Two Jetstar businesses have copped fines totalling $90,000 for unlawfully making cadet pilots pay for training costs and deducting their wages, despite being advised the deductions were illegal.
The Federal Court in Sydney has fined Jetstar Group Pty Ltd and Jetstar Airways Pty Ltd $45,000 each over the matter, after both companies admitted they breached the Fair Work Act.
The case, initiated by the Fair Work Ombudsman, involved the treatment of six pilots who were recruited between October 2010 and January 2011.
The pilots were employed on New Zealand individual contracts through a New Zealand-based Jetstar subsidiary while they underwent six months of training.
When training was completed, the pilots’ employment contracts were transferred to Australian business Jetstar Group.
The court found that Jetstar pursued plans to recover training costs from the pilots, despite the fact this was illegal according to the Australia’s Air Pilots Award 2010.
Jetstar deducted $17,500 in total from the trainees’ wages between June and September 2011.
Following a legal challenge by the Australian Federation of Air Pilots, this was stopped and the money was returned to them in November 2011.
Justice Robert Buchanan said Jetstar appeared to show no remorse for the unlawful deductions.
“The respondents used their vastly superior bargaining power to effectively brush aside any personal resistance by cadet pilots, not desisting until the AFAP stepped in,” he said.
“The conduct of Jetstar Group and Jetstar Airways was calculated solely by reference to their assessment of their own commercial interests and their determination that the cadet pilots should be ultimately responsible for the cost of their training.”
The Judge said the two companies had done this despite knowing it was contrary to the Award and the Fair Work Act. He said the penalty was to show that this was not acceptable behaviour.
Jetstar Australia and New Zealand chief executive David Hall said that while the airline accepted responsibility for the breaches, it was “very proud” of its pilot training program.
“More than 100 cadets have participated in the program which has been successful in providing opportunities for Australians to begin their flying careers and allow them to work in other Jetstar branded airlines,” he said.
“Jetstar has more than 3000 team members across Australia and we take our responsibilities as an employer of choice seriously.”
Swaab Attorneys employment partner Warwick Ryan says the fine is fair for a breach of an Award, but the amount won’t do a great6 deal to impact a big company like Jetstar.
“One of the functions of implementing a fine is the deterrent to businesses not to do it again,” he says.
“I have seen businesses such as cafes and restaurants get fines in the vicinity of $40,000 or $50,000 for Award breaches…it is a much bigger impact on their business.”
He says the Jetstar situation is unusual, as businesses do not often deduct staff for training costs. However he says the breadth of reasons why businesses breach Award rules is vast.
Paying cash to staff so they can escape tax and trying to keep costs low to win contracts from competitors are two key reasons he has witnessed.
Melinda is a business writer and editor and helps companies to bring their brand stories to life through her small business, Oliver Content. Melinda was previously the content manager for KPMG Australia, an editor of SmartCompany, and spent many years as a journalist.
