[2020] FWCFB 817

The attached document replaces the document previously issued with the above code on 14 February 2020.

Clause 16.6(v) of training bonds clause set out at paragraph [82] amended to correct error by inserting the word “bond” after the words “over the term of the training”. The determination issued on 14 February 2020 [PR716763] giving effect to this decision will be corrected.

Associate to Vice President Catanzariti

11 March 2020

Fair Work Act 2009
s.156—4 yearly review of modern awards

4 yearly review of modern awards—Air Pilots Award 2010
(AM2018/14)

4 yearly review of modern awards – Air Pilots Award 2010 – substantive issues – training bonds.

Introduction

[1] The Fair Work Commission (the Commission) is currently conducting a 4 yearly review of modern awards (the Review) in accordance with s.156 of the Fair Work Act 2009 (the Act). This Full Bench was constituted to hear and determine certain substantive claims relating to the Air Pilots Award 2010 (Air Pilots Award). 1

[2] This decision deals with the question of inserting a training bond clause into the Air Pilots Award. Training bond arrangements do not presently feature in the Air Pilots Award, albeit training bonds between air pilots and their employers, historically and currently, have not been uncommon in the aviation industry; and provisions in relation to training bonds are also contained in a number of enterprise agreements.

[3] In a hearing on 12 November 2019, Alliance Airlines Pty Ltd (Alliance), Regional Aviation Association of Australia Limited (RAAA) (appearing on behalf of thirteen named member aviation operators) and the Australian Federation of Air Pilots (AFAP) proposed agreed terms for a training bond clause for inclusion in the Air Pilots Award (the November Proposal), albeit the formal, primary position of AFAP, for the reasons elaborated in its submissions, was in firm opposition to the inclusion in the award of any training bond arrangements. The November Proposal was not agreed to by the Regional Express group of companies (Rex) or the QANTAS group of companies (Qantas). Moreover, there have been certain subsequent changes in the positions of Alliance, RAAA and AFAP concerning their original agreement as reflected in November Proposal. We will return to those matters.

[4] Directions were issued on 4 December 2019, the resulting effects of which were to require Rex and Qantas to provide their respective draft/s of the training bond clause to the other parties and also directing parties to have discussions in an attempt to reach agreement. 2 In the event no agreement was reached, Rex and Qantas were directed to file submissions in support of their proposed clauses; and Alliance, RAAA and AFAP were directed to file submissions in reply by 4.00pm on Friday, 27 December 2019.

[5] The parties to the proceedings did not agree to all the terms of the training bond clause, and, further to the directions, the following parties subsequently made written submissions:

•  Qantas 3

•  Rex 4

•  Alliance 5

•  RAAA 6

•  AFAP. 7

[6] There was a Commission-initiated relisting of proceedings on 5 February 2020, before the Presiding Member on behalf of all members of the Full Bench. In those proceedings, certain issues were canvassed with the parties to address potential procedural fairness issues concerning aspects of the submissions and to raise a discrete matter about provisions which deal with circumstances when a bond amount cannot be recovered. In consequence of that relisting, additional written submissions subsequently were made by AFAP, 8 Alliance,9 RAAA,10 Qantas11 and Rex.12

[7] Before dealing with these submissions, we set out the legislative context for the Review.

Legislative context

[8] Section 156(2) of the Act deals with what must be done in the Review:

“156 4 yearly reviews of award to be conducted

…

(2) In a 4 yearly review of modern awards, the FWC:

(a) must review all modern awards; and

(b) may make:

(i) one or more determinations varying modern awards; and

(ii) one or more modern awards; and

(iii) one or more determinations revoking modern awards.

(c) must not review, or make a determination to vary, a default fund term of a modern award. …”

[9] In the Review, the Commission will proceed on the basis that the modern award being reviewed presumptively achieved the modern awards objective at the time it was made. 13 Variations to modern awards should be founded on merit-based arguments that address the relevant legislative provisions, accompanied by probative evidence directed to what are said to be the facts in support of a particular claim. The extent of the argument and material required will depend on the circumstances.

[10] The modern awards objective set out in s.134 of the Act, among other provisions, conditions the Commission’s modern award powers, which are defined to include the Commission’s functions or powers under Part 2-3 and, so far as they relate to modern award minimum wages, Part 2-6 of the Act. The Review function in s.156 is contained in Part 2-3 of the Act and so will involve the performance or exercise of the Commission’s “modern award powers”. The modern awards objective therefore applies to the Review.

[11] The modern awards objective is set out in s.134(1). It reads:

“134 The modern awards objective

What is the modern awards objective?

(1) The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards and the needs of the low paid; and

(b) the need to encourage collective bargaining; and

(c) the need to promote social inclusion through increased workforce participation; and

(d) the need to promote flexible modern work practices and the efficient and productive performance of work; and

(da) the need to provide additional remuneration for:

(i) employees working overtime; or

(ii) employees working unsocial, irregular or unpredictable hours; or

(iii) employees working on weekends or public holidays; or

(iv) employees working shifts; and

(e) the principle of equal remuneration for work of equal or comparable value; and

(f) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and

(g) the need to ensure a simple, easy to understand, stable and sustainable modern award system for Australia that avoids unnecessary overlap of modern awards; and

(h) the likely impact of any exercise of modern award powers on employment growth, inflation and the sustainability, performance and competitiveness of the national economy.

This is the modern awards objective.”

[12] The modern awards objective is very broadly expressed, 14 requiring that modern awards, together with the National Employment Standards, provide “a fair and relevant minimum safety net of terms and conditions”, taking into account the matters in ss.134(1)(a)–(h) of the Act.15 Fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question.16 The obligation to take into account the s.134 considerations means that each of these matters, in so far as they are relevant, must be treated as a matter of significance in the decision-making process.17 No particular primacy is attached to any of the s.134 considerations, and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.18 It is not necessary to make a finding that the award fails to satisfy one or more of the s.134 considerations as a prerequisite to the variation of a modern award.19 The s.134 considerations do not set a particular standard against which a modern award can be evaluated; many of them may be characterised as broad social objectives.20

[13] In giving effect to the modern awards objective the Commission is performing an evaluative function taking into account the matters in ss.134(1)(a)–(h) and assessing the qualities of the safety net by reference to the statutory criteria concerning fairness and relevance. What is necessary is for the Commission to review a particular modern award and, by reference to the s.134 considerations and any other consideration consistent with the purpose of the objective, come to an evaluative judgment about the objective and what terms should be included only to the extent necessary to achieve the objective of a fair and relevant minimum safety net. 21 In that task, the matters which may be taken into account are not confined to the s.134 considerations.22

[14] Section 138 of the Act is also relevant. It emphasises the importance of the modern awards objective, in these terms:

“138 Achieving the modern awards objective

A modern award may include terms that it is permitted to include, and must include terms that it is required to include, only to the extent necessary to achieve the modern awards objective and (to the extent applicable) the minimum wages objective.”

[15] Section 138 provides that terms may be included in a modern award only to the extent necessary to achieve the modern awards objective. That which is “necessary” to achieve the modern awards objective is a value judgment to be made taking into account the s.134 considerations, to the extent that they are relevant, having regard to the context, including the circumstances pertaining to the particular modern award, the terms of any proposed variation and the submissions and evidence. 23 Where an interested party applies for a variation to a modern award as part of the 4 yearly review, the task is not to address a jurisdictional fact about the need for change, but to review the award and evaluate whether the posited terms with a variation meet the objective.24

[16] Section 136 sets out the terms that may or must be included in a modern award.

November Proposal

[17] The November Proposal from Alliance, RAAA and AFAP, as tendered in proceedings on 12 November 2019 (and otherwise conveniently located as an attachment to Alliance’s submission, which, together with all other submissions, is accessible on the Commission’s website), is as follows:

“Training Bonds

13.6(1) An employer and a pilot may, by agreement, enter into a training bond whereby the costs of training which have been or are to be borne by the employer may be recovered from the pilot if the pilot ceases to be employed by the employer within a period of time agreed between the pilot and the employer, subject to the following:

A. The Training Bond must be agreed between the employer and an individual pilot.

B. The Training Bond must be in writing, specify the amount of the bond, and be signed by the pilot prior to commencing training.

C. The maximum term of the Training Bond will be two (2) years for piston engine/turbo prop aircraft and three (3) years for jet aircraft.

D. The training bond amount cannot exceed fifty percent (50%) of the actual cost of the training.

E. The Training Bond amount reduces on a monthly pro rata basis over the term of the Training Bond from the commencement of the training.

F. A pilot can only be subject to one Training Bond at a time. Where a pilot is subject to one Training Bond and subsequently enters into another, the bonds are not cumulative and the highest value Training Bond will apply.

G. The employer can only recover an amount payable under a Training Bond where the pilot resigns, or their employment is terminated for serious misconduct.

H. No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except in the case of serious misconduct) or where the Pilot fails the training course.

I. A Training Bond cannot be entered into in circumstances where an employer directs a pilot to undertake training.

13.6(2) For the avoidance of doubt, a Training Bond can only be entered into between an employer and a pilot in respect of:

(a) Class and type rating training necessary to operate a particular aircraft, including the aircraft type for which the pilot was initially employed (including pre-employment training and initial class and type rating training); and

(b) Upgrade training (change in rank and status training).” 25

Submissions

[18] We note that the November Proposal and the parties’ written and oral submissions interchangeably referred to (and as a corollary so do relevant quotes in this decision) “clause 13” and “clause 16” in terms of the proposed training bond variation. This is because the exposure draft of the Air Pilots Award dealt with training-related matters at clause 13, whereas the current version of the award deals with such matters within clause 16. The references to subclauses “A-I” as they concern clause 13 are also impacted by the numbering issue. Our final clause 16.6, which is the subject of the determination, uses subclause numbering “(a)” together with roman numerals “(i)-(ix)”, and “(b)” together with roman numerals “(i)-(ii)”.

[19] While the parties broadly agree to the terms of November Proposal, the following three issues remain in dispute:

•  when the amount of the training bond should start to reduce;

•  the type of training to be included; and

•  the types of costs to be included.

AFAP submissions otherwise distil those three points of difference between as being:

•  the meaning of “actual costs of training”;

•  whether the pro rata reduction in the training bond amount should start to reduce (a) from the commencement of training or (b) from when the pilot successfully checks to line; and

•  the type of training for which a bond can be required.

[20] Rex and Qantas each propose a version of a training bond clause with a number of subclause amendments differing from the November Proposal in respect of these issues. Moreover, AFAP submissions indicate that it now also seeks certain arrangements different from those in the November Proposal in as much as it seeks a “hard cap” on the amount of any training bond in the form of 50 per cent of actual costs or an agreed value, whichever is lower.

[21] In reply submissions, RAAA maintains as its primary submission its support for the November Proposal. In the event that RAAA’s primary submission is not accepted, RAAA otherwise supports the amendments to the November Proposal advanced by Rex.

[22] Alliance submits that the training bond clause should remain in the form of the November Proposal, given it was the product of extensive negotiations and significant consideration. Alliance submits the proposed clause reflects the breadth of operators in the industry and sufficiently achieves the minimum safety net objectives of award provisions without being “overly descriptive”.

[23] As to matters arising from the relisting of proceedings on 5 February 2020 with respect to clause 13.6(1)H concerning circumstances when amounts may not be recovered from a pilot, the subclause in the November Proposal presently reads:

“No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except in the case of serious misconduct) or where the Pilot fails the training course.” (underlining added)

[24] The proposed alternative version of clause 13.6(1)H of the November Proposal propounded in the February 2020 submissions by Alliance and subsequently by RAAA (and supported in more detailed submissions by, respectively, Rex and by Qantas) is:

“No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except for the valid reason of serious misconduct) or where the Pilot fails the training course. (underlining added)

For its part, AFAP proposes the clause should read:

“No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except where the termination is because of serious misconduct and there is no later finding by a court or tribunal or acceptance by the employer that the employee did not engage in the serious misconduct on which the termination was based) or where the Pilot fails the training course.” (underlining added)

When the amount cannot be recovered

[25] It is convenient to deal first with the short point arising from the parties’ most recent February submissions concerning when the bondable amount cannot be recovered. This was a matter arising from queries raised by the Full Bench in February 2020. Those queries stemmed from a concern that it seemed the particular subclause, in the terms proposed, may visit an unfairness, in addition to not meeting the modern awards objective. That is, the proposed subclause does not appear appropriately to take account of recovery of a bondable amount in certain circumstances where there was an employer-initiated termination of the employment relationship as it dovetails with the ensuing provisions as to recovery. As noted above, the airline operators collectively agreed to certain proposed wording (the Operators’ Recovery Proposal), whereas AFAP proposed a different formulation.

[26] Rex submits as to the Operators’ Recovery Proposal that: “The term ‘valid reason’ has a clear, legal and industrial meaning and preserves the intention of the clause: to enable an airline to recover a bond where a pilot is terminated by reason of serious misconduct, but accommodates the situation where the Commission determines on an unfair dismissal application that there was no valid reason for dismissal. … ”. 26 In opposing the formulation proposed by AFAP, Rex further submits:

“17. … The [Operators’ Recovery Proposal], on the other hand, allows each of the employer and the pilot to determine whether there was a valid reason of serious misconduct and then act accordingly. If they disagree the pilot can refuse to pay the bonded amount and argue her or his position when the employer seeks to enforce payment. The pilot is not required to challenge the dismissal (eg an unfair dismissal claim) himself or herself in order to be excused from the bond.

18. There is no prejudice to pilots in the clause jointly proposed by Alliance, Rex, Qantas and the RAAA. It is unambiguous, maintains the intention of the clause, and Rex submits that it sets an appropriate minimum standard to be applied in the circumstances.

19. Rex further submits that such a clause is necessary, in circumstances where the removal of such a clause may give rise to a situation where a pilot who wishes to cease their employment early could deliberately engage in an act of serious misconduct as a means of avoiding their liability to repay a training bond. This would entirely negate the purpose for which the training bond provisions exist and place airlines in a precarious position where they are unable to address pilot attrition rates. …”

Consideration – when the amount cannot be recovered

[27] Upon our further consideration of the concerns that caused the Bench to raise with the parties the operation of this subclause in its originally-agreed form, the submissions of the parties, and the now-competing versions for the wording, it seems to us that the wording proposed by AFAP is preferable for inclusion in the award. This is because the wording proposed by AFAP more accurately captures, and addresses, the import of the concern that led to the matter of the subclause being broached with the parties in the February 2020 relisting. The AFAP wording of the subclause also more appropriately captures a potentially-broader range of circumstances than one which seems to be referenced, solely or principally, to proceedings commenced before the Commission under s.394 of the Act seeking an unfair dismissal remedy. We are not persuaded by the submissions advanced by Rex including the contention that the Operators’ Recovery Proposal “allows each of the employer and the pilot to determine whether there was a valid reason of serious misconduct” – when the everyday experience of matters indicates that such assessments of (alleged) serious misconduct are typically contested between an employer and an employee. Qantas opposes, on the basis of it being “problematic”, the wording put forward by the AFAP as it reads “or acceptance by the employer”. As to this, Qantas submits it is possible that an employer and employee may reach an agreement subsequent to the termination of employment which deals, among other things, with the repayment of the training bond whereas the award should not deal with the recovery of the training bond in such circumstances. We are similarly not persuaded by the Qantas submissions in such respects; it is entirely appropriate for the subclause to allow for, or contemplate, this very contingency to which Qantas particularly objects.

[28] In consequence of our acceptance of the proposed AFAP subclause, it follows that it is necessary also to make a complementary amendment to the immediately preceding subclause within the November Proposal. As such, the preceding subclause will be amended to read:

“The employer can recover an amount payable under a training bond only where the pilot resigns, or, subject to the provisions of subclause (viii) of this clause, the pilot’s employment is terminated for serious misconduct.” (underlining added)

[29] We turn next to the other matters which were the subject of submissions by the parties.

When the bond starts to reduce

[30] Under clause 13.6(1)E of the November Proposal, the training bond amount starts reducing on a monthly pro rata basis from the commencement of training. Rex and Qantas submit this should be amended to provide that a training bond amount starts to reduce when the pilot successfully checks to line, and not earlier.

[31] Rex proposes the following amendment to the clause in the November Proposal:

“The Training Bond amount reduces on a monthly pro rata basis over the term of the Training Bond from the commencement of the training when the pilot successfully checks to line.” (underlining added)

[32] Rex submits the training bond amount should start to reduce only once a pilot checks to line and commences operational flight duties, and is no longer under training - as this is the point the pilot commences providing “valuable services” in return for the training provided and paid for by the airline. Rex argues that no reasoning has been advanced as to why a training bond should reduce before a pilot begins providing valuable services to the employer.

[33] Rex submits that a training bond which starts decreasing at the commencement of training does not achieve the following objectives of a training bond:

•  to act as a safeguard against airlines incurring unreasonable costs associated with training a pilot who then ceases employment; and

•  to discourage such pilots from leaving employment before they provide valuable services as a fully operational pilot.

[34] Qantas, similarly to Rex, proposes the following amendment to the November Proposal:

“The Training Bond amount reduces on a monthly pro rata basis over the term of the Training Bond from the commencement of training when the pilot successfully checks to line.” (underlining added)

[35] Qantas submits that amending the November Proposal accordingly would be consistent with a number of enterprise agreements made and approved in accordance with the Act.

[36] Qantas further submits that the effect of the clause 13.6(1)E of the November Proposal is to reduce the training bond period. Qantas submits that this, coupled with the limitation on recovering a maximum of 50 per cent of the cost of the training at clause 13.6(1)D, represents an unnecessary restriction on what should reflect minimum terms and conditions. Qantas submits that an employer starts to receive a return on its investment for the pilot’s training costs only when the pilot completes the training and successfully checks to line.

[37] In reply submissions, RAAA maintains as its primary position its support for the November Proposal but, in the event the primary submission of RAAA is not accepted, otherwise supports the amendment to clause 13.6(1)E proposed by Rex for the reasons advanced by Rex and, as may be relevant, Qantas. 27

[38] AFAP opposes the amendments to clause 13.6(1)E of the November Proposal advanced by Rex and Qantas. AFAP submits that, by providing for the training bond to reduce on a pro rata basis from the commencement of training, the November Proposal provides a fair and minimum standard which can be varied through enterprise bargaining.

[39] AFAP submits that the training bond should start to reduce from the commencement of training for the following reasons:

•  it represents the date from which the pilot is required to devote his or her time and attention to training;

•  an employer starts to receive a benefit from the moment the employee enters training, as from that time they are gaining knowledge and skills that ultimately will be employed in the employer’s business.

[40] AFAP rejects Rex’s characterisation of training bonds as a safeguard against unreasonable costs where a pilot fails to provide a reasonable return of service. AFAP submits that, instead, the purpose of a training bond clause is to balance the following two competing interests:

•  the interest of pilots in securing in-service training without paying upfront costs; and

•  the interest of employers who fund such training in receiving an appropriate return on their training investment.

[41] AFAP submits that, by training their employees, employers obtain the substantial advantage of a skilled workforce trained to company standards using company methodologies. AFAP further submits that aviation employers are not unique in their use of training development as a means of employee retention and that all such employers face the risk that an employee will leave their employment before the full value of the training cost has been realised. AFAP observes that, despite this, training bond clauses are not a common feature of modern awards.

[42] AFAP also submits that, while a number of enterprise agreements provide for training bond amounts to start reducing once a pilot successfully checks to line, there is no consistent approach across agreements as to when training bond starts reducing. AFAP reiterates that the terms of the November Proposal strike a balance between a fair and reasonable minimum standard and the need to promote enterprise bargaining.

[43] Alliance similarly opposes the amendments to the proposed clause advanced by Rex and Qantas, submitting the November Proposal “reflects the breadth of operators in the industry” and “sufficiently achieves the minimum safety net objectives of award provisions without being overly descriptive”. 28

Consideration - when the bond starts to reduce

[44] As outlined earlier in that part of this decision which describes the legislative context for the Review, variations to modern awards should be founded on merit-based arguments that address the relevant legislative provisions, accompanied by probative evidence directed to what are said to be the facts in support of a particular claim. Relevantly, s.134 of the Act identifies, among other matters, that the Commission must ensure that modern awards provide a “fair and relevant minimum safety net of terms and conditions”, taking into account matters including (but certainly not limited to) the likely impact of any exercise of modern award powers on business, including on productivity, employment costs and the regulatory burden; and fairness in this context is to be assessed from the perspective of the employees and employers covered by the modern award in question. As also outlined earlier, no particular primacy is attached to any of the s.134 considerations, and not all of the matters identified will necessarily be relevant in the context of a particular proposal to vary a modern award.

[45] Based on our assessment of the evidence and submissions, and as part of the evaluative function and/or value judgment, it seems to us that to achieve the objective of a fair and relevant minimum safety net (and a balanced one, noting that the matters which may be taken into account are not confined to the s.134 considerations), that an appropriate balance would best be achieved by giving effect to the amendments to clause 13.6(1)E of the November Proposal effectively as advanced by Rex and Qantas. We appreciate that the competing, well-developed arguments for the parties indicate highly-contestable issues as to which approach should be preferred. In the end, we are of the view that the varied terms posited by Rex and Qantas better-meet the statutory objective.

[46] We agree with the amendments to clause 13.6(1)E of the November Proposal put forward by Rex and Qantas and will incorporate these changes in the training bond clause we propose to insert in the Air Pilots Award.

Included training

[47] Under the November Proposal, the training bond is entered into in respect of:

“(a) Class and type rating training necessary to operate a particular aircraft, including the aircraft type for which the pilot was initially employed (including pre-employment training and initial class and type rating training); and

(b) Upgrade training (change in rank and status training).”

[48] Qantas and Rex submit that it is important for bonds to be entered into whenever there is a significant cost associated with training a pilot and this should not be limited to upgrade training. 29

[49] Qantas proposes the following amendment to clause 13.6(2)(b) of the November Proposal to cover broader types of training:

“13.6(2) For the avoidance of doubt, a Training Bond can only be entered into between an employer and a pilot in respect of:

(a) Class and type rating training necessary to operate a particular aircraft, including the aircraft type for which the pilot was initially employed (including pre-employment training) and initial class and subsequent type rating training) for additional aircraft types; and

(b) Upgrade training involving a (change in rank and/or type status training); and

(c) Downgrade training involving a change in type.” (underlining added)

[50] Qantas submits that its proposal adopts a different formulation which would cover both upgrade training involving a change in rank and/or type and downgrade training involving a change of type. Qantas submits that downgrade training is already encompassed in the proposed clause by “class and type rating training necessary to operate a particular aircraft” and that amending the clause to include “downgrade training” provides greater certainty.

[51] Rex proposes the following amendments to the November Proposal:

“16.6(2) For the avoidance of doubt, a Training Bond can only be entered into between an employer (or prospective employer in the case of a pre-employment endorsement) and a pilot in respect of:

(a) Class and type rating training necessary to check to line and operate a particular aircraft, including the aircraft type for which the pilot was initially employed (including pre-employment training), subsequent type rating training for additional aircraft types and initial class and type rating training); and

(b) Change in grade Upgrade training (change in rank and/or status training).” (underlining added)

[52] Rex submits that the recast wording it proposes provides clarity that a training bond may be entered into by a prospective employer to enable it to operate as a condition of employment and in respect of all training necessary to check to line and operate a particular aircraft.

[53] In reply submissions, RAAA maintains its support for the November Proposal as its primary position but supports the amendment to clause 13.6(2)(b) proposed by Rex in the event its primary position to incorporate the November Proposal is not accepted by the Full Bench. 30

[54] AFAP opposes the amendments to clause 13.6(2) of the November Proposal advanced by Rex and Qantas. AFAP submits that “downgrade” training should not be included in the clause and argues that there is no rationale consistent with the modern awards objective for a training bond for downgrade training. AFAP further submits that Rex offers no explanation of how a clause with the breadth it seeks furthers the modern awards objective.

[55] Alliance similarly opposes the proposed amendments to the clause, submitting, as noted earlier, the terms of the November Proposal reflect the breadth of operators in the industry and sufficiently achieve the minimum safety net objectives of award provisions without being overly descriptive. 31

Consideration - included training

[56] Having regard to the submissions and the benefits of a training bond we are of the view that the amendments proposed by Rex and Qantas should be rejected. We have determined that we will insert the terms of clause 13.6(2) of the November Proposal into the Air Pilots Award because we are satisfied that it sufficiently addresses fairness criteria as between a pilot and his or her employer.

Included costs

[57] During the hearing on 12 November 2019, the parties were asked to consider and propose a definition of the “actual cost of training”. In submissions, a dispute arose in respect of whether to define actual costs at all, and what should be included in any definition.

[58] In paragraph 17 of its submissions dated 18 December 2019, Rex submitted as follows: 32

“The AFAP, Alliance and RAAA proposal provides that the training bond amount cannot exceed 50% of the actual cost of the training, and that:

16.6(3) For the purpose of clause 16.1(1)(D), the “actual cost of the training” means all direct costs to the organisation associated with, or in connection with, providing a pilot with the training the subject of the bond being:

•  Operation [sic] costs of flying the aircraft in non-revenue operations

•  External training provider costs

•  cost [sic] of simulator and other training devices

•  Ground school training costs

•  Facility hire costs

•  Administrative costs of collating the required documentation to meet CASA regulations

•  Cost of materials (operational documentation and devices) provided to the trainee” 33

[59] Qantas submits that any definition should include all direct costs of training incurred by the employer in providing training. Qantas submits that the definition should be non-exhaustive, noting that the cost varies depending on the type and duration of the training and can also vary over time. Qantas submits that such an approach is consistent with the definition of “actual cost of training” developed as a policy of the Office of the Employment Advocate in December 2005. 34 Qantas proposes the following definition:

“13.6(3) For the purposes of clause 13.6(1)(d), the “actual cost of the training” means all direct costs to the organisation associated with, or in connection with, providing a pilot with the training the subject of the bond, including:

•  Operational costs of flying the aircraft in non-revenue operations

•  Internal and external training provider costs

•  Cost of simulator and other training devices

•  Ground school training costs

•  Facility hire costs

•  Personnel related costs for the trainee while undertaking full-time training

•  Administrative costs of collating the required documentation to meet CASA regulations

•  Cost of materials (operational documentation and devices) provided to the trainee.” 35

[60] Rex submits the definition of “actual cost of training” should include all direct and indirect costs to the organisation associated with or in connection with the training. Rex contends that the entirety of costs included during a pilot’s training period are to enable a pilot to become a productive employee no longer operating under training or supervision. Rex further submits that matters listed in the definition should not be exhaustive as such matters should “represent the costs that can be included in a training bond”. 36

[61] Rex submits a sub-clause defining “the actual costs of training” should be included, which would read:

“16.6(3) For the purposes of clause 16.6(1)(D), the “actual cost of the training” means all direct and indirect costs to the organisation associated with, or in connection with, providing a pilot with the training the subject of the bond being including but not limited to (where applicable) the following:

A. Operational costs of flying the aircraft in non revenue operations

B. Cost of providing a trainer including checking personnel

C. External training provider costs

D. Cost of simulator and other training devices

E. Ground school training costs

F. Facility hire costs

G. Personnel related costs for the trainee and trainer/s such as the cost of remuneration, travel, accommodation and/or meals, and any associated on-costs such as superannuation and payroll tax.

H. Administrative costs of, such as collating the required documentation to meet CASA regulations

I. Cost of materials (operational documentation and devices) provided to the trainee

J. Provision of a safety pilot”

[62] Rex argues that many of the bonds currently being used and agreed to would not be permissible under the November Proposal due to the combination of a bond being allowed only in respect of 50 per cent of the costs and the costs being narrowly defined. For example, Rex submits that if the clause was approved in terms of the November Proposal, the enterprise agreement training clauses entered into by airlines such as Rex would be unlikely to pass the better off overall test (BOOT).

[63] Rex submits that under the November Proposal, Rex’s maximum recoverable bond amount would be approximately $11,000 as the “direct costs” associated with training are estimated at $22,000 per pilot. However, operators within its group also incur “indirect costs” estimated at $6,100 and administrative and operational costs estimated at $1,300. 37

[64] Rex states that attrition rates remain a significant issue under its current bonds, with a pilot attrition rate of 29.1 per cent in the 2017/18 financial year. Rex argues that any decrease in the training bond amount will likely result in an increase in attrition.

[65] AFAP submits that a definition of “actual costs” should be included in the clause. AFAP comments that there is significant scope for dispute regarding the meaning of “actual costs”, including whether it includes indirect costs in addition to direct costs and what costs fall within those descriptors. AFAP submits this ambiguity creates risks of disputation and does not promote the modern awards objectives.

[66] AFAP also submits that only direct costs should be included in the clause and that these should be clearly defined in the terms of any award provision. 38 AFAP submits these costs represent a fair and reasonable description of the costs likely to be expended by an employer and any further or additional costs can be a subject of bargaining. AFAP argues that expanding the clause beyond the proposal would confer a substantial benefit on the employer without any commensurate benefit to the employee.

[67] AFAP submits that, when determining the terms of any training bond, the Commission should bear in mind that the difficulty in negotiating an enterprise agreement containing a training bond clause that meets the BOOT is an intended feature of the statutory scheme. In light of this, AFAP state there should not be an amendment to the award conferring a substantial benefit to employers without providing a counterbalancing benefit to employees without clearly articulated and evidence based reasons.

[68] AFAP submits that the prevalence of training bond clauses in enterprise agreements evidences their value to employers (as a tool for securing ongoing service) and employees (as a tool for negotiating above-award terms and conditions). AFAP argues that their omission from the award therefore promotes the modern awards objective of encouraging enterprise bargaining. AFAP submits that including a term wider than the November Proposal would further reduce employees’ minimum award entitlements, confer a substantial benefit on employers and be inimical to enterprise bargaining. 39

[69] AFAP also rejects Rex’s submission that existing bonds would not be permissible under the November Proposal, arguing that such bonds would remain permissible as part of enterprise agreements that meet the BOOT.

[70] In reply submissions, and in the event its primary submission in support of the November Proposal is not accepted, RAAA supports, as a secondary position, the definition of actual costs proposed by Rex 40 and provides several additional reasons for this support. RAAA submits Rex’s definition is illustrative rather than prescriptive, providing guidance for what constitutes a training cost without creating a closed category. RAAA argues that its operator members adapt training practices according to business needs and regulatory requirements and the strict limitations of what is and is not a “training cost” as proposed by AFAP is likely to cause difficulties for small operators.

[71] RAAA submits that limiting bondable costs to direct costs is necessarily uncertain, as it is unclear what distinction exists between direct and indirect costs. RAAA also objects to the exclusion of the costs of “providing a trainer” and “travel, accommodation, amenity and remuneration costs of the trainer and the trainee”.

[72] RAAA states that AFAP’s proposal to limit bondable costs did not form part of earlier negotiations. RAAA submits that its agreement to a 50 per cent cap on bondable costs was made on the basis the clause did not contain limitations on actual cost (of a type advanced by AFAP subsequent to the November Proposal). 41

[73] In reply submissions, Alliance submits that the training bond clause should remain in the form of the November Proposal (as tendered in the Full Bench proceedings and which Alliance otherwise attached to its submissions for reference). Alliance submits that the November Proposal sufficiently achieves the minimum safety net objectives of the award without being overly descriptive. 42 The November Proposal, it may be noted, does not contain a definition of the “actual cost of training”. As to that, in its further submission, Alliance “reaffirms” its position that the training bond clause should remain in the form of the November Proposal (subject only to its more-recently proposed amendment in respect of clause 13.6(1)H as to when an amount may not be recovered).43 The reiteration by Alliance of its position in such respects is advanced on the basis that the November Proposal “has sufficient clarity, whilst not restricting the variety of aviation operators in the industry and the engagement of their pilots for training.”

Consideration - included costs

[74] We consider that it is not practicable to have a definition of the actual cost of training that applies universally. In such respects, we note also that the award variation we will implement contains a number of provisions which might be described as being protective in nature – including the requirement for a signed written agreement prior to the commencement of training. We also do not consider it is necessary to have such a definition within the training bond clause because it is not necessary to achieve the modern awards objective.

Cap on training costs

[75] In reply submissions, AFAP submits that any clause inserted into the award should “hard cap” the training at a fixed amount. AFAP contends that this cap should take the form of “50% of actual costs or an agreed value (which may vary by type), whichever is lower.”

[76] AFAP submits such a cap is an important fetter on the power of an employer to determine training costs. AFAP states employees are particularly vulnerable with respect to training instruments such as training bonds as they have no control over the manner or form of training, the method by which it is delivered or whether the costs are reasonable and proportionate. AFAP argues the inclusion of a cap acts “as a bulwark against exploitation and unfair terms”, furthers the minimum wage objective, promotes enterprise bargaining, and assists in ensuring the award provides a fair and reasonable minimum standard for employees. AFAP acknowledges this submission represents a change to its earlier agreement with Alliance and RAAA as set out in the November Proposal.

[77] The proposal of AFAP concerning the hard cap taking the form of whichever is the lower of 50 per cent of actual costs or an agreed value (which may vary by type), is objected to by RAAA. 44

[78] For the reasons set out in its submissions of 18 December 2019, Rex submits that an airline should be able to implement a bond in respect of all costs associated with a pilot’s training, as there is “no good reason … to impose any further financial limit on what costs might be agreed” to be covered by a bond by setting an agreed value. 45 Rex further submits that such an approach effectively would apply a lower cap than otherwise would apply (depending on the conclusions of the Full Bench concerning the various proposals) – and, moreover, that such an approach would be impracticable. Rex’s February 2020 submissions exampled a number of scenarios in such respects, including hypothetical circumstances whereby the “actual cost” of training could be greatly impacted by altered circumstances such as an overseas venue as the location for simulator training for particular types of aircraft.

[79] Rex further elaborates its submissions as follows:

“In order to set an accurate agreed value, the Commission would need to engage not only in the lengthy and complex task of considering every possible type of training across every existing type of aircraft in order to ascribe a dollar figure, but to also consider possibly constantly changing elements such as operation costs associated with flying aircraft in nonrevenue operations (such as fuel prices and wages of other pilots), external training provider costs, facility hire costs and the like which are impacted by external factors such as fuel prices, and fees set by external companies. Such calculations have the potential to almost immediately become obsolete/outdated and would then remain so until the next 4 yearly review.”

[80] In its support of the Operators’ Recovery Proposal, Qantas submits that the earlier agreed drafting of clause 13.6(1)D of the November Proposal “already represents a significant cap on the amount of a training bond”, namely 50 per cent of the actual cost of training. 46 Qantas adds that if parties wish to agree on a “bespoke training bond amount” that is “more appropriately achieved through enterprise bargaining”.

Consideration - cap on training costs

[81] Conformably with our conclusions that it is not practicable to have a definition of the actual cost of training that applies universally and it is not necessary to have such a definition within the training bond clause because it is not necessary to achieve the modern awards objective, we are not persuaded it would be appropriate to include the amendments proposed by AFAP as they concern, directly or indirectly, reworking the proposed wording of clause 13.6(1)D of the November Proposal.

Conclusion

[82] We propose to insert a training bond clause into the Air Pilots Award in the terms set out in the November Proposal, save for the amendment to clause 13.6(1)E (or clause 16.6(a)(v)) proposed by Rex, the amendment to clause 13.6(1)H (or clause 16.6(a)(viii)) proposed by AFAP, and our associated amendment to clause 13.6(1)G (or clause 16.6(a)(vii)); and some other minor recasting of a typographical nature. While the November Proposal, as noted earlier, was cast in terms of the exposure draft’s clause 13, the clause will be inserted in clause 16 of the current award as follows:

“16.6 Training bonds

(a) An employer and a pilot may, by agreement, enter into a training bond whereby the costs of training which have been or are to be borne by the employer may be recovered from the pilot if the pilot ceases to be employed by the employer within a period of time agreed between the pilot and the employer, subject to the following:

(i) The training bond must be agreed between the employer and an individual pilot.

(ii) The training bond must be in writing, specify the amount of the bond, and be signed by the pilot prior to commencing training.

(iii) The maximum term of the training bond will be two (2) years for piston engine/turbo prop aircraft and three (3) years for jet aircraft.

(iv) The training bond amount cannot exceed fifty per cent (50%) of the actual cost of the training.

(v) The training bond amount reduces on a monthly pro rata basis over the term of the training bond when the pilot successfully checks to line.

(vi) A pilot can be subject only to one training bond at a time. Where a pilot is subject to one training bond, and subsequently enters into another, the bonds are not cumulative and the highest value training bond will apply.

(vii) The employer can recover an amount payable under a training bond only where the pilot resigns, or, subject to the provisions of subclause (viii) of this clause, the pilot’s employment is terminated for serious misconduct.

(viii) No amount can be recovered in the case of redundancy, loss of medical licence by the pilot, termination of employment by the employer (except where the termination is because of serious misconduct and there is no later finding by a court or tribunal, or acceptance by the employer, that the employee did not engage in the serious misconduct on which the termination was based) or where the pilot fails the training course.

(ix) A training bond cannot be entered into in circumstances where an employer directs a pilot to undertake training.

(b) For the avoidance of doubt, a training bond can be entered into between an employer and a pilot only in respect of:

(i) class and type rating training necessary to operate a particular aircraft, including the aircraft type for which the pilot was initially employed (including pre-employment training and initial class and type rating training); and

(ii) upgrade training (change in rank and status training).”

[83] A determination giving effect to our conclusions issues in conjunction with this decision.

VICE PRESIDENT

Appearances:

S Lutton and A Molnar for the Australian Federation of Air Pilots.

L Saunders, K Nelson and J Andrews for the Regional Aviation Association of Australia Limited.

D Chin and D Diggins for Alliance Airlines Pty Ltd.

D Trindade for the Regional Express group of companies.

K Srdanovic and L Gray for the Qantas group of companies.

Hearing details:

2019.
Sydney:
November 12, 13

Appearances:

A Molnar and S Kelly for the Australian Federation of Air Pilots.

B Martin and J Andrews for the Regional Aviation Association of Australia Limited.

J Hignett for Alliance Airlines Pty Ltd.

D Trindade for the Regional Express group of companies.

K Srdanovic for the Qantas group of companies.

Hearing details:

2020.
Sydney:
February 5

Printed by authority of the Commonwealth Government Printer

<PR716764>

 1   [2018] FWC 6107 at [3] and Attachment A.

 2   Directions, 4 December 2019.

 3   Qantas submissions, 11 December 2019; Qantas submission 18 December 2019.

 4   Rex submission, 18 December 2019.

 5   Alliance submission, 20 December 2019.

 6   RAAA submission in reply, 23 December 2019.

 7   AFAP submission, 27 December 2019.

 8   AFAP submission, 6 February 2020.

 9   Alliance submission, 7 February 2020.

 10   RAAA submission, 10 February 2020.

 11   Qantas submission, 10 February 2020.

 12   Rex submission, 10 February 2020.

 13   Preliminary Jurisdictional Issues [2014] FWCFB 1788 at [24].

 14   Shop, Distributive and Allied Employees Association v National Retail Association (No 2) (2012) 205 FCR 227 at [35].

 15   [2017] FWCFB 1001 at [128]; Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [41]–[44].

 16   [2018] FWCFB 3500 at [21]-[24].

 17   Edwards v Giudice (1999) 94 FCR 561 at [5]; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121 at [81]-[84]; National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [56].

 18   Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [33].

 19   National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [105]-[106].

 20   See National Retail Association v Fair Work Commission (2014) 225 FCR 154 at [109]-[110]; albeit the Court was considering a different statutory context, this observation is applicable to the Commission’s task in the Review.

 21   ibid at [28]-[29].

 22   Shop, Distributive and Allied Employees Association v The Australian Industry Group [2017] FCAFC 161 at [48].

 23     See generally: Shop, Distributive and Allied Employees Association v National Retail Association (No.2) (2012) 205 FCR 227.

 24   ibid at [46].

 25   Alliance submission, 20 December 2019 at Attachment A.

 26   Rex submission, 10 February 2020 at [15].

 27   RAAA submission in reply, 23 December 2019 at [5].

 28   Alliance submission, 20 December 2019.

 29   Rex submission, 18 December 2019 at [15] and Qantas submission 18 December 2019.

 30   RAAA submission in reply, 23 December 2019 at [5].

 31   Alliance submission, 20 December 2019.

 32   Note: Although Rex’s submission included the quoted text within this paragraph of our decision, the formal submissions before the Full Bench made by AFAP, Alliance and RAAA did not, in fact, advance any such proposed wording for clause 16.6(3). The derivation of the clause asserted by Rex to have been agreed between those parties is unclear.

 33   Rex submission, 18 December 2019 at para 17.

 34   Qantas submission 18 December 2019 at [19] and Attachment B.

 35   Qantas submission 18 December 2019 at [7].

 36   Rex submission, 18 December 2019 at para 20. Underlining in original.

 37   Witness Statement of Christopher Hine, filed on behalf of Rex, 29 March 2019 at [27].

 38   AFAP submission, 27 December 2019 at [25].

 39   AFAP submission, 27 December 2019 at [27].

 40   RAAA submission in reply, 23 December 2019 at [6]-[13].

 41   RAAA submission in reply, 23 December 2019 at [14].

 42   Alliance submission, 20 December 2019.

 43   Alliance submission, 10 February 2020.

 44   RAAA submission, 10 February 2020.

 45   Rex submission, 10 February 2020.

 46   Qantas submission, 10 February 2020.