Fiji Airline Pilots Association v Air Pacific Ltd [2007] FJAT 66; Award 68 of 2007 (24 September 2007)

THE REPUBLIC OF THE FIJI ISLANDS

NO 68 OF 2007

AWARD OF
THE ARBITRATION TRIBUNAL

IN THE DISPUTE BETWEEN

FIJI AIRLINE PILOTS ASSOCIATION

AND

AIR PACIFIC LTD

Association: Mr P Rae
Air Pacific: Mr N Baines

DECISION

This is a dispute between Fiji Airline Pilots’ Association (the Union) and Air Pacific Ltd (the Employer) concerning clause 3.3 of the Collective Agreement.

A trade dispute was reported by the Union on 11 February 2005. The report was accepted on 8 March 2005 by the Chief Executive Officer who referred the Dispute to conciliation.

As the Dispute was not settled the parties agreed to refer the Dispute to voluntary arbitration. The Minister then authorized the Chief Executive Officer to refer the Dispute to an Arbitration Tribunal for settlement pursuant to section 6 (1) of the Trade Disputes Act Cap 97.

The Dispute was referred to the Permanent Arbitrator on 19 April 2005 with the following terms of reference:

"- - - for settlement over the employer’s failure to hold consultations with the Association in accordance with clause 3.3 of the collective agreement prior to the appointment of the contract pilots. The Association views the Company’s action to be in breach of clause 3.3 of the collective agreement and seeks a declaration that those appointments are null and void."

The Dispute was listed for a preliminary hearing on 29 April 2005. On that day the parties were directed to file preliminary submissions within 21 days and the Dispute was listed for mention on 27 May 2005.

The Employer filed its preliminary submissions on 25 May and the Union did likewise on 26 May 2005.

The Dispute was then listed for hearing on 22 August 2005. However, by letter dated 14 July 2005, the Union applied for the hearing date to be vacated. The basis of the application was that the instructed legal practitioners were not available on that day. The Dispute was listed for mention on 29 July 2005. On that day the Union confirmed its application which was not opposed.

As a result the Tribunal vacated the hearing date and the Dispute was refixed for hearing on 7 October 2005.

Due to unforeseen circumstances it was necessary for the Tribunal to vacate that hearing date and as a result the Dispute was listed for mention on 30 September 2005. The Dispute was refixed for hearing on 28 November 2005.

By letter dated 22 November 2005 the legal practitioner for the Employer applied for the hearing date to be vacated. The immediate reason for the application was that the legal practitioner appearing for the Employer was ill. The parties also wanted some further time to discuss the issues raised by the Reference.

The Dispute was listed for mention on 25 November 2005, 27 January, 24 February, 28 April, 23 June, 1 September, 27 October, 24 November 2006, 19 January, 23 February, 23 March, 27 April, 25 May, 29 June and 6 July 2007. All these relisted dates were at the request of one or both of the parties.

On 6 July 2007 the Tribunal directed the parties to file a signed statement of agreed facts. This was done on 26 July 2007. The parties then appeared before the Tribunal on 17 August 2007 to present final oral submissions.

The signed Statement of Agreed Facts set out the background to the Dispute.

The Employer has faced an ongoing shortage of national pilots and cannot maintain a full pilot roster using only national pilots. The current roster comprises about 109 aircraft movements a week.

As a result there are from time to time pilot shortages. The Employer meets the shortfall in pilots by leasing pilots from two crew leasing companies. These companies are Riskworth Aviation Limited and 1AC Pacific Limited. The Employer has utilized this arrangement since 1989. The Employer has entered into a contract with each of the companies for the supply of pilots for a fee which is payable to the companies and is based on the number of duty days each leased pilot performs. The leased pilots wear the Employer’s uniform and insignia and are treated as the Employer’s pilots by the Immigration Ministry. The Employer is required to give six weeks notice to the companies if one of their leased pilots is no longer required.

The Dispute is essentially concerned with this arrangement and whether the Employer is in breach of clauses 3.3 of the Agreement. The Collective Agreement was dated 18 September 2001.

Clause 3.3 states:

"Prior to the appointment of a Contact Pilot by the Company, consultation with the Association on the terms of the Contract to be offered and accepted will take place."

The issue is therefore a narrow one and may be stated as whether a pilot leased by the Employer from one of the leasing companies was/is a contract pilot for the purposes of clause 3.3 of the Collective Agreement. If such a pilot is regarded as a contract pilot then the Employer is required to consult with the Union and by not doing so would be in breach of clause 3.3.

It is important to note that contract pilot is defined in clause 2 (32) of the Agreement as:

"Pilot, contract means an expatriate Pilot employed by the Company on contract for a specified period".

However there is no definition of leased pilot. If the leased pilots are contract pilots then the provisions of the Collective Agreement do not apply to those pilots by virtue of clause 3.1. The Employer, though, must consult with the Union prior to the appointment of such pilots. If the leased pilots are not contract pilots then clause 3.3 does not apply and it would also appear on a proper reading of clause 3.1 that they fall outside the scope of the Collective Agreement altogether. Clause 3.1 states:

"This Agreement shall be binding on Air Pacific Limited and the Fiji Airline Pilots’ Association in respect of Pilots who are employed by the Company and replaces all previous conditions of employment whether written or implied except that it shall not apply to Pilots in the following categories:

(i) Executive Pilots

(ii) Contract Pilots

(iii) Cadet Pilots

The principles to be applied in the interpretation of a Collective Agreement were discussed by the Fiji Court of Appeal in Hassan Din and Another –v- Westpac Banking Corporation (Unreported Civil Appeal No 66 of 2003 delivered 26 November 2004).

Commencing at paragraph 25, the Court observed:

"- - - the evidence relating to the negotiations between (the parties) that led to the Collective Agreement should have been excluded as inadmissible. What the parties may have said or done or offered or rejected in the course of those negotiations is irrelevant when determining the meaning to be attributed to the clause in question. Similarly, what the parties say they intended the clause to mean is inadmissible and irrelevant.

- - The interpretation of the clause is to be approached objectively. It is the meaning that the clause would convey to a reasonable person having the relevant background knowledge that is to be determined, not the meaning that the parties to the agreement thought the clause would have.

It follows from this analysis that any belief the parties may have had about how the clause should be interpreted is irrelevant. The parties agreed that the clause should be included in the collective agreement that they signed."

The Tribunal has concluded that clause 3.3 means to a reasonable person with the relevant background knowledge that consultation was required between the Employer and the Union in relation to the terms of the contract to be offered to an expatriate pilot who was to be employed by the Employer for a specified period.

In this case, there is no contract between the Employer and the pilot. There is a leasing agreement between the leasing company and the Employer. Although the Employer may select the pilots whose services it wishes to utilize, the fact remains that there is no contract between the employer and the pilot nor, on the material, does it appear that the services of any particular leased pilot are acquired for a specified period.

The position here is that there is a more complex situation than one finds in the normal employment relationship. There are three parties involved in what is sometimes termed a "triangular" employment relationship.

Such a relationship exists here because the employees (the pilots) are employed by the provider (the leasing companies) to perform work for the third party (the Employer in this Dispute) to whom their employer (the leasing companies) provide labour (the pilots).

Although it is well outside the scope of the reference, such an arrangement involves the leased pilots interacting with two entities, each of whom assumes certain functions of a traditional employer. Functions such assigning tasks, providing the means to perform them, giving instructions and supervising their performance, paying wages, assuming risks and terminating employment relationships are assumed separately or jointly by both the Employer and the leasing companies.

On the material which has been placed before it, the Tribunal has concluded that the pilots are employed by the leasing companies which have entered into agreements with the Employer whereby pilots selected from a pool by the Employer are leased to the Employer. The Employer does not pay the pilots. The Employer pays a fee to the leasing companies pursuant to a leasing agreement. The contract of service is between the leasing company and the pilots.

As a consequence the Employer is not required under clause 3.3 to consult with the Union before selecting a pilot whose services are to be utilized pursuant to a leasing agreement with the leasing company.

The Tribunal notes that the Statement of Agreed Facts signed by the parties indicates that the practice has been in place since 1989. The current Collective Agreement was signed on 18 September 2001. The Union knew or ought to have known about the leasing arrangement at that time. The Collective Agreement does not deal with pilots whose services are provided through the leasing agreement with the leasing companies.

The Union will need to consider a variation to the Collective Agreement by amending the definition of contract pilot or amending clause 3.3.

AWARD

The Employer is not in breach of clause 3.3 when it acquires the services of a leased pilot without prior consultation with the Union.

DATED at Suva this 24 day of September 2007.

Mr. W. D. Calanchini
ARBITRATION TRIBUNAL