The much-anticipated decision of the High Court of Australia in Qantas Airways Limited v Transport Workers Union of Australia  HCA 27 was handed down yesterday. While this is a significant decision and has generated a lot of publicity, it reinforces the importance of the unique factual circumstances in general protections litigation under the Fair Work Act 2009 (Cth) (FW Act), rather than significantly changing how the law has been interpreted to date.
Importantly, the High Court’s decision does not mean that employers cannot make cost-based decisions about their workforce. Rather, employers need to be clear as to who is making the ultimate decision and the basis for that decision, ensuring that prohibited reasons are not a substantive and operative factor in the decision-making.
The decision to outsource ground handling services
In November of 2020, Qantas Airways made a decision to outsource ground handling operations at 10 Australian airports. The effect of the outsourcing decision was that ground handling operations work (which had been performed by employees of Qantas Airways and Qantas Ground Services, a wholly owned subsidiary), would instead be carried out by third-party ground handling companies.
Approximately 1,683 Qantas employees were made redundant as a result.
The decision was implemented in 2021, at a time when Qantas Airways’ flying activity had greatly reduced, due to the COVID-19 pandemic.
The Union’s claim
The Transport Workers Union (TWU) filed an application on behalf of the affected employees in the Federal Court, arguing that Qantas’ outsourcing decision was made for a prohibited reason in contravention of the general protections provisions set out in the FW Act.
The TWU argued that the decision was made for prohibited reasons, including to prevent the affected employees from exercising their future workplace rights to organise and engage in protected industrial action and enterprise bargaining. The employees of Qantas Airways were, at the time, covered by an enterprise agreement which had not nominally expired. While the Qantas Ground Services enterprise agreement had passed its nominal expiry date, no steps towards taking protected industrial action had been taken.
The Federal Court proceedings
It was necessary for Qantas Airways to prove that the outsourcing decision was not made for reasons that included a prohibited reason identified by the TWU. A single member of the Federal Court was not satisfied that Qantas Airways had done so.
Qantas Airways then appealed to the Full Court of the Federal Court, and as part of its appeal argued that the phrase ‘prevent the exercise of a workplace right’ in section 340 of the FW Act does not extend to action taken to prevent the future exercise of workplace rights, where those workplace rights were not presently held by the employee concerned.
The Full Court of the Federal Court rejected this argument and otherwise upheld the first instance finding that Qantas Airways had failed to establish that the prevention of industrial action was not a substantial and operative reason for making the outsourcing decision.
Appeal to the High Court
Qantas Airways appealed to the High Court of Australia. In support of its appeal, Qantas Airways made two key arguments:
- Firstly, that an employer does not ‘prevent’ the exercise of a workplace right by an employee within the meaning of s340(1)(b) simply by taking advantage of a ‘window of opportunity’ to take adverse action against an employee at a time when ‘architectural features’ of the FW Act (such as s417) operate to prevent the employee from exercising a workplace right (including by taking industrial action in response).
- Secondly, and more broadly, a workplace right must be presently in existence for the protections of section 340 to apply. A workplace right cannot be protected before it comes into existence.
Counter to this, the TWU argued that section 340 of the FW Act contemplates future rights and does not require a workplace right to exist, or be capable of immediate exercise, at the time of the alleged unlawful adverse action. The TWU argued that its construction was consistent with the purpose of the protections in the FW Act.
The Minister for Employment and Workplace Relations, intervening, argued that the FW Act does not require that in order for a workplace right to exist it might be capable of immediate or unconditional exercise.
The High Court’s conclusion
The High Court has confirmed that the scope of section 340 of the FW Act will apply where adverse action is taken to prevent the other person exercising a presently held or future workplace right.
Both of Qantas’ arguments were rejected, with a majority of the High Court (comprised of Chief Justice Kiefel and Justices Gageler, Gleeson and Jagot) determining that the text of section 340 does not require a workplace right to be held or to be capable of immediate exercise by an affected person at the time of the adverse action. Rather, all of the Justices found that section 340 is broad enough to encompass workplace rights at some future stage of the employment relationship, on the occurrence of an expected event, or on the occurrence of a contingency.
Accordingly, the appeal was dismissed, and the findings made at trial (that the reverse onus had not been discharged) are undisturbed.
Flowing from this, an individual may be found to have taken unlawful adverse action if they put an obstacle in the way of, (or seek to thwart), another person exercising a right that may arise at some future date, provided that the prevention of the exercise of the right was a substantial and operative reason.
While agreeing with those findings, the majority, (as well as Justices Gordon and Edelman in a separate judgment), drew a distinction between presently existing but contingent entitlements (such as annual or personal leave) and actions that are positively prohibited (such as taking unlawful industrial action), finding that the former is a ‘benefit’ to which a person is entitled under section 341, although the latter is not.
Importantly, Justices Gordon and Edelman noted that there is nothing falling from the High Court’s ruling that suggests employers are prevented from considering the existence and terms of enterprise agreement in making decisions about the future. There is no legal or practical difficulty in allowing such a matter to be considered by a decision-maker. In his own judgement, Justice Steward observed that corporate decision-making is often the product of many motivations, causes, influences and processes of reasoning.
Importantly, a mere appreciation of the possible future exercise of a workplace right at the time of taking adverse acting does not amount to a substantial and operative reason for taking adverse action.
What does this mean for employers?
Three key things may be taken away from yesterday’s ruling:
Firstly, decisions relating to employment and workforce composition are not divorced from the commercial realities of operating a business.
Secondly, while a decision-maker will likely be aware of (and in some cases should be aware of) the future rights and entitlements of employees, it will not be unlawful to make a decision which effects those rights and entitlements where all of the substantive and operative reasons for the decision are not the prevention of the exercise of those rights, or any other prohibited reason.
Thirdly, it is important that a decision-maker can clearly and adequately articulate the reasons for their decision. If future workplace rights were known to the decision-maker but did not form part of their substantive and operative reasoning, the decision-maker should be prepared to explain how this is the case.
These things should provide comfort for employers, that despite the hype and attention, this decision does not restrict outsourcing decisions or other decisions about the composition of a workforce, including the use of labour hire.
As you no doubt will be aware, the introduction of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (which is now subject to a Senate Committee Review due in February 2024), are likely to have a far more significant impact than the decision in Qantas Airways.