The Qantas standoff explained

The standoff is now over and Qantas is flying again but how did we get to this point in the first place?

What we have here is a good old fashioned lockout, a heady mix of old school union activism and process driven industrial relations legislation, seemingly more suited to the 1970’s. All we needed to complete this back to the future picture were goons in black balaclavas, paisley shirts and a lot more facial hair.

Put simply, Qantas management, facing the debilitating prospects of a protracted union campaign of public sniping and ongoing industrial action chose instead to up the ante by grounding the airline and massively escalating the severity of the dispute.

They did so, to force the hand of either the Federal Government or the industrial umpire Fair Work Australia. The only parties effectively able to terminate ongoing labour disputes. A position somewhat ironically made possible by the new Fair Work legislation.

Under the Fair Work Act, introduced under Kevin Rudd, Fair Work Australia can order a court enforceable suspension or termination of industrial action, where the industrial action:

  • is causing significant economic harm to the employer or employers who would be covered by the agreement and/or the employees who would be covered by the agreement.
  • where it threatens to endanger the life, personal safety, health or welfare of the population or of part of it, or to cause significant damage to the economy or an important part of it.

Under the same legislation, the Minister of Education, Employment and Workplace Relations is also empowered to terminate certain industrial action, although a Ministerial decision could theoretically be challenged in the courts. But it could be argued that this step was not taken by the Minister, either in the lead up to, or after the announcement but prior to the implementation of the grounding because Federal Labor felt it could not be seen to be siding against the unions, despite the evident dislocation that would eventuate.

So on Saturday, when Qantas announced that on Monday evening it would lock out all employees covered by the industrial agreements currently being negotiated, it was effectively throwing down the gauntlet to the Federal Government.

The Qantas position was that the lock-out would continue until the Australian Licenced Engineers Union (ALAEA), the Transport Workers Union (TWU) and the Australian and International Pilots Union (AIPA), dropped their demands that the company believed made it impossible for agreements to be reached.

The grounding of the entire Qantas fleet on Saturday was reportedly made for ‘precautionary reasons’. In practice it turned up the heat on the only two bodies that were able to address the ongoing labour issues.

The Qantas twitter announcement

From this perspective the timing was impressive, with Prime Minister Gillard already struggling with the perception of incompetence when facing crisis and the distraction of C.H.O.G.M., the Melbourne cup festival firmly in swing and multiple stakeholders including the NSW and Victorian governments loudly calling for action to resolve the long brewing industrial dispute.

One of the crucial issues leading up to the actions of this weekend has been the way in which the Fair Work Act enables protracted industrial action under bargaining in good faith provision. The Act clearly enshrines and empowers Labor’s belief in the primacy of organised labour within the Australian industrial environment. And it is this general positioning that Qantas, and other Australian businesses, are clearly resisting.

Qantas, at a board and executive management level, has clearly made a decision to refuse to concede to union demands over manning and shift allocation, as well as the terms under which contract employees can be engaged. Central to this is a drive to cut costs, in order to both remain competitive and to support company profits. 

The company is supposedly losing $200 million a year on its international routes and is seeking to establish new offshore support hubs offering lower pay rates and more flexible working conditions. An example of which is the recent employing of pilots for its Tasman route, in New Zealand, at a rate significantly less than Australian employed staff.

The unions on the other hand are resisting these changes. Empowered by the Gillard/Rudd reforms in 2009 the unions have steadily being applying pressure on a number of fronts, with the first of the recent round of strikes beginning in August. 

There have been reports that the pilots union is pushing for an annual 2.5% pay increase for the next three years, long haul Qantas pilots conditions to be extended to company pilots flying Jetstar, free tickets and travel discounts for family members, two union officials to be paid for by Qantas and discounted membership to the Qantas club for all pilots and their families. Although when I contacted the union media representative indicated that the sticking point was that the pilots were demanding that all Qantas flying is performed by a Qantas pilot or a pilot on equal conditions.

The general media reporting was the engineers and ground staff on the other hand are primarily seeking inflation matched pay rises and guarantees of job security. Although there is also reportedly some discussion about suitable maintenance regimes. Upon closer investigation the TWU log of claims runs to 20 pages and includes interesting provisions such as Flexible Blood Donors Leave (a maximum 2 hours leave up to 4 time a year to give blood with a permitted arrangement of up to 4 hours leave for a maximum of two days per year), defined restrictions on casual employment and labour hire (no more than one fifth per work group), 1% of additional company super contributions each year, and increases to wages and allowances in each year of no less than 5% (with CPI safety net), a mandated super fund (union controlled), some simply amazing rostering conditions ( i.e. if less that 48hours notice is given employees must be paid at the rate of double time) etc..

Complicating the issues at hand have been a number of highly visible sticking points. Firstly despite crying poor, Qantas still made a sizable profit of $377 million last financial year, largely on the back of its dominance of the domestic market.  
 
In addition, it is a poor look in anyone’s book to give chief executive Alan Joyce a 71% pay rise ($5 million up from $2.9) while planning the axing of 1000 jobs, principally from within pilots, engineers and cabin crew. Job cuts specifically connected to the announcement of the establishment of a new, non Qantas branded, premium airline to be based in South East Asia.

So where are we now?

After the stranding of thousands of passengers and the widespread disruption to tourism and business, Fair Work Australia, headed by Justice Geoffrey Giudice, after an application by the Federal Government, has ordered an end to both the union and airlines industrial activity. There has also been an order made for both parties to negotiate a settlement within 21 days or face arbitration by the tribunal.

This ruling will give Qantas some initial certainty, the three unions some food for thought and probably correctly the opposition will continue to blame the government for allowing the dispute to drag on for such an extended period of time.

How this affects 'brand' Qantas is anyone's guess. There are clearly a lot of very annoyed people out there and it is yet to be seen who the public blames for this quite complicated mess.

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