Federal Court confirms validity of Qantas’ stand down due to effects of COVID-19

In response to the COVID-19 pandemic, Qantas Airways Ltd (Qantas) and Jetstar Airways Pty Ltd (Jetstar) determined to stand down its licensed aircraft engineers pursuant to the applicable enterprise agreements. The validity of those stand downs was challenged by the Australian Licensed Aircraft Engineers Association (Association).

On 6 October 2020, the Federal Court of Australia (Court) in Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 3) [2020] FCA 1428 held that the stand down of employees by Qantas and Jetstar was lawful, having regard to the terms of the applicable enterprise agreements.

Facts

The stand down provision in the Licensed Aircraft Engineers (Qantas Airways Limited) Enterprise Agreement 10 (the Qantas Agreement) provided, among other things, that:

“Qantas shall have the right to deduct payment for any day an employee cannot be usefully employed because of a strike or stoppage of work through any cause for which Qantas cannot reasonably be held responsible.”

The Jetstar Airways Engineering & Maintenance Enterprise Agreement 2018 (the Jetstar Agreement) contained a slightly different stand down clause as follows:

“The Company may deduct payment from an Employee for any day or part of a day in which they cannot be usefully employed because of a stoppage of work by any cause, which Jetstar cannot reasonably prevent.”

Relevant to the matter before the Court, the dispute resolution clause within the Jetstar Agreement also stated that if there is a dispute relating to any matter arising under the Jetstar Agreement, work will continue as per the “status quo” prior to the dispute arising, provided that the dispute does not relate to an imminent risk to health or safety and the employee cannot be reallocated to other appropriate duties.

The key issues for the Court to determine were as follows:

• whether there was a “stoppage of work”;
• if there had, whether the stoppage of work was “through any cause for which Qantas [could not] reasonably be held responsible” or “by any cause, which Jetstar [could not] reasonably prevent”; and
• whether licensed aircraft engineers employed by Jetstar were entitled to have the status quo maintained pending the resolution of the dispute which emerged.

Decision

The Court noted at the outset that stand down provisions serve two purposes:

• to provide financial relief to an employer from paying wages in circumstances where, through no fault of its own, the employer has no work that the employees can usefully perform; and
• to protect the employees from what would otherwise flow from the termination of their services.

The Court considered various authorities which discussed the phrase “reasonably be held responsible” in relation to stand downs. The Court held that the “stoppage of work” in this case was the substantial stoppage of domestic and international passenger flights during the period from 29 March 2020 to 22 April 2020. All parties agreed that Qantas and Jetstar progressively experienced an almost total reduction in its travelling passages. The Court determined that the cause of that reduction was the COVID-19 global pandemic, the travel restrictions imposed by the Australian Government and governments of the States and Territories and the quarantine restrictions imposed upon those who did travel. Further, that it was not open to conclude that anything other than those causes were the “cause” of the stoppage of work.

The Court also held that the facts of the case “come nowhere close to a situation where other steps could reasonably have been pursued by Qantas or Jetstar”. Such a finding was supportive of the fact that the dramatic downturn in airline travel was not the result of any conduct on the part of Qantas or Jetstar but by reason of the COVID-19 global pandemic.

The Court also rejected the Association’s submissions in relation to the issue of whether the dispute resolution clause in the Jetstar Agreement regarding “status quo” precluded the standing down of the licensed aircraft engineers whilst the dispute was underway. It was held that “the assumption is that whilst a dispute remains to be resolved, there is available work for the employee to perform and that the status quo will continue”. In the present case, there was no work which could be usefully performed by the Jetstar licensed aircraft engineers. Therefore, the status quo provision in the Jetstar Agreement was not enlivened.

Take Home Message

The COVID-19 pandemic has presented unique industrial scenarios across many sectors. In this case, Qantas and Jetstar could rely on the stand down provisions within their respective enterprise agreements to stand down employees as a result of the stoppage of work that they experienced due to the COVID-19 pandemic.

For employers covered by the Fair Work Act 2009 (Cth), the stand down provisions in section 524 may be relied upon in certain circumstances, should an enterprise agreement not apply, or in the absence of a stand down clause in an applicable enterprise agreement. In all circumstances, it is recommended that employers seek advice before making the decision to stand down employees.

For more information please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Ganesh Krishnan on +61 8 8217 1395 or gkrishnan@normans.com.au or Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au.