Outsourcing can be unlawful

In brief 3 min read

The Federal Court has found that Qantas engaged in unlawful adverse action when it decided to outsource approximately 2000 ground handling jobs last year.

How does this affect you?

• In another decision highlighting the impact of the pandemic, it's important that employers continue to consider how changes made to deal with the financial and operational effects of COVID-19 will work alongside existing employment law obligations.
• The decision is a reminder that in adverse action claims:
  • employers must be able to prove that in taking any adverse action the reasons do not include a prohibited reason; and
  • the evidence of the decision maker will be closely analysed, as well as any relevant prior context to the extent it impacts on the decision maker's reasoning.

Background

In August 2020, Qantas obtained in-house and external bids for the restructure of its ground handling operations. The in-house bid was ultimately rejected and in November 2020, Qantas announced that approximately 2000 ground handler positions would be outsourced.

The Transport Workers Union (the TWU) challenged this move in the Federal Court, claiming Qantas had engaged in unlawful adverse action. The TWU said the outsourcing decision was made substantially:

• because of the ground handlers' union membership; or
• to prevent the employees disrupting services by engaging in industrial action in 2021, when operations were expected to return to normal and Qantas would be exposed to the risk of protected industrial action during enterprise bargaining.

Decision

The court accepted that the ground handlers' union membership was not a substantial reason for the outsourcing decision. However, in deciding that Qantas had engaged in unlawful adverse action, the court's view was that:

• Qantas' key concern in making the outsourcing decision at the time was the 'vanishing window of opportunity' in the context of operational disruptions caused by COVID-19; and
• Qantas was not able to prove that the decision was not made in part to prevent affected employees taking protected industrial action after the relevant enterprise agreements nominally expired, which would theoretically disrupt services in 2021 when it expected business operations to resume to levels pre-COVID.¹

On 25 August, the court confirmed that this decision is not limited to employees who are union members, but extends to all employees covered by the relevant enterprise agreements.²  Qantas is reported to have said it will oppose any reinstatement or compensation orders and will appeal the decision.