Qantas hit with Australia’s largest industrial relations fine (so far)

In a landmark decision, the Federal Court has imposed Australia’s largest ever industrial relations penalty on Qantas, marking a pivotal moment in corporate accountability and workplace law enforcement. The $90 million fine, levied for the unlawful outsourcing of over 1,800 ground staff during the COVID-19 pandemic, has been widely hailed as a significant victory for workers’ rights and a stern warning to employers against mass breaches of the Fair Work Act 2009 (Cth) (FW Act).

Union leaders, including those from the Transport Workers Union, framed the ruling as a strong message to corporate Australia that workers will assert their legal protections. However, commentators have raised concerns about whether the penalty will serve as an effective deterrent, noting that Qantas reportedly saved significantly more than it has been required to pay.

Here, our experts dive into the details of this momentous decision, explain the key lessons for employers, and discuss why businesses must proceed with caution when considering outsourcing.

From 2020 to today: the details of the case

In November 2020, Qantas decided to outsource its ground handling, resulting in over 1,800 jobs being cut. The Transport Workers Union (TWU) argued that Qantas had proceeded with this decision at this time because of the impending expiration of the enterprise agreement, and the workers’ right to engage in protected industrial action as a result.

Qantas has been ordered to pay a $90 million penalty for unlawfully outsourcing 1,820 ground handling roles. In handing down the decision, Federal Court Justice Michael Lee stated the penalty should reflect the seriousness of the breach and bear a proportionate relationship to the maximum available penalty of $121 million, setting it at 75 per cent of that amount. Justice Lee directed that $50 million be paid to the TWU, which led the proceedings on behalf of the affected workers. The allocation of the remaining $40 million will be determined at a future hearing, including the possibility of compensation to individual workers

Turbulent times: unpacking the $90 million decision

In the judgement, Justice Lee considered that Qantas’s Chief Operating Officer at the time, Paul Jones, “factored into his risk assessment, as an important component, that the outsourcing decision should be taken at that particular time to prevent affected employees disrupting services in 2021 by taking protected industrial action”. While he accepted that Qantas was sorry, Justice Lee was “unconvinced that this measure of regret is not, at least in significant measure, a result of what the Full Court (Besanko, Wigney and Bromwich JJ) described as “the wrong kind of sorry”.”

It was also a point that Qantas’s current CEO, Vanessa Hudson, did not appear as a witness in proceedings, despite being “the person who could give the most direct and compelling evidence of corporate change and contrition”. Qantas’s conduct throughout the proceedings, including its media releases, as well as the size of the business, were also relevant in determining the size of the penalty. Justice Lee also considered that the anticipated savings from the outsourcing by Qantas were more than the maximum penalty that could be awarded.

Shining the spotlight on employer responsibility in workplace compliance

Qantas has since published a media release confirming that it will make the penalty payment, expressing that the judgment holds them accountable, in contrast to its previous media strategy of denying wrongdoing. The case marks a significant milestone in Australia’s industrial relations landscape, highlighting the responsibility of employers to comply with workplace laws and the consequences of engaging in unlawful labour practices. The FW Act includes civil penalty provisions for breaches of various workplace laws, particularly relating to minimum employment standards, industrial relations conduct, and employer obligations.

Civil penalties may be imposed for breaches of various provisions under the FW Act, including:

• National Employment Standards (Part 2-2), such as non-compliance with leave entitlements or maximum weekly hours
• Modern Awards and Enterprise Agreements, including underpayment of wages or incorrect classification of employees
• General Protections (Part 3-1), involving adverse action, coercion, or workplace discrimination
• Record-keeping and payslip requirements, including failures to keep or issue proper documentation as required by law

Employers should seek legal advice before taking any action that might breach civil remedy provisions to ensure compliance with complex workplace laws and avoid significant penalties. Early advice helps identify potential risks, enables informed decision-making, and allows for proactive measures to prevent unlawful conduct. Given the serious financial consequences, including substantial fines and reputational damage, as well as the possibility of court orders to remedy breaches, obtaining professional guidance is essential to navigate obligations under the FW Act and protect both the business and its employees.

If any of the information in this article has raised questions about outsourcing or you’ve got another workplace matter you need assistance with, please reach out to the Citation Legal team for a confidential discussion here.

About our author

Zaynab Aly is a Solicitor at Citation Legal. She has a particular interest in the retail industry and regularly provides advice on workplace matters to find solutions for clients.