The High Court’s Qantas decision does not preclude outsourcing

The recent High Court of Australia decision in Qantas Airways Limited v Transport Workers Union of Australia confirms that an employer is prohibited from taking adverse action against an employee to prevent the exercise of a future workplace right. The decision is all about the preclusion in section 340 of the Fair Work Act which precludes an employer from taking adverse action against a person because the person has, is or proposes to exercise a workplace right.

The facts

Late November 2020, Qantas announced that its ground handling operations would be outsourced to third-party suppliers. This resulted in thousands of its employees becoming redundant. Many such employees were members of the Transport Workers Union of Australia (the TWU).

The TWU commenced proceedings. It alleged that the decision to outsource was made to prevent employees from exercising their workplace rights, including to the future right to take industrial action.

Qantas had sound commercial reasons for the outsourcing decision, but it also  had additional reasons which were “substantial and operative”. Those additional reasons were to prevent the affected employees from exercising workplace rights to organise and engage in protected industrial action and to participate in bargaining (the future workplace rights). The affected employees could not exercise the future workplace rights at the time of the outsourcing decision. Nevertheless, it was expected at the time of the outsourcing decision that, in the absence of the outsourcing decision, the affected employees would be able to exercise and would in fact exercise the future workplace rights in 2021.

The central issue in the High Court was whether Qantas’ decision to terminate its employees at a time when they only had the future workplace rights, breached section 340(1)(b) of the Act, which prohibits a person from “taking adverse action against another person to prevent the exercise of a workplace right.”

The decision

The key aspects of the High Court decision are:

• section 340(1)(b) of the Act prohibits adverse action against another person if a substantial and operative reason for the action is to prevent the other person from exercising a presently held or “future workplace right”;
• if a person’s ability to exercise a workplace right “depends on temporal and  circumstantial contingencies”, then the person has a workplace right, even if it is not presently exercisable; and
• if the “substantial and operative reason” for taking the adverse action is to prevent the exercise of a future workplace right then it is in breach of section 340(1)(b).

The lessons

1. There is no general preclusion against a business outsourcing aspects of its business including labour.
2. Stating the obvious I know, but limit the reasons for any decision that involves taking adverse action against a person (e.g. termination of employment), to those things that are not past, present or future workplace rights.