Legal Insights

When outsourcing a problem creates a bigger one: The Qantas decision

By Ross Jackson

• 01 September 2021 • 5 min read

In an outcome which has involved two recent decisions of the Federal Court, the Transport Workers’ Union has successfully argued Qantas engaged in adverse action for prohibited reasons, when it decided to outsource its ground handling operations at a number of airports last year[1]. The Court is yet to determine what relief it will grant the Union, which is seeking the reinstatement of some 2,000 employees whose jobs were outsourced.

Qantas has indicated it will appeal the decision.

We have been down this path before. The Patrick's Waterfront Dispute in 1998, and the decision of the full Federal Court regarding Greater Dandenong City Council’s[2] decision around the same time to outsource its home and community care functions both involved decisions to outsource jobs previously performed by employees, where that decision was subsequently found by courts to have been made for prohibited reasons.

In the Qantas litigation, the question was whether Qantas decided to outsource the jobs of the relevant employees because in 2021 they would have the ability to engage in protected industrial action and bargaining. By then, the relevant enterprise agreements would have reached their nominal expiry date. In other words, so the union alleged, Qantas decided to get in first and outsource the jobs where protected action was likely to be taken by the affected employees.

Self-evidently, the ability to participate in a protected action ballot and protected industrial action, and in enterprise bargaining more generally, are ‘workplace rights’ for the purposes of the general protections provisions of the Fair Work Act 2009.

Accordingly, and critically, once adverse action is established (which the outsourcing of the jobs would be) the onus of proof shifted to Qantas to establish that whatever reasons it did have, they did not include prohibited reasons, such as the fact that the workers were entitled to the benefit of their rights to bargain and engage in protected industrial action.

Qantas was unable to discharge that onus when the evidence of the critical witnesses was viewed in light of all of the other evidence before the Court.

The evidence of Qantas’ Chief Operating Officer, Mr Paul Jones, and its Chief Executive (domestic and international) Mr Andrew David, was critical. As has been well established by the High Court[3], if a decision maker is believed, on their evidence, that the actuating reasons they had in mind were not unlawful, to the exclusion of all others, then the onus of proof will be discharged. As is often the case, the ultimate decision maker makes their decision on the basis of reports and recommendations prepared by others. In this case, Mr Jones recommended to Mr David the outsourcing process should commence. The Court determined there was no material difference between the reasons behind Mr Jones’ recommendation and Mr David’s decision. The reasons of the person making the recommendation could effectively be imputed to the final decision maker.

What are the lessons to be learned?

Firstly, timing does matter. If, as in this case, a decision is made to outsource just before those whose jobs were to be outsourced would have the ability to exercise their workplace rights (in this case, to bargain) then the burden of proving there is no ‘smell’ about the decision will, in a practical sense, be that much greater. Similarly, for example a decision to suddenly terminate an employee for poor performance just after they have said they will file a workers compensation claim raises a similar risk scenario. In each instance, it is not impossible for the employer to discharge the onus of proof; but the cogency of the evidence required to do so will be greater. In other words, the strength and coherence of the business case demonstrating there were non-prohibited reasons for a decision to outsource will need to be capable of proof through robust, cogent evidence. It is important to ask, is there a convincing body of evidence to prove that the same decision would have been made even if the claimed attribute (such as the employee’s exercise of a workplace right) didn’t exist?

Secondly, beware of “killer” documents, such as email trails. For example, in the Qantas case, the Court had before it Mr Jones’ notes he had prepared for a Board meeting, comparing the likely approaches of different Unions that could be involved in the bargaining process. You should always assume non-privileged notes, documents and emails will be discoverable in litigation.

Thirdly, what is the evidence of the ultimate decision maker, and what would it be based upon? If there has been reporting and recommendations made ‘up the line’, will the ultimate decision maker be in a position to give evidence of what their reasons were, to the exclusion of all others; or will they be ‘tainted’ by what was in the mind of those below?

These are difficult issues for any employer facing costs pressures, as Qantas surely was in 2020. Indeed, the outcome of any appeal will be interesting as Qantas contends its motivations were managing operational risk, rather than the denial of its employees’ workplace rights. Whether such a distinction can be drawn between the actual exercise of workplace rights, and the consequence of that exercise (loss of operational continuity) will be an interesting point on appeal.

In the meantime, the case stands as another in a line that stretches back over decades, involving employers turning to outsourcing as a way to reduce risk, and finding that in doing so they have created a far bigger problem.

As always, the question for any employer to ask themselves in undertaking any actions that could fall within the broad scope of what constitutes ‘adverse action’ under the Fair Work Act is:

‘Why did we do what we did, and can we prove it?’

[1] Transport Workers Union of Australia v Qantas Airways Limited [2021] FCA 873;

Transport Workers Union of Australia v Qantas Airways Limited (No 2) [2021] FCA 1012

[2] Greater Dandenong City Council v Australian Municipal, Clerical and Services Union [2001] FCA 349

[3] Bendigo Institute of TAFE v Barclay [2012] HCA 32

Do you need more information on the Fair Work Act?

Get in touch with our Employment & Workplace team.

By Ross Jackson

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