that she was to be appointed as an Aircraft Check Captain based in Perth.

[67] The letter stated,

"Currently you are provided with an allowance of 25% of gross annual salary (currently $41,940.14) to undertake additional duties as designated by the Head of Flight Operations as a Flight Examiner/Simulator Training Captain under terms as detailed in the National Jet Systems Pty Ltd Pilot Enterprise Agreement 2012 (PEA).

You are advised that the company is providing you notice that effective from 1 March 2017 the company has determined that you will not be required to undertake on-going additional duties as a flight Examiner/Simulator Training Captain."

[68] It is apparent that this letter erroneously referred to "Simulator Training Captain" rather than "Simulator Check Captain." I note that the allowance payable to a Simulator Training Captain under the 2012 Agreement is 20% of the gross annual salary.

[69] The letter advised that the allowance of 25% of gross annual salary she had been receiving as the Simulator Check Captain would be removed over a 16 week period and the applicable allowance for an Aircraft Check Captain paid instead.

[70] The allowance payable to a Pilot appointed to the position of Check Captain under the 2012 Agreement is 15% of gross annual salary.

[71] There was no evidence as to the existence of, let alone the terms of, any written contract of employment between the Applicant and the Respondent.

[72] The parties agree that the 2012 Agreement applied to Ms Kinnaird in 2016 and at the time of hearing. Relevant provisions of the 2012 Agreement are set out below.

NATIONAL JET SYSTEMS PTY. LIMITED (ACN: 008 279 203)

The Pilots as defined in Clause :1 herein employed by National Jet Systems Pty. Ltd (NJS) and the TWU and the AFAP; herein referred to as the "parties".

(8) "Captain" means a Pilot as defined in this clause who holds the necessary licences, ratings and endorsements approved by CASA and who is employed by NJS pursuant to this Agreement, and who may be designated, in writing, as a Pilot in command of any aircraft operated by NJS.

(9) "Check Captain" means any Captain nominated by NJS, approved by CASA and designated in writing by NJS to conduct flight proficiency tests and to certify the competency of Pilots for the issue and renewal of professional Pilots' licences.

(a) has been certified by a NJS Check Captain as competent to pilot an aircraft operated by NJS;

(b) holds all appropriate licences, ratings and endorsements in accordance with CAR/CASRs and CAOs and has been approved, in writing, by NJS to act as an operating crew member on a specific aircraft type operated by NJS.

(19) "First Officer" means a Pilot, who holds the necessary licences, ratings and endorsements, who is employed by NJS pursuant to this Agreement and who is designated in writing by NJS to act as a Pilot other than Pilot in command of multi-pilot aircraft operated by NJS.

(22) "Full-Time Pilot" means a Pilot who is required to work up to the maximum Flight Time as per Clause 34.

(27) "Pilot" means an Employee employed by National Jet Systems Pty. Ltd. in the classifications listed in Schedule 1 of this Agreement.

(34) "Senior Base Pilot" means a Pilot, who is designated in writing by NJS, to act as a supervisor at base level in addition to substantive duties and in accordance with the approved NJS Position Description for Senior Base Pilot.

(38) "Training Pilot" means any Pilot who is approved, in writing, by NJS to provide either or both ground and flight instructional training for other Pilots.

31.8 A Pilot appointed to the following positions upon such conditions as determined by NJS shall be paid allowances (which are not cumulative) effective from 1 July 2012, as follows:

(1) a Pilot appointed by the Head of Flight Operations to undertake delivery of Ground Training, $180 for each day or part thereof that the duties associated with ground training are undertaken. This Allowance will be increased by CPI in accordance to the provisions detailed in Schedule 1 Clause 1.1(b)

(2) a First Officer Line Training Captain appointed by the Head of Flight Operations, an additional 8.5% of the gross annual salary prescribed in Clause (1) of Schedule 1.

(3) a First Officer Line Training Captain and Command Line Training Captain, appointed by the Head of Flight Operations, an additional 10% of the gross annual salary prescribed in Clause (1) of Schedule 1.

(4) a Check Captain, appointed by the Head of Flight Operations, an additional 15% of the gross annual salary prescribed in Clause (1) of Schedule 1.

(5) a Simulator Training Captain, appointed by the Head of Flight Operations, an additional 20% of the gross annual salary prescribed in Clause (1) of Schedule 1. For the purpose of Clause 34.2, when acting in the capacity of a Simulator Training Captain, a Simulator Training Captain will receive a credit of one flight hour for each simulator hour worked.

(6) A Simulator Check Captain, appointed by the Head of Flight Operations, an additional 25% of the gross annual salary prescribed in Clause (1) of Schedule 1. For the purpose of Clause 34.2, when acting in the capacity of a Simulator Check Captain, a Simulator Check Captain will receive a credit of one flight hour for each simulator hour worked.

(7) an Administrative Pilot, an administrative allowance as agreed between the Pilot and NJS. In the absence of agreement, the quantum of the administrative allowance shall be determined by NJS.

(8) a Pilot appointed to the role of Flight Data Analysis Program (FDAP) Fleet Representative, an allowance of $8,500 per annum in addition to the gross annual salary prescribed in Clause (1) of Schedule 1and this amount will be adjusted in accordance with Schedule 1, Clause (1 ),(b).

(9) a Pilot appointed to undertake Line Operations Safety Audit (LOSA) responsibilities, an allowance of $3,000 per annum in addition to the gross annual salary prescribed in Clause (1) of Schedule 1 and this amount will be adjusted in accordance with Schedule 1, Clause (1),(b).

34.1 NJS shall roster and each Pilot shall fly a roster in accordance with the Rostering Protocol and CAOs, as amended or any concessions granted in writing by CASA as reflected in NJS Operations Manuals, and according to any other special considerations as specified at Clause 35.

The Pilot's maximum Flight Time per roster period are 75 hours for a monthly Roster Period.

34.3 Time spent in the flight Simulator shall be included in the calculation of Flight Time per Roster Period and will be recognised for the purpose of the overtime threshold.

(a) Pilot gross annual salaries effective from 1st July 2012.

representing 55% of the wage designated for a Captain

representing 57.5% of the wage designated for a Captain

representing 60% of the wage designated for a Captain

representing 60% of the wage designated for a Captain

representing 65% of the wage designated for a Captain

• Year 1 is the first year of service with NJS or related entity

• Year 2 is the second year of service with NJS or related entity

• Year 3 is the third year of service with NJS or related entity

• Year 4 is the fourth year of service with NJS or related entity

• Year 5 is the fifth year of service with NJS or related entity

Progression will occur based on the anniversary date of the First Officers employment with NJS or related entity. Progression will occur on the day following the anniversary date.

(7) A Pilot who is appointed as a Senior Base Pilot shall be paid an allowance in additional gross annual salary of $12,000 p.a. and this amount will be adjusted in accordance with Schedule 1, Clause 1(b)." (Underling added)

[73] Section 386 of the Act defines when a person has been "dismissed" as follows:

(a) the person's employment with his or her employer has been terminated on the employer's initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person's employment, to avoid the employer's obligations under this Part."

[74] In Navdeep Singh v MSS Security Pty Ltd [ [2016] FWC 1857] the Commission as currently constituted considered the case law applicable to instances of demotion that were asserted to amount to dismissal as follows,

"[37] The respondent's objection is that Mr Singh's employment contract contains a term allowing demotion without termination and consequently his demotion did not involve termination of Mr Singh's employment and so Mr Singh has not been dismissed within the meaning of section 386(1) (a) of the Act. Consequently Mr Singh is not a person who is able to make an unfair dismissal remedy application.

[38] It is clear from the evidence that the respondent employer did not express any intention to terminate Mr Singh's employment. Nothing was put in writing to him that he was dismissed or that his employment was terminated. Mr Singh concedes in his evidence that he was never told he was dismissed or that he was terminated. The respondent's actions throughout have been consistent with not intending to terminate or dismiss Mr Singh. Nothing the respondent has done amounts to an express termination of his employment.

[39] Mr Singh has not resigned from his employment. Mr Singh simply has not returned to do any work for the respondent since the meeting on 9 June 2015. He has not advised his employer verbally or in writing that he is resigning from his employment. This then is not a case of constructive dismissal under section 386(1) (b) of the Act.

[40] What Mr Singh argues is that the respondent has repudiated his employment contract. Whether there has been a repudiation is a question of fact. Not every breach of contract is a repudiation. A repudiatory breach does not automatically terminate the contract but confers an elective right of termination on the innocent party.

[41] There is a body of case law that deals with this situation. Deputy President Gooley in the matter of Terence Lollback v the University of Southern Queensland considered the circumstances where a demotion is not a termination of employment. This particular matter concerned a circumstance where an employee had been demoted which the employer argued was authorised by the terms of an enterprise agreement and so was not a termination of employment and so not a dismissal.

[42] After considering the line of authority Deputy President Gooley found that she was bound by the decision of the Full Bench of the Australian Industrial Relations Commission in Elizabeth Gorczyca v RMIT University which had concluded that:

"The respondent argues there has not been a termination because the certified agreement permits the demotion without regard to the income loss and provides in effect that it is not a termination. We think that the latter proposition is correct. There has not been a termination because the certified agreement operates to preclude there being one in the circumstances of this case. Put another way we think, at law there has been no termination and if there has been no termination we do not see, notwithstanding the provisions of s.170CD(1B) that there has been a termination for purposes of the Act."

[43] Deputy President Gooley also considered another Full Bench decision of the Australian Industrial relations Commission in Charlton v Eastern Australian Airlines Pty Limited which turned its attention more broadly to when the termination of employment occurs and held as follows:

"[32] Consistent with the decision in Boo Hwa Chan, a termination of employment occurs when a contract of employment is terminated. This necessarily occurs when the employment relationship comes to an end. However, it can also occur even though the employment relationship continues. Where a contract of employment has been terminated, but the employment relationship continues, this will be because a new contract of employment has come into existence. Therefore, whether the appellant's demotion involved his employment being "terminated by the employer" within the meaning of s.170CE turns on whether his contract of employment was terminated notwithstanding the continuing employment relationship. This question is answered by reference to general law principles relating to the termination of contracts of employment, unconstrained by the Convention.

[33] The question of when a demotion constitutes a termination of employment within general law principles relating to termination of contracts of employment, unconstrained by the Convention, was given careful consideration by the Full Court of the Supreme Court of South Australia in Advertiser Newspapers Pty Ltd v IRC & Grivell. We respectfully adopt that analysis. Although the decision related to a different statutory context, that context required a consideration of general law principles that are equally applicable in the present case.

[34] Unless the contract of employment or an applicable award or certified/workplace agreement authorises an employer to demote an employee, a demotion, not agreed to by the employee, that involves a significant reduction in remuneration will amount to a repudiation of the contract of employment. If that repudiation is accepted, either expressly or by conduct, then the contract of employment is terminated. If, in such circumstances, the demoted employee then remains in employment with the employer, this occurs pursuant to a new contract of employment in respect of the demoted position. It may be noted that where the employment continues with the employee allegedly acquiescing in a reduction in salary or other terms of employment, difficult questions may arise as to whether the continued employment involves the continuation of the original contract of employment (but with the employer breaching that contract by paying the reduced salary), a consensual variation of the terms of the original contract or the termination of the original contract and a substitution of a new contract of employment." (Underlining added)

[44] The Deputy President in that case accepted that the demotion authorised by the applicable enterprise agreement was not a termination.

[45] This principle, that a demotion arising from the application of a clause in an agreement is not a termination of employment at the initiative of the employer nor is it a repudiation of the contract of employment, was earlier accepted and applied by Senior Deputy President Drake in the case of Michelle Holland v Qantas Airways Limited.

[46] The broader statement of principle identified by the Full Bench above is that a demotion of an employee by an employer which involves a significant reduction in remuneration that is not agreed to by an employee will not amount to a repudiation of the employment contract if it is authorised by a contract of employment, an applicable award or a certified/workplace agreement.

[47] More recently a Full Bench of the Commission in the case of Phillip Moyle v MSS Security Pty Ltd simplified the applicable principle as follows:

"[12] ...Whether or not the exception in s. 386 (2) (c), properly construed, was applicable, it remains necessary for Mr Moyle to demonstrate at the outset that he had been "dismissed" within the meaning of s. 386 (1).

[13] An action taken by an employer to change the remuneration and duties of an employee could not constitute a dismissal under s. 386 (1) where the change was one authorised by the contract of employment." (Reference omitted)

[75] On appeal the Full Bench [ [2016] FWCFB 3546] took no issue with this summary of the applicable case law and principles.

[76] The Full Bench's consideration, in the case of Philip Moyle v MSS Security Pty Ltd [ [2016] FWCFB 372] mentioned above, of the exception in s. 386(2)(c) to the definition of dismissal was as follows,

"[9] We accept Mr Moyle's submission to this effect. Section 386(1) sets out a general definition of what constitutes a dismissal. Section 386(2) then sets out three sets of circumstances which, even if they fall within the general definition, are deemed not to be dismissals. These are, in effect, exceptions to s.386(1). The third of these exceptions, in s.386(2)(c), relates to demotions in employment. In order to fall within this exception - that is, for a demotion that otherwise constitutes a dismissal under s.386(1) to be deemed not to be a dismissal, both limbs of the exception must be satisfied, as Mr Moyle submitted. The construction adopted by the Senior Deputy President was, with respect, in error because it inverted the exception by making it necessary for an applicant to negative both limbs of the exception in order for the demotion to be a dismissal. This would have the perverse result that a demotion in employment could never constitute a dismissal, even where it is plain that the existing contract of employment has been terminated and replaced by a new and inferior contract, because the employee will necessarily have remained in employment with the employer and thus could not negative s.386(2)(c)(ii).

[13] An action taken by an employer to change the remuneration and duties of an employee could not constitute a dismissal under section 386(1) where the change was one authorised by the contract of employment. In this case, we consider it clear that MSS's transfer of Mr Moyle was authorised by Mr Moyle's contract of employment.

[23] We do not consider that there was any repudiation of Mr Moyle's contract of employment by MSS, and that it continued to operate in accordance with its terms after Mr Moyle's transfer took effect. Therefore, there was no termination at the initiative of the employer under s.386(1)(a) and no dismissal."

[77] In the current case, for the Commission to have jurisdiction to consider this application the Applicant must prove her employment was terminated at the initiative of the Respondent.

[78] Even if changes made by the Respondent (including demotion) did involve a significant reduction in her duties and/or remuneration this will not be a termination of her employment at the initiative of the Respondent if the contract of employment or applicable enterprise agreement authorised the Respondent to do this.

[79] A demotion that would otherwise be a dismissal which falls within the exception of section 386(2)(c) of the Act is deemed not to be a dismissal.

[80] It is submitted that section 386(2)(c) of the Act contemplates a demotion as constituting a dismissal where sections 386(2)(c) (i) and (ii) of the Act are satisfied.

[81] The Applicant submits that she was demoted and that her demotion involved a significant reduction in her remunerations and duties. Consequently it is submitted Ms Kinnaird's dismissal was harsh, unjust or unreasonable.

[82] The Applicant submits that at all material times her appointment to the position of Simulator Check Captain was a permanent/full-time appointment.

[83] Other incumbents of the position of Simulator Check Captain have enjoyed permanency of appointment for up to 25 years.

[84] Ms Kinnaird's appointment to this position of almost nine years is a conclusive indicator of a permanent appointment.

[85] It is submitted Ms Kinnaird held the position of Simulator Check Captain from 27 August 2008 uninterrupted, until she was dismissed from her position of Simulator Check Captain on 1 March 2017 when she was demoted to the substantive position of Line Captain, purportedly acting as an Aircraft Check Captain.

[86] It is submitted that the Simulator Check Pilot is senior in the organisational structure to the Aircraft Check Captain.[18]

[87] In both the 2012 Agreement and the prior 2007 Agreement, which applied at the time Ms Kinnaird was appointed as a Check Captain, the same language is used. The Applicant submits for example that the appointment of a Pilot to be a Captain under either agreement by definition, requires that they are "designated, in writing" . The Applicant submits this means that a Captain is undeniably a permanent appointment. Similarly when a Captain is appointed to be a Check Captain, because the definition of Check Captain also refers to them being "designated, in writing" the Applicant submits that the appointment is permanent.[19]

[88] It is submitted there is nothing in either the 2007 Agreement or the 2012 Agreement that can be taken as meaning that appointment to Check Captain, including Simulator Check Captain is temporary or short-term in nature or not of a permanent nature.

[89] The words in the 2007 Agreement in subclause 27.8 "...upon such conditions as the employer may determine" and the in the 2012 Agreement "...upon such can conditions as determined by NJS..." at subclause 31.8 refers only to the payment of allowances.

[90] The fact these clauses provide for remuneration to Simulator Check Captains in the form of an allowance cannot be taken as characterising the appointments as of limited or temporary tenure or as being on an as required basis. The evidence of Ms Kinnaird and Mr MacKerras refute this.

[91] It is submitted that the position of Simulator Check Captain is a dedicated role and not an adjunct to other duties.

[92] It is submitted that Ms Kinnaird's contract of employment does not provide for demotion. It is submitted there is nothing apparent in the terms of the agreements that provides for NJS to demote an employee other than in the 2012 Agreement where it includes a provision for the transfer to lower paid duties in circumstances of redundancy at subclause 22.4.

[93] In the circumstances there is sufficient evidence to demonstrate that what occurred was a repudiation of Ms Kinnaird's contract. Ms Kinnaird has constantly and repeatedly objected to the dismissal/demotion in her correspondence to the Respondent.

[94] It is submitted that the characterisation by NJS that appointment to the position of Simulator Check Captain is not permanent but is of a temporary nature is a contrivance to avoid the operation of the redundancy provisions in the 2012 Agreement or to avoid the other obligations to pay relocation costs in instances of transfers.

[95] The Commission should find that Ms Kinnaird's employment was terminated at the employer's initiative and so she has been dismissed.

[96] The Respondent submits there is no jurisdiction to hear the application because Ms Kinnaird was not dismissed at the employer's initiative.

[97] The repeated reference by the Applicant's representative to "demotion" is misdirected. Demotions are a secondary exception within the legislation which is directed to the meaning of "dismissed". The Applicant must first establish that she has been dismissed at the employer's initiative. If demotions are relevant, and the Respondent submits they are not, they are to be examined as described within the latter part of section 386(2) of the Act only.

[98] The Respondent in addition submits that Ms Kinnaird has not been made redundant. The restructuring of the Respondent's workforce did not involve the termination of her contract of employment and did not involve her job not being required to be done by any person.

[99] The Respondent submits the Commission must first determine whether there was a dismissal pursuant to section 386(1) of the Act. If there was no dismissal then Ms Kinnaird's claim must fail and no further review is required. If the Commission however finds a dismissal did occur consideration must then be given to the exceptions to dismissal, including that of demotion, set out in section 386(2) of the Act.

[100] The Applicant is currently employed by the Respondent and has been so since 1994.

[101] Ms Kinnaird has been employed in the classification of Pilot Captain continuously since April 1999.

[102] The applicable agreements during Ms Kinnaird's employment to date, the 2007 Agreement and the 2012 Agreement only have classifications of Pilot Captain, Pilot First Officer and Trainee Pilot.

[103] This limited set of classifications is consistent with the Air Pilots Award 2010 [MA000046] (the Award), Ms Kinnaird's Australian Workplace Agreement and various other pilot enterprise agreements.

[104] The agreements define a "Pilot" as an employee employed within the classifications in Schedule 1 of the respective agreement. Schedule 1 in each instance has classifications of Pilot Captain, Pilot First Officer and Trainee Pilot only.

[105] Ms Kinnaird's was approved by CASA as a Check Pilot and over time was appointed progressively to various training roles as a Training Captain, Check Captain and Simulator Check Captain and received additional appropriate allowances for those duties and skills. None of those appointments to training roles altered or varied or replaced her contract of employment as a Pilot Captain.

[106] The 2012 Agreement which applied in 2016 and continues to apply to Ms Kinnaird's employment provides that appointment of training positions to pilots will under the terms of subclause 31.8 be "...upon such conditions as determined by NJS".

[107] In Ms Kinnaird's case she had been paid an allowance of 25% of her base salary in accordance with 31.8 of the 2012 Agreement in consideration of the duties she performed as a Simulator Check Captain.

[108] The positions of Training Captain's including the Simulator Check Captain are not classifications under the 2007 Agreement or the 2012 Agreement and are not permanent or separate contracts.

[109] Ms Kinnaird has been required to be checked by the Respondent's Head of Training and Checking every two years in order that the Respondent can consider its advice to CASA that the instrument provided by CASA which allows her to act as CASA's delegate be renewed.

[110] The position of Training Captain is not a classification under the 2012 Agreement nor was it so under any prior agreement. They consequently are not permanent classifications as Ms Kinnaird argues. Training Captains can resign from such positions and revert to being a Pilot Captain flying line requirements without any change to their substantive classification or alternatively as occurred in this case the employer can restructure and not require an employee to continue such training duties.

[111] The Applicant and Mr MacKerras incorrectly argue that the fact the training roles are full-time positions (which is not disputed) equates to them being "permanent".

[112] The long-standing scheme of a limited set of classifications being supplemented with prescribed allowances for particular training roles as is provided in the current 2012 Agreement, which was also in the 2007 Agreement, which was reflected in Ms Kinnaird's Australian Workplace Agreement and is also in the Award very strongly supports the conclusion that there is not a separate classification of Simulator Check Captain.

[113] Employees being appointed to various training roles, and in particular from being a Pilot Captain to work as a Simulator Check Captain, does not involve being engaged in a new classification and so does not result in a new contract of employment being formed between the parties. There is merely an adjustment to the duties and a prescribed allowance becomes payable.

[114] Ms Kinnaird's classification was and still is that of a Pilot Captain under the terms of the 2012 Agreement.

[115] Immediately prior to the Respondent's review of the Pilot Training and Checking organisation Ms Kinnaird as a Flight Examiner/Simulator Check Captain was as required by the 2012 Agreement being paid an allowance of 25% for undertaking additional duties. Ms Kinnaird was based in Perth.

[116] The Applicant did not apply for the Flight Examiner/Simulator Check Captain vacancies in Brisbane that were one result of the Respondent's restructure.

[117] There were, also as a result of the restructure, two Aircraft Check Captain opportunities available in Perth. These roles attracted a 15% allowance under the 2012 Agreement.

[118] The Applicant expressed an interest in the role of Aircraft Check Captain in Perth and was subsequently selected for this. Ms Kinnaird confirmed her acceptance of the offer of such a position on 9 December 2016.

[119] Ms Kinnaird continues to be employed by the Respondent now as an Aircraft Check Captain in Perth and is in receipt of the 15% allowance under the 2012 Agreement.

[120] The difference between the 25% allowance Ms Kinnaird was receiving and the 15% allowance she is now receiving is $16,776.04 per annum.

[121] As a Simulator Check Captain Ms Kinnaird was being paid approximately $209,700 per annum.

[122] Ms Kinnaird currently is being paid approximately $192,924 per annum.

[123] The reduction in Ms Kinnaird's previous remuneration as a result of this change is 8%.

[124] The Respondent acknowledges Ms Kinnaird expressed her wish to remain as a Simulator Check Captain in Perth and her view that she held a permanent position as such. The Respondent advised her that this was not correct.

[125] The Respondent has at no stage reclassified Ms Kinnaird. She was before the restructure and continues to be employed after the restructure in the classification of Pilot Captain under the 2012 Agreement.

[126] The Respondent has not dismissed the Applicant and she remains in employment.

[127] At no stage has the Respondent identified that the job previously being performed by the Applicant nor any of the other Pilots impacted by the restructure was not required to be performed by anyone.

[128] The process of the restructure was lawfully and procedurally fair and the Respondent has not offended any provisions of the 2012 Agreement nor the Applicant's contract of employment.

[129] NJS submits that they have not unilaterally altered Ms Kinnaird's contract of employment but have simply, through the restructure, altered the nature of the additional training duties she is to do and they are entitled to do so under the terms of the 2012 Agreement.

[130] There has not been a repudiation of the Applicant's contract of employment. She remains employed in her classification and there has been no demotion in law.

[131] Training positions such as the Simulator Check Captain are held by employees on terms as determined by the employer as is specified within the 2012 Agreement.

[132] Consequently NJS submits that this application must therefore fail for want of jurisdiction.

[133] Considering the provisions of the 2012 Agreement it is apparent from the introduction that the agreement covers employees who are Pilots, as defined in clause 4.

[134] Clause 4 of the 2012 Agreement contains various definitions relevantly as follows.

[135] A "Pilot" means an employee employed by NJS in the classifications listed in Schedule 1.

[136] The only classifications in Schedule 1 are Captain, First Officer and Trainee Pilot.

[137] There is no classification of Simulator Check Captain in Schedule 1.

[138] A "First Officer" means a Pilot holding various licenses etc who is designated to act as a Pilot, other than Pilot in command of multi-pilot aircraft.

[139] A "Captain" means a Pilot holding necessary licenses etc approved by CASA who may be designated as a Pilot in command of an aircraft.

[140] A "Check Captain" means any Captain nominated by NJS, approved by CASA and designated in writing by NJS to conduct flight proficiency tests and certify the competency of Pilots.

[141] I infer from the evidence and the scheme of the Agreement that a Simulator Check Captain is in practice a particular type of "Check Captain".

[142] "Full-Time Pilot" means a pilot required to work up to the maximum flight time of 75 hours for a monthly roster.

[143] There is no definition of Simulator Check Captain in the 2012 Agreement nor in the 2007 Agreement.

[144] There is no definition of "permanent" in the 2012 Agreement nor in the 2007 Agreement.

[145] Clause 31 of the 2012 Agreement provides for allowances. Subclause 31.8 says that a Pilot is appointed to one of the specified positions "upon such conditions as determined by NJS" and shall be paid the related allowance.

[146] Considering subclause 31.8 as a whole, of the nine positions for which allowances are prescribed eight (including a Simulator Check Captain) have an associated allowance expressed as a percentage of the same amount, that amount being "t_he gross annual salary prescribed in Clause (1) of Schedule 1_". The only allowance calculated differently, is for an Administrative Pilot, which is an amount to be agreed between the Pilot and NJS.

[147] The 2012 Agreement does not prescribe in Schedule 1 any classifications using the same nomenclature as the nine positions for which allowances are payable under subclause 31.8. In fact there are no classifications in the 2012 Agreement at all of Head of Flight Operations, First Officer Line Training Captain, First Office Online Training Captain and Command Line Training Captain, Check Captain, Simulator Training Captain, Administrative Pilot, Flight Data Analysis Program Fleet Representative, Line Operations Safety Audit nor is there a classification of Simulator Check Captain.

[148] To recap the 2012 Agreement says it covers "Pilots as defined in Clause 4 herein employed by National Jet Systems Pty Ltd".

[149] In clause 4 the definition of "Pilot" says it "...means an employee employed by National Jet Systems Pty Ltd in the classifications listed in Schedule 1..."

[150] The only classifications in Schedule 1 are Captain, First Officer and Trainee Pilot. Each of these classifications has a prescribed salary and for Captains and First Officers this is dependent upon the aircraft type and their level, which is a function of years of service.

[151] It is clear from this scheme of the 2012 Agreement that a Pilot appointed to any of the positions for which an allowance is prescribed in subclauses 31.8(2) to 31.8 (6) inclusive must be employed in the classification of Captain. Obviously Pilots in these positions could not be employed in the classifications of Cadet Pilot, Trainee Pilot or First Officer.

[152] Consequently I find that Ms Kinnaird was employed in the classification of Captain under the 2012 Agreement before the Respondent's restructure in 2016 when she was still a Simulator Check Captain. During the time she was a Simulator Check Captain and after her appointment to this position was ended she remained in the classification of Captain.

[153] There is no evidence to support a finding that this appointment as a Simulator Check Captain involved the parties entering into a new contract of employment.

[154] Consistent with this finding that Ms Kinnaird was employed in the classification of Captain it is apparent from the evidence regarding the quantum of allowance she received at various times that this allowance was always calculated based on the classification of Captain in Schedule 1 of the 2012 Agreement. This was also the case under the 2007 Agreement.

[155] This finding that Ms Kinnaird was employed in the classification of Captain is also consistent with the hierarchical scheme of definitions in the 2012 Agreement, which also existed in the 2007 Agreement.

[156] A Simulator Check Captain is a specific type of "Check Captain" which is apparent from the evidence as to what a Simulator Check Captain does and the definition of "Check Captain" in subclause 4.1(9). That definition of "Check Captain" says that a "Check Captain" is a "Captain" nominated by NJS who meets other prescribed requirements. Similarly by definition a "Captain" is a "Pilot" who is designated as a Pilot in command by NJS and who also meets other prescribed requirements.

[157] Therefore under the 2012 Agreement all Simulator Check Captains are "Check Captains" and all "Check Captains" are "Captains" and all "Captains" are "Pilots".

[158] Equally some "Pilots" are "Captains", some "Captains" are "Check Captains" and some "Check Captains" are Simulator Check Captains. But all Simulator Check Captains and "Check Captains" and "Captains" are employed in the classification of Captain in Schedule 1 of the 2012 Agreement. There are no classifications of Check Captain or Simulator Check Captain.

[159] Ms Kinnaird's classification was also that of Captain before she was appointed to the position of Simulator Check Captain. When she was appointed to the position of a Simulator Check Captain she received the prescribed allowance of 25% of the gross annual salary for that classification of Captain and continued to be employed in the classification of Captain. Further Ms Kinnaird remains employed in the classification of Captain notwithstanding she has now been appointed to the position of Aircraft Check Captain. She now receives the prescribed allowance for this position which is also a percentage of the gross annual salary for the classification of Captain.

[160] For the Applicant it has been argued that Ms Kinnaird was demoted by NJS.

[161] The Macquarie dictionary defines "demote" as meaning,

"to reduce to a lower grade or class (opposed to promote)."

[162] As I have found above NJS's actions did not change the classification Ms Kinnaird was employed in. NJS did not reduce Ms Kinnaird's classification so as a matter of fact it is not the case that Ms Kinnaird has been demoted.

[163] Given my conclusion on this it is not necessary to consider whether what occurred involved a significant reduction in Ms Kinnaird's remuneration or duties.

[164] Returning to the question of whether Ms Kinnaird's employment was terminated at the initiative of NJS.

[165] Relevantly for this application in Advertiser Newspapers Pty Ltd v IRC of SA and Grivell (Grivell Case),[20] which was cited with authority by the Full Bench in Gorczyca v RMIT University[21], the Supreme Court of South Australia considered the situation where an employer reverses a direction that an employee perform higher duties,

"48. Depending on the original contract, there may also be a term of that contract that the employer reserves the right to direct the performance of higher duty for such period as the employer shall determine and to pay the employee at the higher rate for only so long as such duties performed. If in those circumstances the employer determines that there will be no more higher duties performed, the employer will be acting within the terms of the contract. There will be no termination of the contract by the employer and no repudiation, because the employer was acting within the terms of contract."

[166] An applicable enterprise agreement could similarly have provisions that would have the same consequence as the contractual term mentioned in the Grivell Case above. An employer that then changes an employee's duties and remuneration would not be terminating the contract and there would be no repudiation if the employer was acting within the provisions of the enterprise agreement.

[167] In this case subclause 31.8 of the 2012 Agreement says an appointment to the position of Simulator Check Captain is "...upon such conditions as determined by NJS".

[168] The 2012 Agreement expressly reserves to NJS the right to apply conditions, which they determine, to such an appointment. There is no temporal element to this.

[169] In this case as part of the restructure of the Pilot Training organisation NJS determined that all Simulator Check Captain positions would in future be based in Brisbane. Consequently NJS determined that with respect to Ms Kinnaird the continuation of her appointment to the position of Simulator Check Captain was conditional upon her seeking a vacant Simulator Check Captain role in Brisbane.[22]

[170] The action of NJS placing this condition upon Ms Kinnaird's appointment was authorised by subclause 31.8 of the 2012 Agreement.

[171] Ms Kinnaird opted not to express an interest in and pursue a Simulator Check Captain vacancy in Brisbane. Rather Ms Kinnaird, under protest, pursued an alternative vacancy in Perth. Ms Kinnaird was successful in this and was in due course appointed as an Aircraft Check Captain in Perth.

[172] The action taken by NJS to change Ms Kinnaird's duties and remuneration was authorised by subclause 31.8 of the 2012 Agreement and so could not constitute a dismissal under section 386(1) of the Act.

[173] Ms Kinnaird has not been dismissed and so was not entitled to make this unfair dismissal remedy application. This application will be dismissed and an order [PR597824] to that effect will now be issued.

D. Stephens from the Australian Federation of Air Pilots on behalf of the Applicant.

[10] Respondent's list of documents, Attachment R28.

[18] Applicant's outline of submissions at paragraph 11.

[20] [1999] SASC 300.

[22] Respondent's list of documents, Attachment R36 at paragraph 6.

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