Australia September 14 2023

The flying kangaroo has been bruised and battered in recent weeks with the High Court delivering a significant blow finding its outsourcing arrangement that saw over 1,700 bag handlers and cleaners lose their job to be unlawful.  Already heavily reported, the decision is leading to fear mongering that this could be the end of outsourcing arrangements as we know them.  So, what did the High Court actual say and what does it mean?

First some context.  As employees, we all have protected rights under the Fair Work Act 2009.  The list of protected rights is long and includes our right to take annual leave or person leave, make complaints about workplace bullying or WHS matters, join (or not join) a union, and as relevant in the Qantas case, engage in lawful industrial action.  It is unlawful for an employer to take adverse steps against an employee, such as dismissal, because they have exercised any of those rights or to prevent the exercise of those rights. 

However, when a business terminates an employee’s employment, those protected rights are naturally extinguished, and it would be foolish to suggest that an employer does not recognise that reality.

Against that backdrop, in response to the workers’ challenge, Qantas argued that its outsourcing decision was not unlawful as, at the time the decision was made in 2020, the workers did not yet have a right to engage in industrial action (that right would have crystallised in 2021) and the mere extinguishment of that future right, which Qantas was fully conscious of, did not breach the Fair Work Act 2009.   

The High Court disagreed.  It found that Qantas outsourced all those jobs with the substantial and operative reason of preventing the employees from organising and taking industrial action and that was a clear breach.  It did not matter that the workers were yet to have that protected right.

Does this mean employers cannot outsource or otherwise make tough decisions that would limit or extinguish employees’ protected rights?  No.

The High Court expressed sympathy for Qantas, appreciating the outsourcing decision had its commercial reasons at the height of the pandemic.  And, had Qantas been able to show that the outsourcing arrangement was wholly due to economic pressures and did not have the aim, even if secondary, of extinguishing workers’ rights, it would have been lawful.  Qantas did not show this.

The lesson for employers is to recognise the reasons for making workplace decisions particularly those that have adverse consequences on staff.  While certain outcomes flow from tough choices, employers must reflect on their motivations and ensure they are lawful.