Business Studies Workplace Dispute Research Assessment – 2011 Qantas Industrial Dispute (19/20 mark)

Business Studies Workplace Dispute Research Assessment – 2011 Qantas Industrial Dispute

Executive Summary

The 2011 Qantas industrial disputes was a series of disputes that sparked international attention, as Australia’s largest airline became under fire internally as unions intensely bargained for new ‘enterprise agreements’. The fine line between labour and capital was intractably battled between three unions representing Qantas employees and Qantas’ high management. With a looming prospect of Qantas announcing intentions to launch a new airline in Asia, bargaining intensified with engineers, pilots and baggage handlers carrying out numerous industrial work-stop actions. At the climax of the dispute, Qantas unpredictably grounded its entire domestic and international fleet. This following report delves into all of the issues surrounding this complex dispute, including the parties involved, a timeline of events, its impact on the broader society, how the conflict was handled by opposing parties and its eventual resolution.

Dispute Summary

Background to the Dispute

This industrial dispute features two obstinate sides – Qantas’ management and board of directors, led by CEO Alan Joyce and three separate unions. Qantas is highly unionised, featuring over 48 different ‘Enterprise Bargaining Agreements’ (EBA). In this particular dispute, the following three unions were involved:

·         The Transport Workers Union of Australia (TWU) representing ground staff and baggage handlers

·         The Australian and International Pilots Association (AIPA) representing aircraft pilots e.g. specifically long-haul pilots

·         The Australian Licensed Aircraft Engineers Association (ALAEA) representing aircraft engineers

Whilst these unions were not directly related, they were all collectively striving for new and better EBA’s. Whilst the minor issues in each case differ, all unions have strong concerns relating to:

·         Working conditions to remain the same and levels of pay to increase

·         Aspects of outsourcing announced by Qantas to be refuted

·         Job security for its employees as the number of foreign workers continues to increase in jobs within to the Asia-Pacific region

Ever-presently involved for the duration of the dispute was the national workplace relations tribunal, Fair Work Australia (FWA). Acting as an independent body and an industrial court, FWA has the responsibility and power to carry out a range of functions, including:

·         The safety net of minimum wages and employment conditions

·         Enterprise bargaining

·         Industrial action

·         Dispute resolution

·         Termination of employment

Thus as an accountable firm for workplace disputes, FWA was significantly involved during the 2011 Qantas Industrial Dispute. One other third party whose rare involvement only impacts more serious industrial disputes is the Federal Government, led by Prime Minister Julia Gillard, who only intervened during the higher escalation of events as it drew nearer to damaging the Australian economy. In summary, the major parties encompassed in this dispute include Qantas’ management, the three unions (the TWU, AIPA, and ALAEA) and FWA, while the Federal Government also made a lesser impact on this dispute.

The commencement of this series of industrial disputes can be traced back to the July 22, 2011, where is spanned a little over 3 months to end on the 31^st of October, 2011. During this time, the intensity of the dispute increased at an exponential rate, as the intractable nature of both parties escalated the disagreement. Included in this timeline of events is the background context of the dispute leading up to the first industrial actions. The following paragraphs comprehensively illustrate the sequence of critical events that led Qantas from a ‘behind closed doors’ dispute, to one that heralded international infamy.

Timeline of Dispute

August 23 2010 – A campaign for a renewal of its EBA is initiated by the AIPA, representing 1700 pilots

February 15 2011 – After Qantas terminated the ALAEA’s original EBA in December 2010; the ALAEA’s new proposed log of claims features – a) the new construction of a heavy maintenance facility of the A380, and b) rise in wages for contractors to equal Qantas staff

March 15 2011 – The ALAEA orders FWA to authorise a secret ballot for its members, regarding methods of industrial action

March 22 2011 – The TWU announces that 9000 Qantas workers are ready to strike for a 4% pay increase; Qantas responds that no negotiations will proceed until July

March 30 2011 – Qantas states that indefinite job cuts will result from rising fuel prices and recent natural disasters

May 9 2011 – ALAEA members stop work for 2hr, as the union claims that negotiations with Qantas have “hit a brick wall”

May 10 2011 – The TWU begins developing a new EBA with Qantas

May 26 2011 – FWA grants AIPA a secret ballot allowing long-haul pilots to vote on industrial action, for the first time in 45 years

June 2 2011 – Qantas offers voluntary redundancies to all 7000 of its cabin crew

July 2 2011 – Qantas engineers call of planned industrial action in Melbourne and Perth due to the grounding of Tiger Airways

July 11 2011 – Long-haul pilots vote to take protected industrial action against Qantas, after claims of sending their jobs offshore

July 22 2011 – AIPA organises Qantas pilots on international flights to make unauthorised in-flight announcements, informing passengers about their current dispute

July 25 2011 – Ground staff vote for a protected industrial action ballot after Qantas knocks back proposal over new EBA’s

July 27 2011 – FWA authorises TWU to hold a secret ballot for protected industrial action

August 16 2011 – Qantas announces a major restructure, ensuing 1000 job cuts as it proposes to establish a new Asian-based premium airline, thus infuriating unions and employees.

 

The results from the survey[1] above validated the AIPA’s view of the disastrous effects that foreign overseas labour would bring to the job security held by Australian Qantas Pilots. Hence the qantaspilots.com.au website utilised this research, to promote to the public its case against Qantas propositioning foreign pilots from taking over Australian jobs, as part of its online petition to raise more public support for its case.

August 19 2011 – Qantas engineers vow to stop work for one hour, every weekday, from August 25 to the week prior Christmas

August 24 2011 – Qantas announces a doubling of its full-year net profit to $250 million, yet Alan Joyce argues that Qantas is still not delivering good returns on shareholder’s investment[2]

 

This low number is resultant from Qantas’ previous low profitability that has been sliding over the decade, giving cause for Qantas to look overseas for more avenues to increase profit.

August 25 2011 – Qantas engineers start work at Sydney Airport an hour late

August 31 2011 – Qantas holds conciliation talks with AIPA at its request, as to avert intensified strike action by long-haul pilots

September 5 2011 – Forty engineers at Brisbane airport strike

September 20 2011 – Over 4000 ground staff strike over pay and conditions, leading to delays and cancellations for 55 flights

September 23 2011 – Aircraft maintenance engineers affect 1300 passengers after holding a 1hr strike

September 30 2011 – 39 Qantas flights are delayed by up to an hour, along with two others cancelled, when baggage handlers and ground staff strike again. TWU also forewarns of more nationwide stoppages

October 5 2011 – Reports emerge of Alan Joyce and other senior executives receiving death threats

October 6 2011 – Baggage handlers and ground staff call off a nationwide strike in a ‘gesture of good faith’

October 7 2011 – Qantas agrees to a 3% annual wage rise and $500 lump sum for its 2100 flight attendants (not related to AIPA)

October 10 2011 – 80 flights are delayed, despite engineers cancelling industrial action as Qantas threatened to withhold pay

October 13 2011 – Qantas says that it will ground 5 aircraft and cut up to 100 domestic flights a week, prompting more union accusations and possible federal government intervention

October 14 2011 – PM Julia Gillard asks Qantas and unions to negotiate. Engineers cancel all industrial action for two weeks

October 15 2011 – Qantas announces its cancellation of 400 domestic flights over the next month

October 16 2011 – PM Julia Gillard says she can’t intervene, as Qantas cancels 16 domestic flights

October 18 2011 – Qantas grounds another 2 aircraft and cancels 80 flights

October 20 2011 – Engineers hopeful of securing a deal, cancel all pre-empted industrial action for 3 weeks as to challenge Qantas to resume its full flight schedule

October 28 2011 – TWU confirms that 1hr will stoppages will be held at major airports around Australia, involving baggage handlers and ground staff. Alan Joyce apologises to 10,000 passengers delayed by strikes. After receiving a $5 million salary package at the Qantas AGM, he also states that the strikes have cost Qantas $68 million

October 29 2011 – Qantas suddenly grounds its entire domestic and international fleet, impacting 447 flights and 70000 passengers at 22 airports around the world. Qantas also announces to lock out workers from the next Monday, as response to prior industrial actions and claims of the three unions. Unions respond to this as “a stunning overreaction”

October 31 2011 – After PM Julia Gillard urgently requested a FWA hearing, FWA terminated all industrial action between Qantas and the unions at 2am, after a 12 hour teleconference video “full bench” hearing held in Melbourne, Canberra and Sydney. FWA also gave Qantas and the unions 21 days of industrial action-free bargaining. Qantas announces planes to be back to full flying scheduled by Wednesday.

Analysis of Parties Actions

Analysis of Unions Actions

From the beginning of the dispute, both parties involved had their sights on better and more profitable times to come. The unions wanted what is best for the employees they represent, with concerns relating to levels of pay, aspects of outsourcing and job security. In order for the three unions to stake its claim and contract new and improved EBA’s, the unions had to go through a number of steps in legitimately taking industrial action against Qantas. These included:

1.       To firstly request FWA to authorise a secret ballot, allowing workers to vote for industrial action as a means of bargaining for their new enterprise agreements.

2.       After this was sanctioned by FWA, the employees under each union were allowed to vote for industrial action.

3.       Once votes were counted in all three cases, overwhelming numbers were in favour of pilots, engineers and baggage handlers to take out industrial action against Qantas.

4.       From that time on, minor cases of lawful forms of “protected industrial actions” of increasing severity were taken out against Qantas, including:

-          Pilots making un-authorised in flight announcements of their conflict with Qantas, refer 22/7/2011

-          Engineers starting work an hour late, refer 25/8/2011 

-          Ground staff striking, refer 20/9/2011

5.       As the situation escalated, the workers under each union began making stronger impacts on the efficiency of Qantas operations, including:

-          Engineers disrupt 1300 passengers from a 1hr strike, refer 23/9/2011

-          Baggage handlers delay 39 flights for an hour after another strike, refer 30/9/2011

6.       By this time, Qantas had met the unions head on in organising groundings of aircraft as well. The unions then challenged Qantas to heed its desires for new EBA’s if it returned to full flight schedule, in turn for unions to abstain from further industrial action.

These above actions were taken out by Qantas employees, under the guidance of their unions, in order to make a stand for its plea for new enterprise agreements. Since earlier attempts at getting Qantas attention failed, the unions felt they had no other alternative but to increase the severity of the industrial actions taken out to further support their claims. The unions stubbornly fought as hard as they could for their case and didn’t falter in light of Qantas’ own actions.

Analysis of Qantas’ Reactions

Qantas main goal was to increase their bottom line by lowering labour costs, specifically on international routes as Qantas is supposedly losing $200 million a year in this way alone. It hopes to achieve this profitable scheme this in a number of ways:

·         To set up a new offshore flight base, possibly with a new premium airline (refer 16/8/2011). By outsourcing its Human Resources, Qantas would effectively be more profitable by lowering pay rates for foreign workers and employ longer shifts. Qantas already does this by paying pilots on the trans-Tasman route in New Zealand a third less than in Australia.

·         Secondly, it is currently running code-share flights with Jetstar and paying pilots at Jetstar rates to cut costs. By extending codeshare arrangements, nationally and internationally, it can further be more cost-effective.

·         Thirdly, Qantas is looking for the right to employ contract labour ground staff to meet demand during seasonal peaks. The TWU has accepted this but wants contract hire companies to be unionised.

As the unions and its employees dissented against the authority of Qantas’ management, Qantas too had to counter these actions and maintain complete command over its workers and the imposing situation. Qantas claims that its international operations are losing $200 million a year but not all the changes it’s after are confined to international operations. Qantas also said that it is fighting its own right to manage a business against the unions. Yet since the Qantas managers want to cut pay rates, change work practices, take jobs offshore and lower labour costs to increase profit, you can see why unions want to have a say. Whilst its employees had strikes of their own, Qantas then took matters into its own hands and made infrequent moves in grounding its planes, thus not paying their personnel. As the situation continued to intensify, Qantas CEO Alan Joyce ordered a full termination of all aircraft and a grounding of its entire fleet. This tactic employed by Alan Joyce threatened to damage Qantas’ reputation by disrupting not only its workforce, but thousands of customers around the world. Alan Joyce felt he had no other alternatives and that this would trigger government intervention. His tactical move appeared to succeed as it caused a national crisis, made more effective by the geographical location and isolation of Australia as a large, island continent and its reliance on aircraft for overseas commuting. Thus the federal government ordered the FWA to intervene immediately.

Conflict Resolution

As a result of the unyielding temperament of both the unions and Qantas, the situation intensified until the government intervened and FWA terminated all industrial action. While the industrial action taken out by the unions was perilous to Qantas, Qantas further riled and took action against the unions by grounding planes and cutting flights. Thus as either side took a strike at each other, the situation only worsened until other third parties became involved.

After the 21 days of bargaining between Qantas and its unions, ordered by FWA on the 31^st of October, had yielded no further resolutions, FWA was forced into arbitration and make a final decision to settle the dispute. During this time with FWA’s impartial help, Qantas and the unions worked through aspects of the disputes which can be mutually agreed or would need to be determined by arbitration. In preference to whose side that FWA would take, Qantas assumed that FWA would not make decisions that would encroach on areas relating to Qantas’ own “business and management decisions”. This could include the way in which work was conducted or by whether foreign workers performed certain jobs. Qantas took view that its proposals to outsource its HR and establish more subsidiaries overseas as falling under such “business and management decisions”. This suggests that Qantas was in a sounder place regarding the possible outcomes of the arbitration process. Nevertheless, FWA listened to lots of submissions from the parties, including witnesses and allegations.

During this time, the challenge for all parties was to rebuild trust and restore good working relationships in order to re-establish Qantas’ reputation with customers, the government and other stakeholders. In the several months to come, FWA came to final decisions as to appease both Qantas and its unions. The following paragraphs disclose the timeline of ensuing repercussions of Qantas’ global grounding and how dispute resolutions were resolved between unions and Qantas.

Timeline of Resolution Process

November 21 2011 – Qantas and AIPA, TWU and ALAEA fail to reach agreements in the designated 21 day timeframe

November 28 2011 – Qantas reports to the ASX, that the combined cost of industrial actions has cost the company $194 million, (consisting of $70 million from groundings, $56 through customer loyalty and forward bookings and $68 million from union actions I prior to the grounding)

December 19 2011 – Qantas and ALAEA consensually agree to FWA for both a 3% wage rise and job security for existing engineers. A380 maintenance is mutually allowed to be offshore.

January 23 2012 – FWA endorses provisions of the new enterprise agreement by Qantas and the ALAEA as a Workplace Determination. It includes trainees performing basic maintenance under supervision, less restrictions on extended hours, as well as other terms from the Enterprise Bargaining Agreement no.8 (EBA 8)

February 16 2012 – Qantas announce restructure of operations, resulting in an initial 500 positions lost that include engineers, cabin crew, catering staff, pilots and ground operations staff

March 22 2012 – FWA commences arbitration hearings between Qantas and the TWU, regarding the 2011 Industrial Actions

May 21 2011 – Qantas announces the closure of heavy maintenance at Tullamarine (VIC), relocating to Brisbane along with 535 job losses

Note – Current new agreements between Qantas and TWU and AIPA have not been finalised

Summary

The 2011 Qantas industrial disputes was one of Australia’s most renowned industrial disputes for the last few years. This report has clearly highlights the escalation of the dispute, the main parties involved, an analysis of how the conflict was handled by these parties and its eventual resolution. Also included in this report are the effects of this industrial dispute on an international scale and how the public views Qantas actions. While not all unions new EBA’s have been finalised, the future for Qantas and its unions looks promising as positive resolutions have replaced industrial actions.

By Jared Lieschke, 3090 words

Bibliography

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[1] Public Opinion Is With Us, qantaspilots.­com.­au/­whats-­at-­stake-­for-­you/­standards/­public-­opinion-­is-­with-­us

[2] Chart of the Day: Qantas Real Problem, http://www.macrobusiness.com.au/2011/10/chart-of-the-day-qantas-real-problem/