Federal Court of Australia
Qantas Airways Ltd v Transport Workers’ Union of Australia  FCAFC 71
In accordance with the practice of the Federal Court in cases of public interest, importance or complexity, the following summary has been prepared. The summary is intended to assist in understanding the outcome of the proceeding, and is not a complete statement of the conclusions reached by the Full Court. The only authoritative statement of the Full Court’s reasons is that contained in the published reasons for judgment which will be available on the Federal Court judgments website. The summary is also available there.
On 30 November 2020, Qantas Airways Ltd (Qantas Airways) made a decision to outsource ground handling operations at 10 Australian airports that had been performed by employees of Qantas Airways and its wholly owned subsidiary, Qantas Ground Services Pty Ltd (QGS). The effect of the outsourcing decision was that ground handling operations work would instead be carried out by contracted third-party ground handling companies.
As a consequence of the outsourcing decision, the employment of approximately 1683 employees of Qantas Airways and QGS was terminated during 2021.
Following the implementation of the outsourcing decision in 2021, Qantas Airways’ ground handling operations business function ceased to exist.
At the time of the outsourcing decision, much of Qantas Airways’ flying activity had dramatically decreased due to the COVID-19 pandemic.
The timing of the outsourcing decision also had the consequence that the scope for any protected industrial action by Qantas Airways and QGS employees in the balance of 2020 and in 2021 was effectively eliminated. That was primarily because the employees of Qantas Airways were unable to take protected industrial action (industrial action from which they would be immune from suit under s 415 of the Fair Work Act 2009 (Cth) (FW Act)) until the nominal expiry date of the Qantas Airways enterprise agreement on 31 December 2020.
An employee’s ability to participate in protected industrial action is a “workplace right” within the meaning of s 341 of the FW Act. Section 340(1)(b) of the FW Act provides that, “A person must not take adverse action against another person … to prevent the exercise of a workplace right by the other person”.
The TWU commenced proceedings in the Federal Court of Australia alleging, relevantly, that Qantas Airways had contravened s 340(1)(b) of the FW Act by making the outsourcing decision. The TWU sought reinstatement of the affected employees into their previous positions, compensation for the employees and the imposition of pecuniary penalties. The TWU also alleged contraventions of ss 340(1)(a) and 346(a) of the FW Act.
The judgments appealed from
On 30 July 2021, in Transport Workers’ Union of Australia v Qantas Airways Ltd  FCA 873, a single judge of the Federal Court (the primary judge) found that Qantas had contravened s 340(1)(b) of the FW Act (but not ss 340(1)(a) or 346(a)).
On 25 August 2021, his Honour subsequently made declaratory orders reflecting these findings in Transport Workers’ Union of Australia v Qantas Airways (No 2)  FCA 1012.
The declarations that Qantas Airways had contravened s 340(1)(b) of the FW Act made it necessary for the primary judge to consider the TWU’s application for reinstatement of the employees to their previous positions, and whether compensation and penalties should be ordered.
On 1 October 2021, his Honour determined that a hearing of the application for reinstatement should precede any hearing for compensation and pecuniary penalties in Transport Workers’ Union of Australia v Qantas Airways Ltd (No 3)  FCA 1339. QGS was also joined as a party.
After hearing the application for reinstatement, on 17 December 2021, his Honour refused to order reinstatement in Transport Workers’ Union of Australia v Qantas Airways Limited (No 4)  FCA 1602.
There were two appeals heard before the Full Court of the Federal Court on 24 and 25 February 2022.
In the first appeal, Qantas Airways and QGS (together, Qantas) appealed from the declarations made by the primary judge that Qantas Airways had contravened s 340(1)(b) of the FW Act, and the TWU filed a cross appeal (Contravention Appeal).
In the second appeal, the TWU appealed from his Honour’s orders refusing to order reinstatement of the employees (Reinstatement Appeal).
The Full Court has decided to dismiss Qantas’ Contravention Appeal, and has consequently found it unnecessary to determine the TWU’s cross-appeal.
The Full Court has also decided to dismiss the TWU’s Reinstatement Appeal.
The Contravention Appeal
On 25 August 2021, the primary judge made declaratory orders that Qantas Airways, in making the outsourcing decision on 30 November 2020, engaged in conduct which contravened s 340(1)(b) of the FW Act against employees of Qantas Airways and QGS who performed ground handling and fleet presentation work at the relevant airports and whose employment was covered by the relevant enterprise agreement.
Qantas claimed that the outsourcing decision was made to:
(a) deliver annual cost savings of around $103 million;
(b) provide the ground operations on a fully variabilised “cost per turn” basis; and
(c) eliminate the need for capital expenditure for new ground handling equipment of $80 million.
Qantas Airways was required by s 361 of the FW Act to prove that there was no prohibited reason for the outsourcing decision of a kind identified by the TWU. The prohibited reason identified by the TWU was to prevent the affected employees from exercising their workplace right to organise and engage in protected industrial action and enterprise bargaining in 2021. His Honour was not satisfied that Qantas Airways had proved on the balance of probabilities that the decision-maker, Mr Andrew David (the Chief Executive Officer of Qantas Domestic and International), did not make the decision to outsource the ground operations for reasons which included this prohibited reason.
On appeal before the Full Court, Qantas contended that the primary judge erred in making the above finding, for reasons which included that the primary judge had incorrectly construed the phrase “to prevent the exercise of a workplace right” in s 340(1)(b) of the FW Act as extending to adverse action taken to prevent circumstances arising whereby a workplace right, even if not presently in existence, might arise and could be exercised in the future. Qantas also contended that the primary judge erred in finding that the outsourcing decision was made to prevent the exercise of the workplace right identified.
The Full Court has dismissed each of Qantas’ grounds of appeal. The Full Court finds that s 340(1)(b) extends to action taken with the ambition of preventing the future exercise of a workplace right by a person, including where the workplace right is not presently existing at the time the adverse action is taken. The Court also finds that the primary judge did not err in concluding that preventing the exercise of a workplace right was more than a mere contributing cause or consideration for the decision.
The Full Court further finds that the primary judge did not err in rejecting as unconvincing the evidence of Mr Paul Jones, Chief Operating Officer of Qantas Airways, that no part of his reasons for endorsing the outsourcing decision was to prevent employees from disrupting services in 2021 by taking protected industrial action, when it was hoped that airline services would be returning to normal. Once that conclusion was reached, along with the conclusion that there was no difference suggested in the views as to the risks and rewards of the outsourcing decision as between Mr Jones, Mr Hughes (the Executive Manager of Qantas Airports) and Mr David, it was for Qantas Airways to prove that this was not a substantial and operative reason for making the outsourcing decision, and Qantas failed to discharge that onus.
The Full Court also rejects Qantas Airways’ contention that the primary judge erred in concluding that Qantas had contravened s 340(1)(b) of the FW Act in respect of employees who were not union members and that the declaration should extend to non-union employees. Rather, the Full Court finds that in circumstances where the non-union employees had the legal capacity to join in with union members in protected industrial action organised by the TWU, it was for Qantas Airways to establish that the outsourcing decision was made by Mr David in the absence of any anticipation that non-union employees would participate in those events.
For these reasons, the Contravention Appeal has been dismissed.
The Reinstatement Appeal
The TWU appeals from the primary judge’s decision not to order reinstatement of the affected employees. Before the primary judge, the TWU sought an order under s 545(1) of the FW Act that Qantas reinstate the affected employees to the positions they held immediately prior to the cessation of their employment.
As Qantas had completed its outsourcing of its ground handling business function and entered a series of third-party contracts for provision of such services, it would be necessary for Qantas Airways to recreate that business function in order for the employees to be reinstated. To do this it would have to, inter alia: buy back ground handling equipment; terminate its contracts with third-parties; recruit, train and employ engineers, workforce planners and managers; and enter new leasing arrangements for space at the ten airports.
The primary judge identified five interrelated reasons for refusing the global reinstatement relief sought:
1. The very considerable cost for Qantas Airways, and potential for significant delay, in recreating the ground handling business function.
2. The absence of clarity as to the number of employees who would opt for reinstatement.
3. The fact that any global reinstatement order would be likely to produce real uncertainty and ongoing disputation, particularly in the context of the relationship between Qantas Airways and the TWU.
4. The likely inevitability of retrenchment at some time in the future should the outsourced employees be reinstated.
5. The availability and appropriateness of the remedy of compensation for the affected employees if reinstatement were not ordered.
The Full Court finds that the primary judge did not err in refusing reinstatement. His Honour did not give excessive weight to the cost and inconvenience to Qantas Airways of recreating its in-house ground handling business function and did not fail to give adequate weight to factors favouring reinstatement.
Moreover, contrary to the TWU’s submission, the primary judge was not required or permitted to take into account any principle that no employer shall be permitted to take advantage of their own contravention when considering the appropriate orders to make under s 545(1) of the FW Act.
The TWU further submits that the primary judge failed to engage in any proper balancing between alternative remedies of reinstatement and compensation for past economic loss on the one hand, and no reinstatement and compensation for past and future economic loss on the other hand. However, the Full Court finds that it was open to his Honour to conclude that whatever the ultimate calculation of compensation, it was a more appropriate remedy in the circumstances than an order for reinstatement. The Full Court finds that the primary judge was required to consider, and did appropriately take into account, whether reinstatement and compensation for past economic loss was a more appropriate order than compensation alone.
The TWU’s submission that the primary judge erred by mistaking the fact, or by taking into account, that there would be little or no work for reinstated employees to do after reinstatement, and that a global reinstatement order would be likely to produce real uncertainty and ongoing disputation, also cannot be accepted on a proper reading of his Honour’s reasons.
The primary judge found that if the affected employees were reinstated, Qantas would, as soon as it was legally possible, retrench them. The TWU contends that this was a mistake of fact on a material matter that vitiated the exercise of the discretion. However, on the evidence, the TWU was unable to demonstrate such a mistake. His Honour’s conclusion was inferred from the evidence.
The TWU has not succeeded in establishing any of its grounds of appeal.
Remaining proceedings before the primary judge
Following the Full Court’s decision the primary judge still has to determine the TWU’s claim for compensation for the affected employees and the pecuniary penalties to be imposed on Qantas Airways.
BROMBERG, RANGIAH AND BROMWICH JJ
4 MAY 2022