The Qantas outsourcing case comes to a $120 million close

In December 2024, the High Court of Australia (the Court) ordered Qantas to pay $170,000 to three employees who were unlawfully dismissed during the pandemic. As part of broader negotiations ordered by the Court, Qantas and the Transport Workers Union (TWU) were given until mid-November to finalise damages for a further 1,820 workers who were affected by this outsourcing decision.

The national airline has agreed to pay $120 million in compensation proposed by the TWU to former ground handlers illegally sacked in 2020, marking a pivotal step towards justice for the affected employees.

Here, our experts explain the details of the Qantas compensation ruling and what the key takeaways are for businesses, especially when it comes to outsourcing decisions in Australia.

The long road to this outcome: a four-year legal battle has finally ended

During the 2020 pandemic, Qantas outsourced ground handling roles to save over $100 million annually, resulting in more than 1,800 job losses. The TWU claimed this move was unlawful and aimed at preventing strike action. After years of legal battles, the High Court ruled Qantas’s outsourcing decision violated labour laws, leading to a compensation ruling by Federal Court Judge Michael Lee.

Justice Michael Lee ordered Qantas to compensate three baggage handlers a total of $170,000 for the psychological, emotional, and financial harm caused. The court found Qantas’s outsourcing in 2020 unlawful due to its premature timing and intent to prevent industrial action, noting the company could have acted legally had it waited until 2021.

This Federal Court ruling comes after two appeals lodged by Qantas against previous verdicts relating to Australian outsourcing laws were unsuccessful. The final compensation agreement includes specific conditions for affected workers, ensuring clarity in eligibility and coverage.

These conditions are:

• Compensation is capped at approximately 12 months’ pay for each eligible worker.
• To qualify, workers must have been dismissed by late 2021, with their roles subsequently outsourced.
• The payouts will also cover amounts reimbursed to the Transport Workers Union (TWU).
• Additional costs incurred in transferring the funds to individual workers will be included in the compensation package.

What does this mean for businesses?

The Qantas labour dispute serves as a powerful example of how hasty business decisions can lead to significant consequences. For employees, it underscores the critical role of union representation and the legal mechanisms available to hold corporations accountable. The Court’s ruling emphasises the essential values of transparency and fairness in corporate decision-making, particularly when it comes to outsourcing and other cost-cutting strategies and workplace rights in Australia.

Beyond the financial payouts, the Court acknowledged the deeper systemic issues at play, highlighting that Qantas’s actions weren’t solely about reducing costs but also aimed at avoiding potential strikes. This case shines a spotlight on the importance of fair labour practices in corporate restructuring and sends a clear message to other businesses. It acts as a deterrent against leveraging crises, like a pandemic, as justification for undermining workers’ rights or bypassing ethical labour standards.

There’s no room for error when it comes to compliance. How can Citation HR help?

Even in the most challenging economic conditions, businesses should always proceed with caution when terminating an employee. The best way to protect your business before minimising your workforce is to seek professional advice and that’s where Citation HR can support you. With an always-on HR Advice Line, our experts can support and advise your business on a full spectrum of workplace matters.

Want to put our services to the test? Arrange a complimentary Workplace Compliance Consultation today.