Qantas’ adverse action appeal grounded following landmark High Court decision

In dismissing Qantas’ submission that workplace rights extend to present rights only, the High Court of Australia has emphasised the requirement for employers to carefully consider workplace decisions to ensure they do not prevent employees from exercising workplace rights, both present and future.

Since the assent of the Fair Work Act 2009 (Cth) (FWA), the general protections regime has existed to protect employees from adverse action where they proposed to exercise workplace rights that were immediately exercisable. However, seldom have the courts considered whether the reach of the general protections provisions extend to protect the exercise of future workplace rights.

Following the High Court’s decision in Qantas Airways Limited v Transport Workers Union of Australia [2023] HCA 27, it is now the authoritative position that an employer is prohibited from taking adverse action against an employee to prevent the exercise of a future workplace right.

Facts

On 30 November 2020, Qantas Airways Ltd made the unilateral decision to outsource its ground handling operations at 10 Australian airports. Formerly, this work had been undertaken by employees of Qantas and Qantas Ground Services Pty Ltd, some of whom concurrently held positions as members of the Transport Workers Union of Australia (TWU). However, due to the economic pressures that beset airlines during the COVID-19 pandemic, Qantas sought to transfer these operations to a third-party supplier. Qantas advanced three commercial arguments as operative reasons for making the outsourcing decision:

1. reducing ground handling costs by $100 million
2. providing ground handling operations on a ‘cost per term’ basis
3. obviating the need for capital expenditure of $80 million over five years to perform the ground handling services ‘in house’.

Consequently, almost 1,700 employees had their employment terminated. At the time the outsourcing decision was made, the affected employees were covered by two enterprise agreements and were prevented by law from taking industrial action and enterprise bargaining (workplace rights) until the agreements had passed their nominal expiry dates. Although one agreement had done so, the other was due to expire on 30 December 2021.

Ultimately, this meant that the outsourcing decision pre-emptively prevented the affected employees from the possibility of exercising their workplace rights.

Previous litigation

The TWU initially commenced proceedings in the Federal Court against Qantas, alleging that the outsourcing decision constituted unlawful adverse action, insofar as it prevented the affected employees from exercising their workplace rights (as described above). The TWU also sought compensation and penalties against Qantas for breaching section 340(1)(b) of the FWA.

In the primary decision, a single judge of the Federal Court found that, although Qantas had sound commercial reasons for the outsourcing decision, it failed to demonstrate that preventing the affected employees from engaging in future protected industrial action was not a ‘substantive and operative’ reason for the outsourcing decision. Therefore, it was found that Qantas had contravened the FWA.

Qantas subsequently appealed the primary decision to the Full Federal Court. However, the appeal was dismissed, and the primary decision was upheld.

Qantas then appealed the decision to the High Court of Australia.

High Court determination

The key issue for determination for the High Court was whether the Full Court of the Federal Court were right to conclude that the outsourcing decision constituted adverse action within the meaning of section 340(1)(b) of the FWA. Qantas’ primary argument was that section 340(1)(b) was confined to a presently existing workplace right, and thus could not arise until the expiration of the remaining contract (being 30 December 2021).

Both a ‘broad’ and ‘narrow’ approach to the construction of section 340(1)(b) were submitted by Qantas. Qantas argued:

• in the broad sense, section 340(1)(b) applies only where a workplace right is present at the time of the adverse action; or in the alternative,
• in the narrow sense, that an employee’s exercise of a workplace right cannot be prevented by an employer taking advantage of a ‘window of opportunity’ to take adverse action when features of the FWA prevent the employee from doing so.

The High Court upheld the Full Court’s preliminary determination, unanimously finding that the airline’s outsourcing decision constituted adverse action within the meaning of Part 3-1 of the FWA. Their Honours opined that Qantas did not bypass the operation of Part 3-1 simply by taking the prohibited action prior to the workplace right crystallising. In fact, it was held that Qantas willingly endeavoured to take the proscribed action to prevent protected industrial action transpiring in the future.

The matter of compensation and penalties against Qantas resulting from this breach is currently being heard before the Federal Court.

Takeaways for employers

The High Court’s decision confirms that the meaning of ‘workplace rights’ includes future workplace rights and not just those rights present at the time.

As such, employers who are considering any action that may have adverse consequences on their workforce should ensure that:

• they do not take adverse action against employees that may prevent employees from exercising workplace rights
• decision makers understand the meaning of ‘workplace rights’ and ‘adverse action’
• decision makers implement clear processes that demonstrate the lawful substantive and operative reasons for their decision, and ensure that their reasoning is sound, justifiable and does not include a prohibited reason.