If you're not a national system employer, your employees do not have rights under the Fair Work Act 2009 (Cth)
The Federal Court of Australia (the Court) recently found that international cabin crew employees who were employed by foreign entities that worked on international Jetstar flights flying to and within Australia are not covered by the Fair Work Act 2009 (Cth) (the Act) and the Aircraft Cabin Crew Award 2010 (the Award).
Background
Jetstar used a combination of Australian and overseas residents as cabin crew on its aircraft for international services. Two foreign entities in Thailand and Singapore had arrangements with Jetstar to provide Jetstar with cabin crew (foreign cabin crew) from Thailand and Singapore. The foreign cabin crew would fly to and from Australia on Jetstar's international services. They also sometimes worked on flights between Australian cities as part of Jetstar's international operations.
Proceedings were brought by the Fair Work Ombudsman (the Ombudsman) on behalf of 8 foreign cabin crew employed by the foreign entities on the basis that they were underpaid as they were entitled to the benefits of the Award when they worked on flights between Australian cities. The foreign cabin crew worked exclusively for Jetstar and Jetstar undertook the rostering of those persons.
When the claim was brought, payment was sought only with respect to the work between the Australian cities. The Court was of the view that the work between the Australian cities formed part of the international operations and no distinction between the international leg and the local leg of the flight existed in the Award.
Findings
The Ombudsman argued the foreign entities were national system employers and the foreign cabin crew were national system employees as defined in the Act. As such, the Act and Award applied.
The Court rejected that argument and found that the foreign entities were not national system employers as they did not have an appropriate connection with Australia under the Act.
The Court found that the Act and awards apply to employment relationships rather than simply to the particular work or duties occurring in Australia. Therefore the employment relationship itself must sufficiently be connected with Australia. When that connection occurs the Act applies irrespective of where the duties might be performed.
The Court held:
"TET and Valuair [the foreign entities]are foreign corporations. Their cabin crew employees are not resident in Australia. The contracts of employment in the present case were made outside Australia and they are regulated by the laws and practices of either Singapore or Thailand. Payment of wages is made and tax, social security and other liabilities on both employer and employee are acquitted outside Australia. Tours of duty commence and finish at the home base outside Australia. The time on duty in Australia of any of the cabin crew represents only a small proportion of overall working time, and is transient.
It is, in my respectful view, incorrect to postulate that the contracts of employment, or the employment relationships, are in and of Australia in any respect. It is also incorrect to postulate that the Award operates on those (overseas) contracts of employment."
To find otherwise, would mean that the work of the foreign cabin crew done for the foreign entities even outside of Australia would be covered by the Act and the Award.
The Court found that the foreign entities had not contravened the Act or the Award. However the Court noted that if it had found to the contrary, in all probability Jetstar would have aided, abetted and been knowingly concerned in the contraventions contrary to section 550 of the Act.
Lessons
- Although the Act and awards are far reaching and in most instances their application is not in question, in circumstances where persons may be performing some work in AUstralia for a foreign entity, it will first be necessary to consider whether the foreign entity is a national system employer and the relevant employees performing the work are national system employee thereby being covered by the Act and potentially a modern award.
- Significant care should be taken by employers who are involved in similar business arrangements as it is difficult to displace the aiding and abetting provisions of the Act when there is a finding that the primary wrongdoer has contravened the Act.
If you would like more information about the case or the matter generally, please contact National Workplace Lawyers on +61 2 9233 3989.
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Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.
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