The Federal Court has ruled on the Qantas Airways (ASX:QAN) compensation scandal with the airline now facing a hefty payout to around 1,700 workers deemed to be illegally dismissed during the COVID-19 pandemic.
Federal Court Judge Michael Lee ruled that Qantas outsourced its ground-handling workforce unlawfully, however, the decision is expected to limit compensation for the 1,683 affected employees to approximately one year’s pay.
The case was first brought to court in 2020 by the Transport Workers Union (TWU).
In 2021, Qantas contracted out the jobs to third-party operators including Swissport and Menzies. The airline claimed it was a commercial decision that would save it $100 million a year.
The TWU claimed that Qantas leveraged the pandemic to implement a pre-existing strategy aimed at removing its below-the-wing workforce, thereby reducing the union's influence and curbing industrial disputes.
Negotiations must resume
Justice Lee has now ordered Qantas and the TWU to resume negotiations to finalise compensation for the workers. This will be based on three test cases where in terms of “non-economic loss”, the court awarded $30,000, $40,000 and $100,000.
The ruling concluded with a strong warning from Justice Lee against further delays, following the four-year-long legal proceedings.
“Without assigning blame to either party, hopefully some common sense can prevail after all the disputation that has taken place, including three separate hearings, six first instance judgments, three appeals — two by Qantas and one by the union, various notices of intention and interlocutory dispute,” said Justice Lee.
“Vast legal costs have been expended, and particularly by Qantas, who have retained no less than five senior counsel during the course of the matter and numerous solicitors from one of Australia’s pre-eminent law firms.”
Justice Lee said both sides had “engaged in rhetoric about being willing to resolve all issues with promptitude”.
He said now was the time to act.
“It may be a triumph of hope over expectation but my desire is for the court to move quickly to resolve any penalty and the balance of compensation issues,” Justice Lee said.
“Apart from any public benefit, finality would help bring a degree of closure to those workers who’ve been wronged, particularly for those who’ve experienced financial and emotional distress.”
TWU victory
TWU national secretary Michael Kaine claimed the decision as a victory for transport workers.
“Qantas says it’s turned over a new leaf. Well, it’s time to prove it,” Kaine said.
“After relentlessly prolonging this case and denying workers justice, Qantas must do everything in its power to ensure appropriate compensation to workers. They should not have to suffer a day longer after the last four years of anguish.”
Qantas CEO Vanessa Hudson reiterated her apology to the outsourced workers and committed to speeding up compensation payments.
“We recognise the emotional and financial toll this has taken on these individuals and their families,” she said.
“We hope this will bring closure to those affected.”
In its full-year results released in August, Qantas increased its provision for the matter by A$70 million but has not disclosed the total amount reserved.
The TWU previously estimated that Qantas could face over A$200 million in costs related to the case.