Qantas’ Record $90m Fine for Unlawful Sackings

Qantas has been fined $90 million for unlawfully sacking 1,820 baggage handlers and ground staff, a record penalty that stands as a warning to corporate Australia that cutting costs at the expense of lawful conduct can have serious legal and reputational consequences.

The outcome concludes a dispute that began in 2020 when Qantas announced it would outsource ground handling operations at 10 Australian airports in response to the COVID pandemic, which resulted in mass sackings.

Reading his judgment in the Federal Court of Australia, Justice Michael Lee highlighted the seriousness of Qantas’ conduct.

“To deprive someone of work illegally is to deprive someone of an aspect of their human dignity,” said Justice Lee.

He said that the decision will send a message to the airline and to other well-resourced employers that not only can they face significant penalties for breaches of the Fair Work Act 2009 (Cth) (FW Act), but also that the penalties will help unions fulfil their statutorily accorded roles as enforcers of the FW Act.

Justice Lee ordered the airline to pay $50 million directly to the Transport Workers’ Union (TWU) but is yet to determine where the remaining $40 million will be directed.

The penalty has been imposed in addition to the $120 million Qantas already agreed to pay as compensation to the sacked workers.

Breaches of the Fair Work Act

Justice Lee slammed the national carrier for its behaviour throughout the lengthy legal battle that lasted five years. Earlier in the proceedings, the Federal Court of Australia found that Qantas had contravened protections under the FW Act in outsourcing its workforce and in making its decision, Qantas was partly motivated to prevent industrial action.

Section 340(1)(b) of the FW Act provides that a person must not take adverse action against a person to prevent the exercise of a workplace right by that person.

Upon commencing proceedings, the TWU alleged that Qantas’ decision to outsource was made to prevent employees from exercising their workplace rights – a clear breach of s 340(1)(b) of the FW Act.

Julie Mehrdawi, Senior Associate at BlackBay Lawyers, said the fine reflects the seriousness of Qantas’ contraventions of the Fair Work Act.

“The severity of the penalty highlights the seriousness of employers engaging in unlawful adverse action, reflecting the Court’s position that mass breaches of the Fair Work Act will not be tolerated. Adverse action can include actions intended to punish employees, such as dismissing an employee or cutting back their shifts, simply because they exercised, or sought to exercise, their workplace rights.”

The Wrong Kind of Sorry

The question of Qantas’ remorse and accountability was raised in Justice Lee’s findings.

While he acknowledged the airline had apologised for unlawfully outsourcing 1,800 ground staff, he doubted the depth of that contrition, dismissing it as “the wrong kind of sorry” as Qantas appeared to be more concerned over the optics of their business rather than their treatment of the unlawfully dismissed workers.

Justice Lee was scathing of Qantas’ delayed remorse over its unlawful outsourcing.

“I do think persons of responsibility within Qantas do now have some genuine regrets, but this more likely reflects the damage this case has done to the company, rather than remorse for the damage done to the affected workers or any concern that it engaged in contravening conduct, a finding it resisted until it could resist no more,” Justice Lee said.

Ultimately, the Court found that legal accountability does not simply lie with a penalty or an apology, but the responsibility in recognising the genuine harm and impact caused to the lives of individuals.

Business Decisions with Real-Life Fallout

It is a financial and productivity reality that businesses, companies and employers often need to make tough economic decisions.

The Qantas decision demonstrated that an employer’s reasons for outsourcing cannot be used to stop employees from exercising their workplace rights.

Whether it involves redundancies, terminations, outsourcing or performance management, employers must remember they are dealing with employees’ livelihoods and should exercise care and sensitivity when making decisions such as these.

Prior to worrying about image and reputation, a company must first ensure that it is exercising proper corporate governance and legal compliance. Without these foundations, efforts to repair or maintain reputation will only go so far.

Ms Mehrdawi also noted the broader implications for employers:

“Once a company is associated with misconduct or non-compliance, it risks losing the trust and confidence of its workforce, clients and the public. Employers must abide by workplace laws and conduct business ethically and responsibly, regardless of the size of the organisation.”

The content in this Article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. It should not be relied upon as such. You should seek legal or other professional advice before acting or relying on any of the content.