Air New Zealand is appealing an Employment Court decision which it says lets the country's largest pilots' union cherry-pick the good parts of other collective employment agreements without having to accept the bad.

In the Court of Appeal yesterday, the national carrier sought to overturn a 2014 judgment in the Employment Court allowing the New Zealand Air Line Pilots Association (NZALPA) to take clauses from collective agreements Air New Zealand made with other unions, in line with NZALPA's interpretation of its own collective agreement with Air New Zealand.

Justices John Wild, Mark Cooper and Helen Winkelmann reserved their decision.

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The dispute centres 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.

The Employment Court's chief judge Graeme Colgan heard the original case, and found the ratchet clause was proposed to address the union's fears of shedding members to its rival. The judge interpreted the phrase "any agreement" in the NZALPA collective as encompassing both a collective agreement in total and its individual provisions.

Counsel for Air New Zealand, Julian Miles QC, yesterday argued that each of the terms agreed to in the rival FANZP collective agreement was conditional on the totality of the deal being struck, meaning NZALPA would have to take the concessions made by the other union to get the benefits they desired.

Miles said there had been specific concessions made by FANZP regarding pay rises for other pilots, without which the airline wouldn't have agreed to the pay rise which NZALPA wanted.

He was determined to find it constituent, and he was bound to find reasons why.

Rodney Harrison QC, counsel for NZALPA, reiterated the union's view that the clause was capable of more than one meaning, which would let the pilots' association ask for benefits from individual clauses, but that it would be highly impractical to have to identify burdens as well.

Harrison said witnesses examined for both sides during the Employment Court's hearing had said Air New Zealand was aware of NZALPA's desire to renegotiate stemming from concern about pay increases FANZP had achieved.

The lawyers also had to argue over the validity of the appeal, which the judges said was still "a live issue", despite the hearing being allowed.


Air New Zealand's counsel Miles said Judge Colgan had incorrectly applied the principles in the agreement, deciding to take NZALPA's view, and then using a "bizarre interpretation" to justify his ruling.

"Probably the judge, having determined the union's view was right, had to conclude somewhere that agreement meant constituent parts," Miles said. "He was determined to find it constituent, and he was bound to find reasons why."

Harrison, arguing for NZALPA, said the court could only hear an appeal if the judge used the wrong principle or wrong method of approach and that Air New Zealand's counsel simply disagreed that the disputed clause was capable of more than one meaning, which Judge Colgan had found in his judgment.

The Employment Court was entrusted with jurisdiction on contract matters, with the court regarded as having a skilled body of experts, Harrison said.