Virgin has become the first employer to test the Albanese government’s unilateral arbitration laws in a bid to end months of strikes at its profitable fly in, fly out service for the resources industry.
The airline’s West Australian-based Virgin Australia Regional Airline (VARA) has applied to the Fair Work Commission for an “intractable bargaining” declaration after more than two years of failed bargaining with licensed engineers over pay.
Virgin Australia is bracing for daily engineering strikes to start on Tuesday night. James Alcock
The application invokes Labor’s new Secure Jobs, Better Pay laws just weeks after they came into effect on June 6 to allow the FWC to determine parties’ bargaining claims.
But the Australian Licensed Aircraft Engineers’ Association, whose 43 members have been taking industrial action at VARA for the past six months, flagged it would strongly oppose the application.
“We believe Virgin group haven’t qualified under the new provisions of the Fair Work Act,” ALAEA federal secretary Steve Purvinas said.
“The Virgin group don’t understand industrial relations in this country. They’re taking directions from Bain [Capital] in Boston and don’t see Virgin as anything other than a bank they can sell for a huge margin. And we’re not going to let them.”
The airline’s attempt to short-circuit the WA dispute came as another 200 engineers at its main airline service were due to start indefinite work bans from Tuesday night in support of an inflation-matching 7.8 per cent pay rise.
Virgin Australia expects to make a profit in the 2023 financial year after losing about $2 billion in the previous 10 years prior to its administration. But it is still yet to meet performance targets.
A Virgin Australia spokeswoman said it was negotiating with the ALAEA for agreements at both VARA and Virgin Tech, which employs the main airline’s engineers, but that the former talks had gone on too long.
“We are working in good faith to finalise an agreement at Virgin Tech and are hopeful this can be achieved shortly,” she said.
“Unfortunately, at VARA, negotiations have become protracted, and we have sought the assistance of the Fair Work Commission to resolve this matter.”
Under the new laws, an FWC full bench can arbitrate claims at least nine months after bargaining starts as long as there has been conciliation, no prospect of agreement, and it is reasonable in all circumstances.
At the time, unions embraced the laws and it was employer groups who raised concerns that the reform would radically change enterprise bargaining by emboldening unions to make unreasonable demands and drag out negotiations.
VARA argues that since negotiations started in February 2021, it has participated in seven FWC conciliation conferences and put two different agreements to an employee vote without reaching a deal.
Meanwhile, its engineers had been implementing stoppages, overtime bans, night-shift bans and early day shift bans since February this year.
While Virgin Australia’s spokeswoman said that “there will be no disruption to aircraft maintenance or operations as a result of the planned industrial action” at VARA and Virgin Tech, the airline told the commission the VARA industrial action “has disrupted services to customers”.
“The industrial action has caused VARA significant costs and will continue to do so,” it said in submissions.
The airline had sought interim orders to suspend industrial action while FWC hears its application for an intractable bargaining declaration.
However, last week, commissioner Paul Schneider found suspension would be inappropriate and was not the intent of the new laws.
“It appears that due to the problematic state of bargaining, the protected industrial action is, as it is intended to be, one of the remaining few effective methods for the [Virgin’s] members to attempt to advance their positions in the hopes of resolving the outstanding disagreements,” he said.
ALAEA is seeking a 3 per cent pay rise each year going back to 2021. Mr Purvinas says VARA’s 14.75 per cent pay offer over the next four years failed to account for the past two years and amounted to a 2.5 per cent annual increase.
“VARA and the mines did not stop in COVID, and they are very profitable,” he said. “We don’t see any reason why workers who worked through it should not get a good pay rise.”
The FWC on Tuesday ordered VARA and ALAEA to file material ahead of a hearing on July 21.
Virgin has offered the Virgin Tech workers a 5 per cent a year increase, but the union argues it should be in line with the Consumer Price Index as of December, or 7.8 per cent.
Mr Purvinas said the union had agreed to offer its own “strike breakers” as part of the industrial action at both VARA and Virgin Tech – that is, workers who had normal days off at the time of the stoppage and who would work the shift on overtime pay.
However, he said Virgin Tech had so far not requested overtime work so argued the work bans would stop aircraft working overnight.
“Tomorrow it’s highly likely there won’t be enough serviceable aircraft and that will get worse throughout the day,” he said.
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