High Court upholds ruling that Qantas illegally outsourced 1,700 ground-handler jobs

The outsourcing of 1,700 ground handler jobs by Qantas Airways (ASX: QAN) in 2020 has been deemed illegal by the High Court after it dismissed an appeal by the airline against a Federal Court ruling two years ago.

While the original decision is said to have saved Qantas $100 million, the High Court defeat means Qantas is now facing the prospect of paying compensations to the affected employees along with penalties for its actions.

The Federal Court previously ruled out Qantas reinstating the affected workers, with Qantas acknowledging it will now consider compensation for the former employees, factoring redundancy payments already made.

While Qantas has made a provision against the potential liability following the original Federal Court decision in 2021, it has not revealed the value of this provision.

In a pointed spray at the company following the decision, Michael Kaine, the national secretary of Transport Workers Union (TWU) posted on  X that it was 'now time for the (Qantas) board to go'.

"But their last act should be to rip away the obscene bonuses (former Qantas CEO) Alan Joyce has received while these workers suffered," Kaine says. "The High Court has now found Qantas responsible for the largest case of illegal sackings in Australian corporate history.”

The original Federal Court action was brought by the TWU after Qantas decided to outsource ground handler positions at 10 airports in 2020 amid lockdowns during the pandemic.

In 2021, the Federal Court ruled that the move, in part, was driven by a desire to avoid industrial action, which the court found to be in breach of the Fair Work Act. 

“It was agreed that Qantas took adverse action against the affected employees in making the outsourcing decision,” says the High Court in its judgement handed down today.

“At the time of the outsourcing decision, the affected employees were prohibited from organising or engaging in protected industrial action under the act because the affected Qantas employees' enterprise agreement had not reached its nominal expiry date and the affected QGS employees were practically unable to take protected industrial action.

“The TWU commenced proceedings in the Federal Court, with issues arising as to whether Qantas could prove that it did not make the outsourcing decision to prevent the exercise of workplace rights by affected employees and whether the outsourcing decision prevented the exercise of workplace rights.”

The High Court found that while Qantas had ‘commercial imperatives’ for outsourcing the work, the company had not discharged its onus under the act that disproves the reasons for outsourcing included preventing industrial action.

In a statement today, Qantas says it accepts the High Court decision although it also highlights the uncertain conditions it was facing at the time.

“The Federal Court originally found that while there were valid and lawful commercial reasons for the outsourcing, it could not rule out that Qantas also had an unlawful reason – namely, avoiding future industrial action,” the company says.

“The High Court has now effectively upheld this interpretation.

“The decision to outsource the remainder of the airline’s ground handling function was made in August 2020, when borders were closed, lockdowns were in place and no COVID vaccine existed.

“The likelihood of a years-long crisis led Qantas to restructure its business to improve its ability to survive and ultimately recover.

“As we have said from the beginning, we deeply regret the personal impact the outsourcing decision had on all those affected and we sincerely apologise for that.”