Kwik Air Limited (“K”) is an Australian airline that has been greatly impacted by the strains of the recession, ensuing management to request its 200 pilots to voluntarily accept a reduction in pay. This was refused by the pilots, to overcome this issue; management held a board meeting to discuss possible strategies from which it was elected that a new company would be incorporated in New Zealand as a wholly owned subsidiary under Xpress Air Limited (“X”).
Xpress has 4 directors, all of which were from Kwik’s board of 6. It was agreed that all the profits of Xpress would be distributed as dividends back to Kwik. The restructure of Kwik resulted in the redundancy for all its pilots, however a new employment opportunity was offered by Xpress on a lesser wage and employment entitlement package for the same work as before. Given the pilots are employed and work in Australia; they are subject to the Australian …show more content…
It is necessary to determine whether or not Xpress was created in own right and whether the subsidiary is not to be deliberated as separate legal entity within the corporate group. The Australian and International Pilots Association v Qantas Airways and Jet Connect case is a key case in shaping a conclusion for this case given the strikingly similar facts and issues. In this case, the association also wishes to take legal action against Qantas for the considerably inferior employment entitlements received by the Jet Connect pilots against those provided by the parent Qantas. Also Qantas provided Jet Connect with planes as capital and responsibility for a number of flight routes for which it was no longer running. The court held that the Jet Connect pilots although employed under the same corporate group, were separate legal entities and hence were not entitled to receive the same contractual employment