20 September 2023
The ACCI issued the below summary concerning the High Court decision which found that Qantas breached the General Protection provisions of the Fair Work Act when it decided to outsource ground handling services.
During the pandemic, Qantas decided to outsource its ground handling services. Qantas had, as held by the Court, “sound commercial reasons for the outsourcing decision”. The decision was expected to save Qantas $100 million every year until the pandemic ceased.
However, a further reason was among the bases for the outsourcing decision. Qantas was cognisant of the risk and resulting cost of its ground handling services employees engaging in protected industrial action in the future.
At the time the decision was made, the relevant employees were covered by an enterprise agreement that had not passed its nominal expiry date. Accordingly, the risk of the employees engaging in protected industrial action, which impacted Qantas’ reasoning for outsourcing, was contingent on the occurrence of several matters, including that the existing EA reaching its nominal expiry date, bargaining commencing and the relevant steps to take protected industrial action had been taken.
Under the general protections regime, employers are prohibited from taking adverse action (eg, dismissing, demoting, altering to a roster detrimentally, etc) against an employee “to prevent the exercise of a workplace right by the other person” (s 340(1)(b)).
A “workplace right” is defined as, among other things, any entitlement or right that is provided for under a workplace law (eg, the Fair Work Act), a workplace instrument (eg, a modern award), or an order of an industrial body (eg, the Fair Work Commission). It also includes the ability to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument (eg, protected industrial action or enterprise bargaining).
The key issue in dispute in this matter was whether the relevant protection only to workplace rights currently in existence (as argued by Qantas) or also to workplace rights which may come into existence (as held by the Full Federal Court).
Under the general protections regime, there is also a reverse onus of proof. This means that it is up to employers to prove to a court that a prohibited reason (relevantly, preventing the exercise of a future workplace right) was not an operative or substantial reason for taking adverse action.
The High Court unanimously rejected Qantas’ argument that the protection only applies to workplace rights currently in existence.
The High Court therefore confirmed that employers are prohibited from taking adverse action against employees on the basis of a substantial or operative reason of preventing the future exercise of a future workplace right, even if it may never arise.
This decision has several important implications for the decisions and operations of employers:
(1) Employers cannot restructure their operations an effort to avoid the enterprise bargaining system
First, employers effectively cannot restructure their operations (in a manner that involves the termination or imposition of a detriment on employees) in an effort to avoid the enterprise bargaining system. This is irrespective of whether avoiding enterprise bargaining was only one of many reasons for restructuring. Doing so may contravene the general protections regime because a substantial or operative reason for taking adverse action was to prevent the exercise of a workplace right.
(2) Employers must not deliberately terminate underperforming employees before they become entitled to protection from unfair dismissal
Second, employers must refrain from deliberately terminating underperforming employees before they become entitled to protection from unfair dismissal in an effort to avoid the disputatious and often costly process in the Fair Work Commission. Even if the underperformance of the employee is the dominant reason for the dismissal, if a substantial reason was to prevent the employee from reaching the six month period (or 12 months for small business) after which they become protected from unfair dismissal, then the employer may have breached the general protections regime.
(3) Advisers to businesses need to exercise caution about what issues are raised during the process of making commercial decisions
Third, advisers to businesses will need to exercise caution about what issues are raised during the process of making commercial decisions. If an employer seeks advice about the risks of different commercial decisions, raising concerns about the potential future costs under one option of, for example, enterprise bargaining, industrial action, or unfair dismissal disputes, the advice may impact the decision and, if an unlawful reason, may cause a contravention of the general protections regime.
Disclaimer: This summary should not be regarded as legal advice or relied on for assistance in any particular circumstance or situation. For further information, call ECA Legal on (08) 6241 6129 or email firstname.lastname@example.org.