High Court confirms that Qantas’ decision to outsource ground handling was unlawful adverse action

The High Court of Australia (High Court) has recently dismissed an appeal of a decision of the Full Court of the Federal Court of Australia (Full Court) which found that a decision by Qantas Airways Limited (Qantas) to outsource the positions of approximately 2,000 ground handlers was unlawful adverse action taken for a prohibited reason.

In Qantas Airways v Transport Workers Union of Australia [2023] HCA 27, the High Court unanimously found that the Fair Work Act 2009 (Cth) (FW Act) prohibits an employer from taking adverse action against an employee if a substantive and operative reason for the taking of such action is to prevent the employee from exercising a future workplace right that they do not currently have.

Facts

On 30 November 2020, Qantas decided to outsource its ground handling services at 10 Australian airports (the Decision), which, at the time, were performed by employees of Qantas and its subsidiary, Qantas Ground Services Pty Ltd (Qantas Ground Services). The Decision led to the dismissal of some 2,000 ground handling employees (affected employees) throughout the course of 2021, which Qantas maintained was financially necessary considering the impact COVID-19 was having on its revenue at the time.

Before making the Decision, Qantas invited internal and external bids for the ground handling work. An internal bid was submitted by Qantas and Qantas Ground Services employees, however, was deemed to be less competitive than external bids. Accordingly, Qantas proceeded with making the Decision.

At the time the Decision was made, neither Qantas, nor Qantas Ground Services employees were permitted by the FW Act to take protected industrial action (i.e., striking), as the relevant enterprise agreements which underpinned their employment were yet to expire.

The Transport Workers Union of Australia (TWU) on behalf of the affected employees, commenced proceedings in the Federal Court, submitting that Qantas made the Decision because it knew that the relevant enterprise agreements would expire shortly, and accordingly, affected employees would then be permitted to commence enterprise bargaining and take protected industrial action. The TWU alleged that Qantas made the Decision because it wanted to prevent the affected employees from exercising these protected workplace rights.

Federal Court Decision

At first instance, the Federal Court of Australia (Federal Court) found that Qantas had taken unlawful adverse action.

Whilst the primary judge accepted Qantas’ evidence that it was motivated by financial pressures to make the Decision, His Honour was satisfied that one of the additional substantive and operative reasons why Qantas made the Decision was to prevent the affected employees from engaging in protected industrial action.

The primary judge also found that it is unlawful under the FW Act for an employer to take adverse action to prevent an employee from exercising a workplace right which they do not currently have, but may or will have in the future.

The Full Court confirmed the Federal Court’s decision on appeal. Accordingly, Qantas appealed to the High Court, arguing that the FW Act protections against adverse action only apply to workplace rights that an employee is capable of exercising at the time the adverse action is taken, and do not extend to workplace rights that may arise in the future.

High Court Decision

The High Court unanimously dismissed Qantas’ appeal against the decision of the Full Court.

Whilst the High Court was satisfied that Qantas had commercial imperatives for making the Decision, it was satisfied that Qantas was also motivated by the desire to prevent the affected employees from exercising protected industrial action. The High Court was satisfied that at the time the Decision was made, Qantas expected the affected employees would exercise those workplace rights upon the expiry of the relevant enterprise agreements in 2021.

The High Court noted that a person has a workplace right if they are entitled to the benefit of a workplace right. This definition is broad enough to encompass situations in which an employee would receive a benefit at some future stage of the employment relationship on the occurrence of an event. An employee may have an entitlement which constitutes a workplace right even if the circumstances for asserting that entitlement have not arisen and may never arise.

The High Court also noted that adverse action taken with a ‘mere awareness’ of a future workplace right is not unlawful adverse action. Rather, adverse action will be deemed to be unlawful where it is taken ‘because’ of a desire to prevent the exercise of a workplace right.

Accordingly, the High Court was satisfied that the primary judge had correctly concluded that Qantas had not disproven that the Decision did not constitute adverse action taken to prevent the affected employees from exercising a workplace right, and accordingly, the appeal was dismissed.

Take Home Messages

When making a decision that will adversely affect an employee, employers must ensure that they are not making the decision on the basis of the employee’s workplace rights. Accordingly, employers should ensure that they have sound reasoning before the making of such a decision, and that the reasoning is clearly recorded so that the employer can defend any general protections claim that may follow.

Employers should also be aware that the general protections also extend to workplace rights that an employee does not have at the time adverse action is taken, but also to rights that an employee may or will have in the future.

For more specific information or advice on any of the material contained in this article please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au or Annabelle Narayan on +61 8 8210 1292 or anarayan@normans.com.au