High Court dismisses Qantas Appeal

The High Court has unanimously dismissed Qantas’ appeal from the Full Court of the Federal Court of Australia in Qantas Airways Limited  & Anor v TWU [2023] HCA 27.

The decision confirms that s 340(1)(b) of the Fair Work Act 2009 (Cth) (FW Act) prohibits a person from taking adverse action against another person for the purpose of preventing the exercise of a workplace right that might arise in the future.

Background and Facts

The highly publicised appeal arose following a decision by Qantas to outsource its ground handling operations at ten Australian airports in 2020 (i.e., peak-pandemic at a time when, in the words of Senior Counsel, Qantas was ‘bleeding cash’).

This outsourcing decision resulted in 1700 redundancies.

The redundancies were challenged by the TWU in the Federal Court where it was alleged that a ‘substantial and operative’ reason behind the decision to outsource was to prevent the relevant employees from engaging in industrial action in the future (i.e., when bargaining for a new agreement commenced and/or the relevant pre-industrial action steps were taken).

This was said to constitute a breach of the ‘General Protections’ provisions of the FW Act because it would ‘prevent the exercise of a workplace right’ by the workers (340(1)(b)).

As many readers will be aware, in the General Protections jurisdiction, a ‘reverse onus’ exists which meant Qantas was required to positively prove that it did not dismiss the workers because it wished to stop them from taking industrial action (s 361).

In the first hearing before a single judge, it was accepted that Qantas was facing a ‘business calamity’ at the time of its decision to outsource.

Critically however, the single judge did not fully accept Qantas’ evidence as to its reasons behind its decision to outsource. With the reverse onus not satisfied, Qantas was found to have engaged in a general protections breach in relation to the dismissals.

The decision was appealed to the Full Bench and then again to the High Court.

The High Court Decision 

The question before the High Court was narrow.

Qantas did not contest the Federal Court’s finding that it had not discharged the reverse onus.

Instead, Qantas’ argument was that as the employees could not yet take industrial action when they were dismissed (none of the prerequisites for industrial action had occurred yet), they did not have an existing ‘workplace right’. Without an existing workplace right, so the argument went, Qantas could not be said to have acted to prevent the exercise of such a right.

While the High Court delivered three separate sets of reasons, the unanimous answer to the question before it was expressed very clearly.

The High Court unanimously ruled that it didn't matter whether the employees had an immediate right to take industrial action when they were made redundant. What mattered was that Qantas had taken adverse action to prevent the exercise of a workplace right, even if that right didn't currently exist but might in the future.

What does this mean?

While not a contested point before the High Court, the Qantas case is a cautionary tale of the general protections reverse onus.

It demonstrates the critical importance of being able to prove the lawful reason behind taking adverse action against an employee or, more pointedly, being able to disprove any allegation that the adverse action was taken for unlawful reasons.

 

Where the reasons for a decision are documented at the time of a decision, this will assist in such a proof.

 

As acknowledged by the High Court, if Qantas had been able to prove that its outsourcing decision was based on obvious commercial imperatives and that its reasons did not include the prevention of industrial action, it would have been successful.

The High Court’s decision is particularly relevant for employers who are considering making so called ‘strategic’ IR decisions involving the adverse treatment of employees, particularly where those decisions involve employees becoming ‘eligible’ for an entitlement at some future date.

These kinds of decisions often are made after receiving advice which may well include some form of ‘industrial strategy’ around avoiding these entitlements.

By way of example, the following decisions should now give employers some pause:

• decisions to outsource which are motivated by a wish to avoid a future enterprise bargaining renegotiation and the prospect of industrial action;
• decisions to terminate employees just prior to six/twelve months service in order to avoid unfair dismissal claim eligibility;
• decisions to treat employees adversely because of their likelihood or plans to become eligible for entitlements in the future (for instance, employees who may become eligible for parental leave, community service leave or potentially union delegate entitlements).

Decision makers should be selective about the scope and source of advice they rely on in making employee decisions. A so-called ‘strategic’ recommendation could well be found to have ‘infected’ the making of a final decision and rendering it unlawful.

Further, employers should also think carefully about building decision-making frameworks that do not include the express consideration of ‘strategy’ around workplace rights.

An example of this might be an employee probation system for the assessment of new employees rather than merely relying on the unfair dismissal eligibility service requirement to guide probation dismissal decisions.

Equally, and most obviously after Qantas, decisions to outsource should be restricted to commercial considerations, not the prospect of avoiding industrial action.

If you would like further information, please get in touch on 1300 565 846 or email info@ablawyers.com.au.