Turbulence over Qantas redundancies in the aftermath of COVID-19

The lawfulness of Qantas’ decision to outsource its ground handling operations has been scrutinized as the Federal Court of Australia (the Court) handed down its judgment in the case of Transport Workers’ Union of Australia v Qantas Airways Limited 2021 [2021] FCA 873 and [2021] FCA 1012. Qantas claimed the decision was made to promote the company’s commercial interests following the impacts of COVID-19, however, Qantas was unable to prove that the decision was not influenced by a prohibited reason (which was the employees’ union membership and their right to participate in enterprise bargaining negotiations).

Facts

In 2020 Qantas Airways Limited (Qantas) made the decision to outsource ground handling operations to a number of third-party companies across ten Australian airports. Qantas claimed that the decision was made to mitigate the impacts the COVID-19 pandemic had on the company, specifically in the hope to reduce operating costs and increase viability. As a result of this decision, Qantas made over 2,000 employees redundant.

The affected employees were covered by either the Qantas Airways and Limited and QCatering Limited – Transport Workers Agreement 2018 or the Qantas Ground Services Pty Limited Ground Handling Agreement 2015 (the Enterprise Agreements). The Enterprise Agreements were due to expire, and renegotiations were available at the end of the year.

The Transport Workers’ Union of Australia (the Union) alleged that Qantas had taken adverse action against the affected employees as the outsourcing decision was made for a prohibited reason. Specifically, the Union submitted that aside from the disruptions to the airline’s operations caused by the COVID-19 pandemic, 2020 provided a unique opportunity for the Qantas to outsource operations as a result of the “vanishing window of opportunity” regarding the expiry date of the Enterprise Agreements. The Union claimed that the redundancies were implemented to avoid the need to consult with the Union when new agreements were due to be negotiated and implement outsourcing before industrial action could protect the affected employees.

The Union filed an application in the Court alleging that the decision to outsource employees was made for a prohibited reason contrary to section 340 and 346 of the Fair Work Act 2009 (Cth) (the Act). Specifically, because the affected employees were members of the Union, and the decision prevented the affected employees from participating in the scheduled enterprise bargaining negotiations.

Decision

Pursuant to the Act, adverse action cannot be undertaken for a prohibited reason and protections are available for contraventions. Prohibited reasons include an employee’s involvement in union activities and exercising workplace rights, which include the right to participate in enterprise bargaining negotiations. Adverse action claims involve a “reverse onus” of proof, whereby Qantas bore the evidentiary and persuasive responsibility to prove on the balance of probabilities that the adverse action was not taken because of a prohibited reason.

Qantas submitted that the decision had been made based on the commercial interests of the company, and that other factors could be considered in the decision-making process without those factors being the “substantial or operative” justification for the outsourcing decision.

Evidence was submitted by Qantas that the Chief Operating Officer provided a number of recommendations to the Chief Executive who was the ultimate decision maker of the company. Whilst the evidence suggested that the Chief Operating Officer had taken into consideration the timing of the decision and the pending expiry date of the Enterprise Agreements, the Chief Executive submitted that this recommendation had not been a factor in his final decision.

However, when the evidence presented by Qantas was viewed in light of all the other evidence before the Court, Qantas was unable prove that the real and substantial cause of the outsourcing decision was based only on the commercial interests of the company. The Court found that Qantas had given substantial consideration to the ability to avoid negotiations with the Union in respect of the Enterprise Agreements and stated:

“The proved facts on the balance of probability fell short of proving that [Qantas] 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.”

Further, the Court held that the evidence led by Qantas showed a number of deficiencies in records of meetings and file notes which would have dealt with the proposed outsourcing strategies. The Court raised a number of concerns regarding the affidavit evidence submitted by Qantas stating that they were inadequate in dealing with any industrial advice received regarding the decision.

Subsequently, the Court held that Qantas had failed to meet the reverse onus of proof and found that Qantas had taken adverse action in reaching the outsourcing decision.

Take Home Messages

Employers are reminded that the “reverse onus” of proof casts a wide net in determining the facts of an alleged offence. Importantly, employers cannot take adverse action against employees or others for a prohibited reason. Decisions made by employers should be supported by cogent evidence and robust reasoning.

Qantas has indicated it is likely to appeal the decision. Norman Waterhouse will continue to monitor the situation and provide updates for our clients in the event of an appeal decision.

For more information in relation to any of the material contained in this article please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Ganesh Krishnan on +61 8217 1395 or gkrishnan@normans.com.au or Alice Tonkin on +61 8217 1361 or atonkin@normans.com.au.