National airline held accountable for pandemic outsourcing

Australia’s High Court (the Court) has ordered Qantas to pay $170,000 to three employees who were unlawfully dismissed during the pandemic. This is the culmination of a four-year court case centring around the national airline’s cost-cutting decision to outsource ground handling operations during the global COVID-19 pandemic.

This case has become a landmark case in holding corporate companies liable for their actions. Here, our experts dive into the High Court’s decision, explain what happened, and share why this case has been a significant turning point within the corporate accountability landscape. Let’s get into it…

It started with outsourcing amid a pandemic

At the peak of the 2020 pandemic, Qantas turned to outsourcing ground handling roles, including baggage services, as a cost-management tool to control the impacts of strict government-imposed travel bans. Resulting in a loss of 1,700 jobs and savings of upward of $100 million annually, Qantas argued that these cuts were necessary because of drastic upheaval within the aviation industry.

However, the Transport Workers Union (TWU) disagreed, contesting that Qantas had actually acted unlawfully to avoid the possibility of allowing employees to unionise and that those who lost their jobs were victims of the airline’s corporate strategy to cut costs.

Qantas took proceedings to the High Court and fought these allegations for years. The court concluded that Qantas’ outsourcing decision had violated labour laws, which set the foundation for leading Federal Court Judge Michael Lee’s compensation ruling.

The decision: compensation for workers

Justice Michael Lee ordered Qantas to compensate the three baggage handlers a total of $170,000 split in the following amounts: $30,000, $40,000, and $100,000. These totals account for the psychological, emotional, and financial toll that Qantas’s actions caused during the current economic climate. Justice Lee’s judgement not only accounted for the impacts losing a job can have but also how this would have impacted the employees during an unprecedented time.

Because Qantas acted in 2020, the court found that if the company had delayed its actions until 2021, it could have proceeded with outsourcing legally.  However, due to the premature timing and the intent to prevent potential industrial action, the outsourcing was ruled unlawful.

What are the broader implications?

Vanessa Hudson, who has been the Qantas CEO since 2023, has been tasked with navigating the recovery of the company post-pandemic as well as legal and reputational challenges. The airline has been involved in several recent legal challenges, and with courts becoming stricter with corporate accountability, Hudson must ensure that the broader implications of this case are considered. This includes regaining the trust of the public as well as the government. After the recent High Court decision, Hudson has expressed regret over the impact of the outsourcing decision on the sacked Qantas workers, stating that the airline will work with the TWU to resolve outstanding compensation claims.

Hudson issued the following statement:

“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. We recognise the emotional and financial impact this has had on these people and their families. We hope that this provides closure to those who have been affected.”

What does this decision mean for employers going forward?

It’s important to remember that although these three workers were compensated, there’s still a long road ahead for the many other employees who were unfairly dismissed. The Court has given Qantas and the TWU until mid–November to negotiate a broader damages agreement for the other workers who were affected by Qantas’s decisions.

In such a case, the challenges for companies arise with managing financial burdens and ethical practices, especially during unprecedented times. This Qantas employment dispute case highlights the impacts hasty decisions can have on a business. For employees, especially in this case, it provides a reminder of the importance of union representation and the legal course in holding corporations accountable. The Court’s decision delves into the importance of transparency and fairness in corporate decision-making, particularly concerning outsourcing in Australia and other cost-cutting measures.

In addition to the payouts, the Court has recognised the broader systemic issue at hand, noting that Qantas’s actions weren’t solely about cutting costs but also about avoiding potential strikes. The case has put the spotlight on fair labour practices in corporate restructuring and serves as a deterrent for other companies considering similar measures under the guise of pandemic-driven necessities.

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If any of the information in this article has raised questions or you have another workplace matter you need assistance with, please reach out to our experts here.