BREAKING: Qantas Hit With Record $90 Million Penalty for Unlawful Worker Outsourcing
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The Federal Court of Australia ordered Qantas Airways Limited to pay a record $90 million penalty Monday for unlawfully outsourcing 1,820 ground handling workers during the COVID-19 pandemic, marking the largest workplace rights violation in Australian industrial law history.
Justice Michael Lee ruled that Qantas' November 2020 decision to outsource ground handling operations at 10 Australian airports constituted "adverse action" designed to prevent workers from exercising their rights to industrial action and collective bargaining.
"This is the largest and most significant contravention of the general protections provisions in over 120 years," Lee wrote in his 328-paragraph judgment, describing it as conduct that "needs to change and needs further incentive to change."
The court ordered $50 million of the penalty be paid to the Transport Workers' Union of Australia, which brought the case, with the remaining $40 million to be allocated at a later hearing.
Union Victory After Four-Year Legal Battle
The landmark ruling concludes a four-year legal battle that saw Qantas unsuccessfully appeal to both the Full Federal Court and High Court of Australia. The Transport Workers' Union argued the outsourcing decision was motivated by a desire to avoid potential industrial action when enterprise agreements expired in December 2020.
Lee found that senior Qantas executives, including then-Chief Operating Officer Paul Jones and Executive Manager Colin Hughes, held prohibited reasons for supporting the outsourcing proposal. The judge noted Jones deliberately used "voice-over" discussions to avoid creating written records of his true motivations.
"Mr Jones was part of a culture which allowed him, when dealing with others within Qantas, and without reproach, to engage in conduct he thought might assist in later presenting a materially incomplete and hence false narrative," Lee wrote.
The court heard that internal documents revealed executives discussing the need to "isolate" decision-makers and ensure "pressure testing" remained privileged to enhance prospects of defending the decision in court.
Massive Financial Impact on Workers
The outsourcing decision, announced during the height of the pandemic when Qantas faced an existential crisis, resulted in the termination of most ground handling workers at major Australian airports including Sydney, Melbourne, Brisbane and Perth.
Beyond the $90 million penalty, Qantas has separately agreed to pay $120 million into a settlement fund for affected workers. The court found Qantas initially saved approximately $125 million in the 12 months following the outsourcing, though net savings were closer to $20 million.
Lee rejected Qantas' arguments that the decision was driven solely by commercial necessity during the pandemic, finding the company was partly motivated by avoiding future industrial action.
"The anticipated savings were more than the quantum of the maximum penalty in the first year and were thought to be ongoing, and the penalty cannot be perceived as being anything like just a cost of doing business," the judge said.
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Corporate Culture Under Scrutiny
The judgment delivered scathing criticism of Qantas' corporate culture and litigation conduct. Lee found the airline presented "positively and materially misleading" evidence during the original trial, with witness statements that did not reflect the reality of decision-making processes.
Current Qantas Chief People Officer Catherine Walsh acknowledged the company had learned from the case but could not provide specific details about cultural reforms when questioned about the misleading evidence.
"We sincerely apologise to our former employees who were impacted by this decision and we know that the onus is on Qantas to learn from this," CEO Vanessa Hudson said in a statement following an earlier compensation judgment.
However, Lee expressed skepticism about the genuineness of Qantas' contrition, noting the company continued aggressive litigation tactics even after expressing regret for affected workers.
Legal Precedent and Deterrence
The penalty represents approximately 75 percent of the maximum possible fine of $121.2 million, calculated at $66,600 per affected worker under federal workplace laws.
Lee emphasized the penalty's deterrent effect, particularly for large corporations that might view legal violations as acceptable business costs.
"A very large penalty must be imposed as the imposition of a pecuniary penalty must involve a financial disincentive which encourages compliance with the law by ensuring that contraventions are viewed by the contravenor and others as an economically irrational choice," he wrote.
The judge noted this case serves as a "wakeup call for corporate Australia" on how workplace decisions should be made and litigation conducted.
Industry and Union Response
Transport Workers' Union National Secretary Michael Kaine said the penalty reflected the severity of Qantas' conduct during the pandemic.
"This decision sends a clear message that employers cannot use crisis situations to strip away workers' rights," Kaine said. "These workers were illegally sacked for having the audacity to want to collectively bargain for better conditions."
The union, which incurred more than $4 million in legal costs pursuing the case, argued the penalty would help fund future workplace rights enforcement actions.
Qantas, which reported $2.078 billion underlying profit before tax for the 2024 financial year, has not indicated whether it will seek to appeal the penalty decision.
Compensation Distribution Continues
The court noted ongoing complexities in distributing the $120 million settlement fund to affected workers, with Lee expressing concern about the lack of transparency in the administration process.
A further hearing will determine how the remaining $40 million in penalties should be allocated, with the possibility that some funds could go directly to affected workers rather than the union.
The case has been closely watched as a test of Australia's workplace protection laws, particularly during economic crises when employers face pressure to restructure operations.
Industry observers said the record penalty demonstrates courts will not accept commercial pressures as justification for violating workers' fundamental rights to organize and bargain collectively, even during unprecedented circumstances like the COVID-19 pandemic.
The judgment comes as Qantas continues to rebuild its reputation following several high-profile controversies, including misleading customers about flight cancellations, for which it was separately fined $100 million by federal court in 2024.
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