The High Court of Australia's decision in the Qantas outsourcing case1 has been widely reported. But both the scope of the decision and the key takeaway have potentially been misunderstood.
How do you (dis)prove a negative presumption about your reasons?
The real issue in this case, as in most adverse action cases, was why Qantas decided to outsource ground handling – that was a factual matter that was debated in the first hearing before the Federal Court of Australia. In these kinds of cases, there is a reverse onus – which means that the employer must prove that the decision-making was not infected by the alleged unlawful reasons. If the employer does not do enough, the presumption is that the decision was made for unlawful reasons.
Qantas said that it had sound commercial reasons for its decision. So where did it all go wrong?
- The decision maker had received advice and recommendations from others. Even though the others had given evidence that their reasons were not unlawful, the judge was not satisfied that the recommendations weren't infected by other reasons – namely, that outsourcing would prevent employees from exercising the right to take industrial action in the future.
- The judge was "less certain" about the decision-maker's reasons. The judge had "reservations" about the evidence "viewed in light of all the other evidence". In other words, the broader context in which the decision was made mattered.
The Federal Court was therefore "not satisfied" that Qantas had done enough in its evidence to overcome the presumption that the reasons were, at least in part, to prevent employees from exercising their right to take industrial action in the future.
Is a decision unlawful if it is made to prevent the potential future exercise of rights?
The High Court's decision considered a fairly narrow issue – whether it is unlawful to take action to prevent employees from exercising rights that they don't presently have but might be able to exercise in the future. The High Court said yes – an employer can contravene the Fair Work Act 2009 if it dismisses employees as part of an outsourcing program and some part of the reason for the outsourcing was to prevent those workers from taking industrial action against the employer in the future. In other words, dismissing employees is unlawful if it is motivated, even in only a small way, by the desire to stop or avoid those employees exercising their workplace rights in future.
Is this the death of outsourcing?
The bell has not yet tolled for outsourcing, but great care needs to be taken when making decisions for reasons that might include, or be presumed to include, preventing employees exercising workplace rights that they could be expected to exercise if there was no outsourcing – such as taking protected industrial action.
The case directs attention back to the critical importance of the reasons for the decision and the evidence about those reasons. Decision-makers must ensure that their decisions to outsource any business functions are not based on preventing employees exercising any workplace rights that employees might have – whether those rights currently exist or might be able to be exercised in the future.
There are also other areas of the employment relationship where employers will also need to take great care – for example, if an HR manager recommends that an operational manager decides to dismiss an employee before the person has sufficient service to bring an unfair dismissal claim, this will carry risk if one or more of those reasons is to prevent the exercise of that future right.
The High Court's decision tells us that risks will be higher if there are surrounding circumstances that point to unlawful reasons being relevant to the decision or if a decision-maker is receiving recommendations from people who might be motivated by preventing employees from exercising present or future workplace rights.
Footnote
1. Qantas Airways Limited & Anor v Transport Workers Union Of Australia [2023] HCA 27
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