By and -

Snapshot

  • The recent case of Transport Workers’ Union of Australia v Qantas Airways Limited [2021] FCA 873 acts as a reminder of the reach of the general protection provisions of the Fair Work Act 2009 (Cth).
  • A strong business case will not preclude a finding that decisions have been made for unlawful reasons.
  • The pandemic may not be utilised as a ‘transformational’ opportunity by employers, to the detriment of the workplace rights of employees.

The recent Federal Court judgment in Transport Workers’ Union of Australia v Qantas Airways Limited [2021] FCA 873 acts as a reminder of the reach of the general protection provisions of the Fair Work Act 2009 (Cth) (‘FW Act’).

Despite a strong business case against the backdrop of COVID-19 and its devastating impact on the airline industry, the Federal Court held that Qantas had not discharged the onus of proving its decision to outsource part of its operations was not motivated by an unlawful reason. The decision is subject to appeal but, for now, suggests that a sound and valid reason will not always displace an unlawful one.

Legislative framework

The general protections in Part 3-1 of the FW Act are well known. Section 340(1) provides that a person must not take ‘adverse action’ against another person for a number of reasons, including that the person has a ‘workplace right’ or has, or has not, exercised a ‘workplace right’.

The causal link between the ‘adverse action’ and the prohibited reason is of critical importance. Taking adverse action will not be unlawful under these provisions unless it was taken because of the prohibited attribute. Proving this causal connection can be difficult but is aided by two features of the FW Act.

The first is that there is a ‘reverse onus of proof’ – that is, it is presumed that action was taken for a reason or with an intent unless the person proves otherwise.

The second is that the prohibited reason need only be one of multiple reasons to be a contravention, albeit it must be a substantial and operative reason for the action. In other words, if one of the reasons for a given course of adverse action is a prohibited reason then that is sufficient, even though there were other factors which played a greater role in the decision-making process.

Adverse action: Outsourcing decision

As part of its response to the impact of COVID-19, Qantas announced in August 2020 that it would outsource 2,500 ground crew and baggage handler positions at ten Australian airports. It was anticipated that this would result in cost-savings for the airline of approximately $100 million per annum.

In making this announcement, current staff and the Transport Workers Union (‘TWU’) were provided with the opportunity to bid for the outsourced work. It was mandatory for Qantas to afford its staff and the TWU this bid opportunity, in light of the provisions of the relevant enterprise agreement. Relevantly, the relevant enterprise agreement was due to expire in 2021.

In November 2020, Qantas announced that the TWU bid had been unsuccessful and that the contract had been let to other providers, with the effect that the employment of the existing ground crew and baggage handlers would be terminated.

[T]he essence of the TWU’s argument was that the dark clouds that gathered in 2020 presented a ‘glimmer of opportunity’ to pursue the perceived financial benefits of outsourcing when the threat of industrial action was of no concern.

In December 2020, the TWU initiated proceedings in the Federal Court claiming that Qantas’ actions contravened the general protections provisions of the FW Act. Specifically, the TWU alleged that its members had been subjected to ‘adverse action’ in a number of respects including because of Union membership; because of the benefits of their enterprise agreements and ability to participate in enterprise bargaining; because of an ability to participate in a protected action ballot and protected industrial action; to prevent employees participating in enterprise bargaining; and to prevent employees exercising the workplace right, following the nominal expiry date of enterprise agreements which covered and applied to them, to participate in a protected action ballot and organise and/or engage in protected industrial action.

In more colourful prose, the essence of the TWU’s argument was that the dark clouds that gathered in 2020 presented a ‘glimmer of opportunity’ to pursue the perceived financial benefits of outsourcing when the threat of industrial action was of no concern.

In its response, Qantas presented its business case that the outsourcing decision had been motivated by three key factors which had arisen by virtue of the pandemic, being:

  • to achieve two-year cost targets by reducing operation costs;
  • to achieve the same by increasing the viability of the cost base; and
  • to ‘minimise capital expenditure, grow customer confidence and deliver ongoing business improvement’.

Risks (including industrial risks) were considered in assessing this proposed course, along with other considerations, but no prohibited reason informed the outsourcing decision in whole or part.

In light of the ‘reverse onus’ contained in section 361 of the FW Act, Qantas was required to prove, on the balance of probabilities, that its decision to outsource the work was not motivated by an unlawful reason, relevantly including depriving the employees the ability to engage in protected industrial action and bargaining (at such time as the agreement expired in 2021). Ultimately, Qantas failed to discharge this onus.

Principal judgment

On the basis of the evidence before him, Justice Lee was satisfied that Qantas had proved that the outsourcing decision was not driven by the fact that some or all of the employees concerned were members of a union, or that at the time of the outsourcing decision they had the ability to initiate or participate in bargaining for an enterprise agreement. The Court also acknowledged that the commercial considerations set out by Qantas may have contributed to the outsourcing decision.

Critically, however, it held that the evidence was not sufficient to discharge the onus of proving that the decision was not motivated by the prevention of protected industrial action and in bargaining when the relevant enterprise agreement expired in 2021. After an extensive analysis of the credit of the witnesses and the identification of the decision makers, Justice Lee concluded:

‘In the end … my conclusion after considering all the evidence is that the facts proved on the balance of probabilities fall short of a reasonable basis for a definite conclusion, affirmatively drawn, that [the decision maker] did not decide to outsource the ground operations partly to prevent the exercise by the affected employees of their workplace right to organise and engage in protected industrial action and participate in bargaining in 2021. Or, to put it another way, it may be that a substantial and operative reason for [the decision maker] making the outsourcing decision was not the Relevant Prohibited Reason, but by reference to all the evidence, I am not reasonably satisfied on the preponderance of probabilities that this fact has been proved by Qantas. In these circumstances, and in this respect, Qantas has not discharged its onus’ (at [302]).

As a consequence, Justice Lee made a declaration that Qantas’ decision to outsource its ground handling and fleet presentation operations at ten Australian airports Qantas contravened the FW Act. The remedy included the possibility of reinstatement for approximately 1700 ground crew.

Federal Court refuses to grant Qantas stay on hearing for remedy

Qantas filed separate applications for leave to appeal and for a stay of proceedings in respect of the hearing on relief. Qantas submitted that a stay should be ordered until such time as the airline’s appeal case was heard by the Full Federal Court.

On 21 September 2021, the Federal Court in Qantas Airways Limited v Transport Workers’ Union of Australia [2021] FCA 1136 refused Qantas’ application for the stay of proceedings. In response to the airline’s submissions, Justice Perram found the stay would irreparably diminish the relief to which the TWU would be entitled, observing that ‘the longer that the former employees wait to be reinstated, the more likely it is that they will have found other work’ (at [5]). In short, the Court concluded the ‘risk of prejudice to the TWU outweighs the risk of prejudice faced by Qantas’.

Conclusion

In first paragraph of the principal judgment, Justice Lee emphasises that the decision ‘was not a test case about the industrial phenomenon of “outsourcing”’, or anything else. This is true. Ultimately, it turned on its facts, and Justice Lee’s view of the credibility of several of Qantas’ key witnesses. It certainly does not sound the death-knell for outsourcing anywhere.

It does, however, serve as a reminder that even in compelling commercial circumstances, the reasons must be lawful and demonstrably so.

In the meantime, the final outcome of the hearing on relief remains to be seen, with the matter set down before Justice Lee on 13 December to 17 December 2021.

It is anticipated that Qantas’ appeal will be listed for hearing before the Full Court of the Federal Court in February 2022.



Jack de Flamingh
is a partner and Alice Johnson is a lawyer, both at Corrs Chambers Westgarth.