Air NZ wins Supreme Court fight with pilots union over collective agreements

Friday 14th July 2017

Air New Zealand has won a dispute with the country's largest pilots' union, which it said had been attempting to cherry-pick the good parts of other groups' collective employment agreements without having to accept the bad.

Four of the Supreme Court's bench of five judges have today ruled in favour of the national carrier, dismissing an appeal by the New Zealand Air Line Pilots Association (NZALPA). Justices Terence Arnold, Mark O'Regan, Ellen France and William Young dismissed the appeal, while Justice Susan Glazebrook would have allowed it.

The dispute centred on one clause in NZALPA's collective agreement, described as a ratchet clause, where the parties agree that “any agreement entered into by the company with any other pilot employee group which is more favourable than provided for in this agreement will be passed on to pilots covered by this agreement."

The union invoked this clause when they wanted to claim a more favourable pay rise for pilots of Boeing 747s and second officers after Air New Zealand had agreed with the Federation of Air New Zealand Pilots (FANZP), a newer and smaller union, to provide a pay rise of 13 percent, more than the NZALPA collective agreement provided for. Air NZ argued that each of the terms agreed to in the FANZP collective was conditional on the total deal being struck, meaning NZALPA would have to take the concessions made by the other union to get the benefits they desired.

The Employments Relations Authority agreed with Air NZ, while the Employment Court in 2014 found in favour of NZALPA. The airline then sought to appeal the Employment Court's decision in the Court of Appeal, which the court allowed, but which NZALPA disputed as it said the appeal court doesn't have the jurisdiction to hear it. The Supreme Court ruling today affirms that the Court of Appeal has jurisdiction.

The NZALPA appeal was based on the Employment Relations Act, which says the appeal court can't hear an appeal on the construction of a collective employment agreement. The Supreme Court said the dispute was a matter of interpretive principle which went beyond the construction of the particular collective agreement, and the majority found the Employment Court judge had wrongly taken into account negotiations between the two parties and their intentions.

The Court of Appeal reinstated the ERA's finding in favour of Air NZ. Today's Supreme Court funding would normally mean the case would be sent back to the Employment Court, but it hasn't been in this case, because the two groups hadn't pursued arguments over the possible meanings of the clause in NZALPA's collective agreement and because the appeal had only been approved on the question of jurisdiction.

The majority judgment stressed that, while its finding meant that the NZALPA claim has failed, it had only found that the union's interpretation was incorrect, not that Air New Zealand's interpretation was correct.

Justice Glazebrook, in her dissenting ruling, said the appeal court hadn't identified any errors of interpretive principle by the Employment Court, and even if it had, the case should have been remitted back to the Employment Court to determine the proper interpretation of NZALPA's contract.

(BusinessDesk)

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