High Court confirms Qantas Took Unlawful Adverse Action Against Employees to Prevent them from Exercising Future Workplace Rights

Introduction

Under the Fair Work Act 2009 (FW Act), employers are prohibited from terminating an employee due to a prohibited reason. Such prohibited reason may include a variety of different causes, such as discrimination, industrial activity and the exercise of workplace rights. This is often referred to as a ‘general protections’ claim.

An employer will be in breach of the general protection provisions of the FW Act if the termination was because of, or substantially because of, the prohibited reason. This is often referred to as ‘adverse action’ or an ‘unlawful termination’.

The Qantas case focussed on whether Qantas had unlawfully terminated staff, in breach of the general protections provisions, when it chose to outsource its operations – and in doing so, denied terminated staff the ability to undertake, or participate in, a future workplace right – namely, protected industrial action and/or negotiate for an enterprise agreement.

Facts of the case

In November 2020, at the peak of the pandemic, Qantas sought to restructure its operations by terminating the employment of ground crew, baggage handlers, cleaners and drivers, and in its place, outsource these functions to a third-party supplier. Qantas argued that the decision to outsource and essentially restructure the business was done to improve the airline’s ability to survive and subsequentially recover from the extensive travel restraints during the pandemic lockdowns, and while vaccines were still under development.  It estimated that this decision would save it approximately $100 million a year in operating costs.

Prior to the decision to dismiss staff, Qantas tendered bids, both internally and externally.  Ultimately, the external bids were more competitive, and Qantas decided to proceed with the outsourcing exercise.

Federal Court’s Decision

The Union initially brought the claim in 2021 to the Federal Court, alleging that when Qantas sacked nearly 2000 workers, they took adverse action against them to prevent them from exercising their workplace rights.

The enterprise agreements in place which covered these staff were reaching their nominal expiry date, which would give the workers a workplace right, at that time, being the ability to participate in enterprise bargaining and a protected action ballot, and potentially industrial action.

However, until the enterprise agreements expired, employees could not take protected industrial action.

In the initial decision, the Federal Court held that “Qantas failed to prove that part of the reasons for [the]  outsourcing decision did not include prevention of an anticipated event, being the exercise of the workplace rights”.

The High Court’s Verdict

The question for the High Court was whether Qantas breached the FW Act, in that: did the outsourcing decision seek to prevent the exercise of a workplace right of another person? – even though that workplace right had not yet come to fruition.

In an unanimous decision, the High Court rejected Qantas’ appeal, upholding the Federal Court’s decision that Qantas’ dismissal of ground staff was unlawful.

Whilst acknowledging that Qantas had sound commercial reasons for making the outsourcing decision – it found that there were other ‘substantial and operative’ reasons, in breach of the general protections provisions.

Ultimately, the High Court held that employers who take adverse action against employees to prevent the exercise of a workplace right is unlawful. It held that this protection extends beyond a person’s current workplace right, to a future right that does not exist at the time the adverse action was taken.  Within the circumstances of this case, Qantas’ breach was against the employees’ future rights to take industrial action – and these affected employees who have exercised those rights in the near future when they could do so.

The evidence presented during the hearing was that Qantas had specified their intention to prevent the exercise of the future potential right of dismissed employees, and that this had formed the substantial reason for taking the adverse action.

However, it was held that when adverse action is taken with only a ‘mere awareness’ of a future right, the action will not be considered unlawful.

In light of the High Court’s findings, Qantas now faces potential compensation and penalties for breaches of the FW Act.

What next?

This decision emphasises that Courts will not only assess current rights – but also future rights – of employees when assessing general protections claims.

It is therefore critical that employers seek advice before taking action to prevent an employee from exercising a workplace right they may have in the future, as this could be considered unlawful adverse action and give rise to a general protections risk.

For further information on general protections or the implications of this case, please do not hesitate to contact HR Legal.

Case Reference

Qantas Airways Limited v Transport Workers Union of Australia [2023] HCA 27