In Qantas Airways Limited v Transport Workers Union of Australia the High Court has confirmed that employers will contravene general protections provisions of the Fair Work Act if they take adverse action against employees in order to prevent them from exercising a future workplace right.

The context

In 2020, and in response to the financial losses it had suffered during the COVID pandemic, Qantas made the decision to outsource its ground handling operations to third-party suppliers (Outsourcing Decision). This decision followed a bidding process that involved Qantas obtaining bids from external services providers and an in-house bid from the Transport Workers Union of Australia (TWU) on behalf of Qantas’ existing employees.

The challenge

The TWU challenged Qantas’ Outsourcing Decision in the Federal Court on the basis that Qantas’ reasons for the decision included preventing the employees from engaging in protected industrial action against Qantas in the future – in contravention of the prohibition in the Fair Work Act against taking adverse action against employees to prevent the exercise of a workplace right. Qantas bore the reverse onus of proof; that is, it had to prove that its reason did not include any prohibited reason, such as to prevent the exercise of a workplace right.

The decision

The Federal Court concluded at trial and on appeal that while Qantas had “sound commercial reasons” for the Outsourcing Decision (including that the TWU bid was not financially competitive compared to the other specialist third-party ground handlers), its evidence failed to prove that preventing the employees from engaging in protected industrial action in the future was not a substantial and operative reason for the decision.

Of particular importance to Qantas’ High Court appeal was that at the time the Outsourcing Decision was made, the relevant employees did not actually have an existing right to take protected industrial action because the enterprise agreement which covered their employment had not yet reached its nominal expiry date. Qantas argued that the general protections in the Fair Work Act could not extend to future (not currently existing) workplace rights.

The High Court wholly rejected Qantas’ argument on the basis that it will be unlawful for an employer to take adverse action to prevent employees from exercising a workplace right they will have in the future – even though that workplace right does not yet exist at the time the adverse action is taken.

The High Court also commented that a decision-maker’s mere knowledge or consideration of the existence of a future workplace right will not result in a contravention, unless preventing the exercise of the future workplace right is a substantial and operative reason for the decision to take adverse action.

Key takeaways for employers

Understanding of the Fair Work Act

The Fair Work Act prohibits restructuring operations and terminating a particular employee’s employment because they will soon be entitled to take long service leave, for example, in the coming months; but it does not prohibit restructuring operations on the basis of sound, defensible and objectively robust commercial reasons that do not include a particular employee’s entitlement to take leave in the future. That employee may well be one of those affected by the proposed action; but the employer must be able to prove that their reasons for the action do not include preventing the employee from exercising that future right.

Operational decision-making

Employers must carefully consider decision-making processes in respect of operational decisions which will adversely affect employees, and ensure that the decision-maker’s reasons are sound and justifiable and do not include a prohibited reason. For example, in relation to outsourcing, employers must ensure that they have defensible and objectively robust commercial reasons for deciding to outsource, and the decision maker(s) can give cogent evidence to this effect.

Exercising workplace rights

Employers must not take adverse action for the substantial and operative reason of depriving an employee of the opportunity to exercise a future workplace right.

If you have any questions in relation to this case, please do reach out to a member of our Employment & Workplace Team.