Issue 22 2021 - Is outsourcing unlawful?


In July, the Federal Court found that Qantas had engaged in unlawful adverse action when it decided to outsource the work previously undertaken by ground handling operations workers at ten of its airports.[1] While this case has been appealed – and should not be taken to state any general principles about outsourcing arrangements – it does highlight some of the risks associated with the decision-making process leading to outsourcing.


Between January 2020 and November 2020, and in particular consideration of the impacts of COVID and the resulting lockdowns and travel restrictions, Qantas went through a decision-making process that ended in a decision to outsource its ground operations work at ten Australian airports. This decision resulted in around 2,000 redundancies across those airports.


Justice Lee found, on a review of the evidence, that ‘one reason for pursuing outsourcing in 2020 was to avoid Qantas being in a position where it had to bargain with the [Transport Workers Union] and its members from December 2020 and face the prospect of industrial action’. On this basis, he found that the decision to outsource was (partially) to prevent the exercise of employees’ workplace rights. The parties are, at the time of this article, required to prepare submissions as to what orders and relief the Court should order.[2] Qantas has stated it intends to appeal the decision.


What does this mean for employers?

The case was complex. Significant background, relevant information, and consideration by Justice Lee went into in his decision that we do not set out in this note. This case should be seen as no more than a decision based on very specific circumstances, where the Court was satisfied that particular evidence suggested that the decision was taken for a ‘prohibited reason’ under the Fair Work Act 2009 (Cth) general protections provisions.


Justice Lee himself made it clear, as the very first statement in his decision, that ‘[d]espite some public statements to the contrary, this is not a test case about the industrial phenomenon of “outsourcing”; nor indeed is it a test case about anything at all’.


The key takeaway for employers is that while outsourcing is (at the time of writing) a commercial option open to employers, the reason for choosing to outsource cannot be because of any prohibited reason. Where employers make decisions about outsourcing while in the thick of enterprise agreement negotiations or disputes, they risk claims by relevant unions and employees that they are choosing to outsource for a prohibited reason. Penalties for general protections breaches are uncapped.


When employers are seeking commercial advice in relation to outsourcing, it would also be prudent to also seek industrial advice to ensure that the employer is not unknowingly contravening the Fair Work Act.


Require further information/assistance?

If you require further information or advice, please contact your Consultant.

[1] Transport Workers Union of Australia v Qantas Airways Ltd [2021] FCA 873.

[2] Order of Lee J in Transport Workers Union of Australia v Qantas Airways Ltd (Federal Court of Australia, NSD1309/2020, 4 August 2021).

EMA Consulting is not a law firm and therefore does not provide legal advice or services. The information contained within this document and associated material is general in nature and should not be relied upon. If you require specific advice on a particular matter, we recommend that you contact EMA Consulting on 08 8203 1700. Subject to the matter at hand, your EMAC Consultant may recommend that you obtain formal legal advice. If formal legal advice is required, upon your written instruction EMAC will brief your matter to a legal practitioner for this purpose. The contents of this document and associated materials do not represent legal advice.

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