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Out-Law Analysis 3 min. read

Australian High Court: Qantas unlawfully interfered with employees’ future rights

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The High Court of Australia has dismissed an appeal from Qantas against Federal Court decisions that it took unlawful adverse action by deciding to outsource its ground handling operations.

The decision – between Qantas Airways and Transport Workers Union of Australia (TWU) – confirms that protections under the Fair Work Act 2009 (Cth) (FW Act) extend to adverse action taken to prevent the exercise of a workplace right that might arise in the future – that is, a right that does not exist at the time the action is taken.

On the face of it, this decision expands the scope of the adverse action regime, and therefore protections for employees. In the context of recent and proposed legislative changes that are favourable to employees, this is another setback for employers.

However, in practice, this decision may not have the wide-ranging implications that has been feared by employer industry groups. As has been the case since the 2012 Barclay decision, evidence of the decision maker’s true motivations for taking adverse action remains critical to employers defending adverse action claims. In the Qantas judgment, the High Court confirmed that an employer can have an “appreciation” of a possible future exercise of a workplace right when making decisions without it constituting a substantial and operative reason for taking adverse action.  However, evidence of the decision maker is crucial in proving this.

Following this decision, employers should be aware that any decisions that are made to prevent the exercise of workplace rights that don’t yet exist may still be found to be in breach of the FW Act.

The Qantas cases also continue to emphasise that decision makers must be able to give clear, cogent evidence in the witness box in order to be believed by the trial judge about their true motivations for decisions in order to successfully defend adverse action claims.

The case

In November 2020, Qantas decided to outsource some of its ground handling operations to, it said, enable it to engage staff with the agility required during and after the Covid-19 pandemic. The nominal expiry date of the enterprise agreements covering incumbent employees was in the middle of 2021.

The TWU argued on behalf of the affected employees that Qantas’ decision was motivated by its desire to prevent those employees from organising, participating in bargaining for a replacement enterprise agreement, and engaging in protected industrial action after the nominal expiry date. Qantas maintained that it made the outsourcing decision for sound commercial reasons: namely, to keep the airline financially viable following Covid-related interruptions.

The primary trial judge found that while Qantas had “sound commercial reasons for the outsourcing decision”, the substantial and operative reason for the decision was to prevent the affected employees from exercising their workplace rights to engage in protected industrial action and to participate in bargaining.

That decision was upheld in the Full Federal Court, which Qantas appealed to the High Court. A central issue in this case was whether employees had a protectable workplace right if, at the time adverse action was taken, the workplace right did not exist but would in future.

From a legal perspective, Qantas asserted that section 340(1)(b) of the FW Act – taking adverse action to prevent the exercise of a workplace right – applies only where that right exists at the time of the adverse action. Qantas also argued that an employer would not be in breach of section 340 merely because a reason for the timing of the adverse action is "to take advantage of an architectural feature of the Act which positively denies to the TWU and employees the right to oppose the decision by industrial action, a denial which delay might reverse".

The High Court decision

The High Court rejected Qantas’ characterisation of section 340 of the FW Act.  It said that:

  • preventing the exercise of a workplace right includes “putting an obstacle in the way of” the exercise of a presently held right, and exercising a right that may arise at some future date;
  • the FW Act does not require a temporal relationship between the workplace right and adverse action (although usually that is relied upon as an evidentiary element by applicant employees); and
  • employers could consider the existence and terms of enterprise agreements when making decisions about the future, which would not be unlawful provided the consideration does not become a substantial and operative reason for preventing the exercise of a workplace right – that is, employers can (and, at times, should) have an appreciation of workplace rights when making decisions and that appreciation won’t necessarily be unlawful.

Qantas’ appeals were on a point of law rather than on the trial judge’s findings about the substantial and operative reasons for dismissal. This recognises the difficulty in overturning adverse action decisions where the trial judge makes a finding of fact about reasons for dismissal.  The difficulty arises because appeal courts are reluctant to overturn those findings where they have not heard the evidence of the decision makers, and therefore are not best placed to make findings of credibility or the decision maker’s mindset.

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