Australia's pilots will take on Qantas in court today in a battle over their award that could have implications for companies across the country who set up overseas subsidiaries in a bid to reduce wages.
The Australian and International Pilots Association claims the Qantas-owned subsidiary Jetconnect is a ''sham company'' set up by Qantas for the sole purpose of avoiding its obligations under the award, and the employment agreement it has with Qantas pilots.
Having initially been set up to undertake domestic flights within New Zealand, last June Qantas quietly gave Jetconnect responsibility for 133 flights a week between Australia and New Zealand.
The pilots say Jetconnect is effectively an operating division of Qantas - the New Zealander pilots wear Qantas uniforms, have Qantas staff numbers, and fly Qantas aircraft which travel routes determined by Qantas.
But the conditions of employment at Jetconnect are significantly inferior to those at Qantas.
Pilots are paid up to 33 per cent less and do not receive the same superannuation entitlements.
Qantas makes a double saving by using Jetconnect: paying less in pilots' wages and reducing the hours it has to give to pilots under the Qantas agreement.
''Our problem is that Jetconnect is for all intents and purposes part of an Australian company, but Qantas is bypassing the minimum Australian pilot's salary,'' the association president, Barry Jackson, said.
Qantas denies there is a direct link.
''Jetconnect is a New Zealand company operating in New Zealand with aircraft originating from New Zealand and using New Zealand staff,'' a spokesman said.
The pilots have asked the full bench of Fair Work Australia to vary the pilots' award so that it covers any wholly-owned subsidiary of Qantas, thus forcing the airline to pay the Jetconnect pilots Australian wages.
A decision in their favour would have significant implications for other Qantas subsidiaries such as Jetstar, as well as the broader Australian aviation sector.
It could also set a precedent for other companies that employ foreign workers who regularly move between Australia and overseas. The ACTU will today attempt to join the action on behalf of workers across the country who it says could be affected.
''This case may set a precedent on the use of artificial corporate arrangements to avoid award entitlements, and which precedent has the potential to affect the interests of all workers,'' the union said in its submission.
An industrial law expert, Andrew Gray from Mallesons Stephen Jacques, said that while the case was unlikely to have implications for companies that outsourced operations, such as call centres, it could set a precedent for other companies in the transport industry.
''I'm not aware of similar cases in the past where an Australian industrial award has been extended to apply to employees who are normally based in another country,'' Mr Gray said.
''It would be a significant development if that was to occur, particularly for corporations who might have employees who regularly work in different jurisdictions. That could particularly apply to transport companies.''
The Herald understands that should the pilots' action before the full bench of Fair Work Australia be unsuccessful , the association may consider taking industrial action.
''Obviously it's up to the members to decided on any future industrial action, but I'm not ruling out anything in the future,'' Mr Jackson said.