Air New Zealand cabin crew given option of furlough

Some of the crew have been given the option to go on furlough.
Some of the crew have been given the option to go on furlough. Photo credit: Getty.

Air New Zealand is looking to furlough some of its cabin crew for three years or longer with the incentive of being rehired first, if and when the airline takes off after a massive downturn following the COVID-19 pandemic.

The company is in the process of laying off more than 1300 cabin crew, 950 of them international, but is offering some of them the opportunity to go on furlough - where their employment contract with the company is basically frozen.

Workers who choose that option do not get a redundancy payment up front, but will be among the first to be hired back if the airline takes off again.

But some cabin crew feel they are being held to ransom, while the union says there could be a simpler, fairer way.

"Whether or not they go for it really just depends on the details of the scheme itself," E tū union's aviation spokesperson Savage told Checkpoint.

An Air New Zealand document – currently under negotiation – was revealed to Checkpoint. It details the scheme.

The airline has collected more than $70 million dollars in wage subsidies, and workers going into hibernation will be paid any of that subsidy attached to their jobs. They work out a paid notice period and after that they are on furlough.

Staff must exhaust any and all existing leave at the start. The pay stops after that.

The scheme currently has no redundancy payment.

"The total period of furlough is up to three years from the end of the notice period," the document said.

"The furlough period may be extended by agreement between Air New Zealand and the employee."

The document shows the furlough is three years, and potentially longer. That is longer than the two years Air New Zealand is currently predicting it will be before the airline can hope to be back at 70 percent of its pre-COVID-19 long-haul business.

"The employee's employment with Air New Zealand is in effect frozen, so they will not accrue further entitlements under their employment agreement such as annual leave, annual pay steps, sick leave, superannuation."  

Air New Zealand will count the time on furlough as continuous when it comes to calculating long service leave.

The hibernating crew can quit the agreement at any time. No notice is required, and they will be paid redundancy calculated prior to furlough.  

Air New Zealand can also quit the agreement during or at the end of the furlough period, if its trajectory is not upwards.

E tū's union's head of aviation Savage said some people simply could not afford to wait.

"Not everyone is in a position where they can forgo a redundancy cheque, and there are many people who don't think it is really worth waiting, given that the airline - particularly for international cabin crew - is saying that it may be a number of years before they are able to rehire people."

Air New Zealand's furlough plan said: "Recall opportunities will be given to those on furlough before external offers of employment are made, including to redundant former employees and in accordance with the recall list."

For some crews, their spot on the recall list is based on length of service with the company. But there are different crew contracts, so conditions vary too.

Some cabin crew are not happy with the prospect of preferential rehiring, based on whether they take furlough.

"Redundancy payments are there for a reason and must not be held ransom to save money for the company," one staff member told Checkpoint.

"The company could develop a scheme that simply said 'we will prioritise all ex-employees and we will make sure that those people have the most simplest way of coming back to Air New Zealand because we value them as employees," Savage said.

Furloughed staff taken back during any reboot will return to usual hours, on the terms and conditions of their employment agreement pre-COVID-19, or the collective contract if they are party to it.

Cabin crew on frozen contracts can still access staff travel, and they are able to get another job while hibernating.

But they are not allowed to work for another airline or an Air New Zealand competitor.

"At the moment the company is driven largely by the need for money," Savage said.

"As one executive said to me, 'cash is king', and what we are seeing at Air New Zealand is a company that is hell-bent on saving as much money as they can, on getting terms and conditions that suit them, arrangements that suit them, and that is the problem we face at the moment."

Cabin crew told Checkpoint redundancy notices have been served, but the union says it could be several weeks before the details are ironed out.