Federal Court rules that Qantas aircraft engineers stand-downs was reasonable

Case: Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 3) [2020] FCA 1428

Qantas Airways have had a significant win against the unions this week with the Federal Court ruling that the airlines decision to stand down hundreds of aircraft engineers without pay during the COVID-19 pandemic was due to no fault of the airline. The Court found that there were no other reasonable steps the airline could have taken to avoid the stand down.

The facts

This case was originally lodged in the Fair Work Commission on 26 March 2020 by the Australian Licensed Aircraft Engineers Association which sought to challenge the legality of the airline’s decision. Qantas then applied to the Federal Court to restrain the FWC from arbitrating the dispute. The Federal Court decided that this matter should be heard in the Federal Court due to the immense effect the decision could have on other businesses which had been forced to stand-down staff.

During the hearing, Qantas argued that the stand-downs were made under clause 14.6 of the Qantas Agreement and clause 30.5.1 of the Jetstar Agreement were the employees could no longer be “usefully employed” due to a stoppage of work. [1]

The union argued that the decision of whether Qantas was to fly or not was solely up to airline and therefore the decision to stand down workers was within the company’s control. This argument was rejected by the Court. It was instead held that this dramatic downturn was not the result of any conduct of the airlines but rather “it was an economic reality forced upon the airlines by reason of the global pandemic and the conduct of the Commonwealth, State and Territory governments in restricting travel and movements”.[2] These border controls left the airline with no choice but to reduce their operations.

Outcome – Federal Court decision

Justice Flick held that the stand down of workers served two purpose, “one purpose being 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; the other purpose is to protect the employees from what would otherwise flow from the termination of their services”.[3]

The stoppage of work for Qantas engineers was due to a substantial halt of domestic and international passenger flights between March 29 and April 22 2020 and, it was not a result of any conduct by Qantas. Both Qantas and Jetstar took those steps which a “reasonable [employer] might be expected to employ in such circumstances”.[4]

The Court has referred the matter back to the Commission to resolve the issues of “whether the licensed engineers could have been usefully employed during the period when they were stood down; and whether, if they could not have been usefully employed, the lack of useful employment was “because of” the stoppage of work.”[5]

How does this effect you?

Many businesses have been forced to stand down employees due to the ongoing impacts of COVID-19. This outcome will be significant in helping to assess whether stand-downs directed by other businesses are regarded as lawful.

This was written by a Senior Lawyer

[1] [7] – [8].

[2] [32].

[3] [16].

[4] Pickard (1924) 35 CLR at 11 per Gavan-Duffy J in Qantas Airways Ltd v Australian Licensed Aircraft Engineers Association (No 3) [2020] FCA 1428, [44].

[5] [46].

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