Qantas Fair Work win limits union power

The Coalition says Fair Work's decision to reject limitations on outsourcing has eased some of its concerns about the current industrial relations laws.

One of the major business criticisms of the Fair Work Act was that it might allow unions too much control over how management ran their companies.

However, the Coalition's industrial relations spokesman Eric Abetz says Wednesday's decision sets an important precedent limiting union influence.

"This was an important test case and it does reassure me to a large extent that in this particular area, the Fair Work Act may not need any changes given this decision," he said.

"But we as a Coalition are still working through all 53 recommendations from the Fair Work Act review." However, Greens MP Adam Bandt says the decision has set a dangerous precedent by rewarding a company for taking drastic industrial action to gain an advantage over its employees by ensuring industrial negotiations were terminated.

"It shows there's a loophole in the act we need to close," he said.

Industrial law expert Professor Andrew Stewart from the University of Adelaide says the Qantas grounding strategy has paid off, at least in the industrial relations arena.

"It vindicates their strategy to pursue these matters through arbitration or pursue an outcome to this bargaining process through arbitration rather than through negotiation but in particularly that very suddenly announced lock-out," he told PM.

"The union did get something out of today's decision but, you'd have to say overall, this was pretty much a win for Qantas." Fair Work win One of the key sticking points in enterprise bargaining negotiations between Qantas and the Transport Workers' Union had been provisions sought by the union to limit the airline's use of lower-cost contractors to supplement or replace employees covered by the agreement.

The TWU had been seeking provisions that would limit the use of contractors to 20 per cent of the airline's workforce, ensure that contractors were engaged under the same conditions as Qantas employees and give workers a chance to put forward alternative cost-saving proposals to contracting out.

Failure to agree on these claims was a major factor behind a series of employee industrial actions and a in late October last year.

The grounding caused the , which it did, before arbitrating a workplace determination to set employee conditions.

for employees in areas covered by the TWU, predominantly baggage handlers and caterers.

FWA upheld union representatives right to be consulted about contracting out, and allowed a provision in the determination allowing for employees to receive time-off to develop and put forward alternative cost saving measures if the airline seeks to outsource their work.

However, FWA rejected the TWU's key demands for a 20 per cent limit on the proportion of contractors in the airline's total workforce, and a clause that would have ensured contractors were engaged on pay and conditions equivalent to or better than Qantas employees.

Vice-president Watson, senior deputy president Harrison and commissioner Harrison said the TWU's proposed limit on outsourcing was without merit.

"The determination of how to engage labour, the extent to which contractors are utilised and the numbers of employees to be engaged in various categories are classically regarded as matters properly to be determined by the management of an enterprise," they noted in their judgment.

"To interfere with management’s decisions on such a matter would require clear and strong evidence of unfairness.

No such case has been established with respect to current employees or otherwise." However, the commissioners failed to conclusively rule on whether FWA had the power to include similar provisions in other agreements where there is greater evidence to support them.

FWA also backed Qantas on pay increases under the agreement, accepting the airline's submission for a 3 per cent per annum rise, rather than the 5 per cent claimed by the TWU.

However, the TWU did have a notable win, with FWA backdating the pay increases to July last year whereas Qantas wanted them effective only from the commencement of the determination.

It also got a written commitment from Qantas, included in the determination, not to force compulsory redundancies on existing staff as a result of outsourcing.

Claiming victory The national secretary of the Transport Workers' Union Tony Sheldon says these were significant victories.

"We've been able to secure a wage increase, including during the period that the company were adamant, when they were using delaying tactics to stop wage increases from occurring, they've now got to back-date it twelve months," he told reporters.

"Secondly, the company has been told absolutely clearly by the courts that they cannot outsource to labour hire companies and force compulsory redundancies." Qantas also says it is pleased with the outcome.

The airline's head of corporate affairs Olivia Wirth says FWA has upheld management's right to run the company.

"Qantas is pleased that our employees have a new agreement in place, and will receive pay rises.

This means Qantas baggage handlers and ground staff continue to be some of the highest paid in the Australian aviation industry," she said in a statement.

"Importantly, Qantas is free to run our business as we see fit and not be dictated to by union officials who do not have the airline's best interests at heart." The determination will be effective for three years from the expiry of the last agreement, meaning it will run from July 2011 to June 30 2014.

Qantas had sought a three-year term, while the union wanted the determination to expire on June 30 2013.

However, Mr Sheldon warns the proliferation of labour hire subsidiaries under the Qantas umbrella will mean more bargaining periods and the possibility of more frequent industrial action.

"Every company they [Qantas] economically control as a labour hire company is now able to take separate industrial action, which can dislocate the Qantas-Jetstar group over the coming two years," he warned.

Restructure costs 2,800 jobs Separately, in a speech in Sydney, Qantas chief executive Alan Joyce said a total of around 2,800 full-time jobs will go under the company's previously announced restructuring plans.

Qantas says none of the cuts are new, but it appears to be the first time the company's management has publicly given a comprehensive total figure.

An announcement last year flagged around 1,000 job losses as part of the company's international restructure, and the company has also already announced job losses in areas such as .

Qantas hopes to achieve around $300 million in savings due to the cuts.

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