Qantas acted unlawfully when it outsourced 1,700 ground staff during COVID-19 lockdowns because it effectively prevented affected workers from taking industrial action, the High Court has ruled. The decision upholds two prior court decisions against the airline.
The carrier employed ramp operation, baggage, and cleaning staff at ten airports across Australia in 2020 while public health restrictions grounded flights and caused major losses for Qantas and competing airlines.
Qantas outsourced those roles to third-party contractors at the time, arguing it was a necessary business decision to mitigate the economic shock of the pandemic.
That argument was challenged by the Transport Workers Union, which claimed the airline had an ulterior motive for outsourcing those employees: avoiding the chance of its staff, many of whom were unionised, engaging in industrial action.
After failing to prove in Federal Court that commercial imperatives were the sole reason for the outsourcing decision, the High Court on Wednesday dismissed its latest appeal, ruling that the airline had engaged in “adverse action” against those workers as defined by the Fair Work Act.
Qantas had “sound commercial reasons for the outsourcing decision,” Chief Justice Susan Kiefel, and Justices Stephen Gageler, Jayne Jagot, and Jacqueline Gleeson wrote in their ruling.
However, they agreed with a prior Federal Court ruling which found Qantas had additional reasons to outsource those workers.
“The affected employees could not exercise those workplace rights at the time of the outsourcing decision,” they said, despite the fact those workers were expected to exercise their workplace rights in 2021.
“In short, a person who takes adverse action against another person for a substantial and operative reason of preventing the exercise of a workplace right by the other person contravenes [the Act] regardless of whether that other person has the relevant workplace right at the time the adverse action is taken,” they found.
Although prior decisions closed the door on reinstatement of those workers, with the courts finding it to be impracticable, the door is open for the outsourced workers to argue for compensation.
“Qantas acknowledges and accepts the High Court’s decision to uphold two prior rulings by the Federal Court regarding the legality of outsourcing the remainder of the airline’s ground handling function in 2020,” the airline said in a statement.
In agreeing with prior rulings that Qantas had an unlawful reason behind the outsourcing decision, ‘”the High Court has effectively upheld this interpretation,” the statement added.
The decision was motivated by genuine concern over what appeared to be a “years’ long crisis”, it continued, while adding a statement to workers ultimately untethered from the company.
“As we have said from the beginning, we deeply regret the personal impact the outsourcing decision had on all those affected and we sincerely apologise for that.”
The workers’ legal representatives say Qantas’ appeal, if successful, could have led to further de-unionisation efforts by big employers.
Josh Bornstein, principal at Maurice Blackburn Lawyers, said, “When companies outsource workers like Qantas [did], they effectively avoid having to bargain with their labour.
“Instead, they engage labour hire agencies and dictate to those agencies what they are willing to pay for labour.
“Outsourcing has been one of the reasons that employees have lost the ability to obtain real wage increases.
“Qantas engaged in a collective bargaining avoidance scheme and thankfully, the High Court has recognised that it was illegal.”
The legal team will now seek compensation for adversely affected workers and the possibility of a “substantial penalty” against the airline, Bornstein continued.
Speaking outside the court, Michael Kaine, TWU national secretary, linked the case to broader political efforts against worker exploitation.
“We need urgent reform in this industry,” he said.
“There is a bill before Parliament as we speak to close loopholes in our laws that companies like Qantas has exploited.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
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