Qantas fined $90m in landmark ruling that could embolden unions

Qantas will pay a record $90 million penalty for illegally sacking more than 1800 workers, a Federal Court judge having reprimanded the airline for its conduct and criticised senior managers, including the former and current chief executives, in a judgment that could embolden unions to pursue further lawsuits.

Justice Michael Lee ordered on Monday that $50 million be paid directly to the Transport Workers’ Union, while a further $40 million penalty, which could end up with the affected workers, will be held for future payment.

The ruling could encourage the TWU to sue more employers. Lee highlighted in his judgment that the union now had the cash to chase new “test cases or other significant litigation”.

He also questioned why the federal government had failed to act on the illegal sackings of Qantas employees, leaving it to the union to “bear the burden of prosecuting this litigation at first instance and on appeal”.

The judge noted that the Fair Work Ombudsman had undertaken no pre-litigation investigatory action against Qantas, despite having an “array of powers”.

A spokesperson for the Fair Work Ombudsman said the ombudsman considered whether affected individuals had “the ability and resources to commence their own proceedings” when assessing potential litigation.

Workplace Relations Minister Amanda Rishworth would not comment on the Fair Work Ombudsman’s failure to investigate Qantas.

Rishworth also declined to comment on the way the $50 million settlement should be distributed by the TWU, saying it was up to the union and its membership to decide.

When asked whether the ruling could lead to frivolous cases from unions, Rishworth said the case “demonstrates that companies around Australia need to abide by our workplace laws”.

Stephen Smith, principal of Actus Workplace Lawyers, which specialises in employment law said: “The sheer size of the penalty awarded to the TWU in this case will no doubt encourage the TWU and other unions to pursue speculative claims against employers.”

Opposition workplace relations spokesperson Tim Wilson said the decision “underscores the importance of upholding Australia’s workplace laws and respecting the rights of employees”.

The penalty concludes a bruising industrial relations saga that began in 2020 when, facing the onset of pandemic lockdowns, Qantas announced it would outsource ground handling operations at 10 Australian airports, culling more than 1800 employees.

The judge accepted that Qantas was sorry for the illegal outsourcing, but wasn’t convinced the measure of regret was “significant” and described it as “the wrong kind of sorry”.

“Although the outsourcing decision was a single act, it was carefully planned. It was an act directed to and affecting a very large number of employees,” Lee said.

He was particularly critical of former chief executive Alan Joyce, who was in charge during the firings, and current CEO Vanessa Hudson, who was chief financial officer and has had to deal with the legal aftermath.

In his ruling, Lee noted the “the central importance of Joyce to the decision-making processes in 2020” even though information about Joyce’s knowledge of the sacking move emerged after Lee had already ruled in 2021 on Qantas’ liability under the Fair Work Act.

Joyce’s name being kept out of direct involvement in the outsourcing decision left the judge “with a sense of disquiet and uncertainty as to precisely what went on within the upper echelons of Qantas leading up to the outsourcing decision”.

Hudson’s absence in the trial was also noted. Lee said Qantas had claimed “the intention of the new leadership and accountability” would be to learn from its mistake and implement change. “But whatever this new leadership and accountability means in concrete terms, it did not extend to Ms Hudson taking the step of entering the witness box,” he said.

The decision was announced at a Federal Court hearing on Monday, following a ruling in the court in December.

The case has cost Qantas an estimated $240 million, about 19 per cent of its 2024 statutory profit after tax of $1.25 billion. Initially, Qantas saved about $125 million in the year following the mass firings of ground crew.

In a statement, Hudson said the company “sincerely apologised to each and every one of the 1820 ground handling employees and to their families”.

In 2024, Qantas had $70 million in provisions around the TWU case. In the half year to December 2024, it had added another $65 million for the case. Qantas says it paid the $120 million in compensation ordered last year, and will pay the $90 million penalty as specified by the court’s orders.

“The decision to outsource five years ago, particularly during such an uncertain time, caused genuine hardship for many of our former team and their families,” Hudson said on Monday.

Of the $90 million penalty he ordered Qantas to pay the TWU, Lee said: “It does not strike me as intuitively wrong that greater rewards might be appropriate for circumstances of greater risk.” The payment of at least a large part of the penalty to the union was warranted, he said, adding that he was “satisfied that such a course will facilitate and promote the specific and general deterrence.

“It will send a message to Qantas and well-resourced employers that not only will they face potentially significant penalties for the breach of the [Fair Work] Act, but those penalties will be provided to trade unions to resource those units to fulfil their statutory roles as enforcers of the act,” Lee said.

The TWU had sought the maximum penalty of $121 million, while Qantas was seeking a fine of between $40 million and $80 million. The union had asked to be the recipient of the full sum.

The case marks a significant win for the TWU at a time when the conditions of wages and work are being debated in the post-pandemic economy. The TWU’s national council is expected to meet to discuss how to deploy the $50 million towards supporting campaigns.

TWU national secretary Michael Kaine said: “Today’s decision is a final win for both those workers and the tens of thousands of other TWU members who backed them every step of the way. Qantas is only sorry now that it has to pay the largest penalty fine of any employer in Australian corporate history.”

As for the $40 million yet to be paid out, Lee said the court would appoint a separate party, known as a contradictor, to represent competing interests around the sacking case.

“There are real competing interests as between the union and the affected workers (or at least some of them),” Lee said.

A case management hearing would be held “as soon as practicable”.

On Thursday, Joyce appeared to break his silence on his handling of Qantas staff. In a speech in Sydney, he said: “It’s well known that, during COVID, Qantas, like many airlines, also faced very challenging decisions about its workforce. I acknowledge that.”

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