23 Jun 2022Federal Court rules Qantas outsourcing illegal
Qantas outsourcing of 1,683 ground crew worker jobs during the pandemic was found to be illegal by the Federal Court and the company lost its subsequent appeal against that decision.
The airline now plans to take the landmark case to the High Court where it could be liable for huge costs if it loses, including compensating the sacked workers, as well as penalties for breaching the Fair Work Act.
The implications of the Federal Court ruling against Qantas go far beyond the airline and could have a major impact for employers across all industries, as the decision relies on a Fair Work Act provision giving protection to union members.
Qantas outsourcing seen as tactic to eliminate unionised workforce
The Federal Court found Qantas, a major employer, acted illegally in sacking its baggage handlers and cleaning staff, largely because the company wanted to get rid of a heavily unionised section of its workforce.
In 2021, Federal Court Justice Michael Lee was not convinced that Qantas’s decision to outsource almost 2,000 ground crew jobs was not motivated, at least in part, by the fact the majority were union members and had various workplace rights under enterprise agreements. (Please see Transport Workers’ Union of Australia v Qantas Airways Limited [2021] FCA 873).
“Adverse action” due to union membership not permitted under Fair Work Act
The Fair Work Act prevents employers from taking “adverse action”, such as dismissal or redundancy, against an employee because they are a union member who is exercising or entitled to a “workplace right”.
This law put the onus on Qantas to prove that its outsourcing was essentially a commercial decision related to financial losses caused by the pandemic, and not because of workplace rights. Justice Lee concluded Qantas failed to prove its case.
Impact of ruling on outsourcing jobs
Justice Lee stressed that his Qantas judgement was not a test case about outsourcing.
However, it does mean that other employers who want to outsource sections of their workforce will need to prove they are not doing it to avoid having to deal with workers backed by a union.
The Transport Workers Union said the outsourcing ruined careers and the airport workers wanted their jobs back.
In December Justice Lee ruled that while Qantas had deprived workers of their jobs, it would be impractical to reinstate them. The judge found that if the affected employees were reinstated, Qantas would retrench them as soon as it was legally possible.
Federal Court appeal confirms Qantas outsourcing illegal
Qantas appealed the decision, and in May 2022 three judges of the Federal Court upheld Justice Lee’s decision. (Please see Qantas Airways Ltd v Transport Workers’ Union of Australia [2022] FCAFC 71).
The union has said it will appeal the decision not to reinstate the workers and is seeking compensation and penalties. Qantas has said the judgement does not mean it has to pay compensation to the sacked workers. Both parties intend taking an appeal to the High Court.
Qantas said it saved $100 million by outsourcing the airport ground work and $80 million by not needing to update vehicles and equipment.
Qantas could be liable for huge court fees and hefty payouts to compensate the sacked workers, as well as facing penalties for sacking them illegally.
It is wise always to seek expert legal advice before making any move to outsource part of the workforce, or even a few individuals.
Similarly, a worker who faces the prospect of their job being outsourced would be advised to consult an employment lawyer to know their rights.
For more information, please see Qantas acted illegally in sacking 1700 ground crew and outsourcing their jobs.
