The humiliation of Qantas is now complete

It should not have been possible for things to get worse for Qantas after it exhausted all appeals in 2023 but remained guilty of illegally sacking 1800 workers at the height of the pandemic.

But the record penalty today was in no small part due to serious questions about whether the airline has truly changed its ways under new chief executive Vanessa Hudson or merely applied a fresh lick of paint to its old corporate culture.

In a judgment that will have corporate Australia collectively choking on their lattes, Justice Michael Lee smashed the airline with a record fine of $90 million to help ensure it would act as a deterrent for other corporate giants contemplating unlawful corporate behaviour on this scale.

And it was matched by his lacerating words.

The judgment chided the airline for its “vehement and regular denials of wrongdoing” in contradiction of his findings and “an attitude of adamantine self-righteousness”.

One matter he raised was the mediation in April last year after Qantas lost its High Court appeal over the sackings.

Despite the replacement of Alan Joyce with Vanessa Hudson as chief executive, the only fresh item on the agenda for the Qantas legal team was an argument denying that compensation was payable to its illegally sacked workers. Qantas lost that argument.

It provided quite a contrast with Hudson’s statements later that year that the compensation was “an important step in bringing closure to these individuals”.

“If any further evidence was needed as to the unrelenting and aggressive litigation strategy adopted in this case by Qantas, it is provided by this effort directed to denying any compensation whatsoever to those in respect of whom Qantas was publicly professing regret for their misfortune,” the judgment said.

Justice Lee did acknowledge the airline had – to a limited extent – held senior management such as Joyce responsible for their actions.

But there was little solace for the airline in his reference to an obscure 17th century French play he referenced in the judgment: “It goes too far to conclude Qantas is now simply like Tartuffe – pleading virtue only when cornered and feigning contrition while harbouring no genuine regret. I do think persons of responsibility within Qantas do now have some genuine regrets, but this more likely reflects the damage this case has done to the company.”

The latest damage is easily judged by the fact that the $90 million fine was much closer to the $121 million requested by the Transport Workers’ Union (TWU) than the $40 million baseline set by Qantas. It represents a humiliating rebuff of the airline’s argument it had expressed remorse and undertaken significant culture change as a prevention measure.

Justice Lee took issue with two particular points of the Qantas PR campaign when it came to determining the airline’s contrition – and the size of the penalty.

The judgment may bring the fallout to a close for Qantas, but it raises the stakes for the rest of corporate Australia.

One was the recurring theme that it had sound commercial reasons to outsource its 1820 employees.

It “overlooks the obvious reality that since man first started to engage in commercial activity, the motivation to engage in unlawful conduct in carrying out such activity can be accurately characterised as being predominantly a commercial one,” Justice Lee said.

The other was the airline’s unwillingness to acknowledge that the conduct was unlawful and accept responsibility for it.

Another issue that seemed to rankle Justice Lee was Qantas declining to make Hudson available as the obvious person who could provide direct and compelling evidence of the corporate change and contrition the airline has undergone.

After all, she was one of the most senior executives under Joyce and leads the airline now.

Instead, Qantas offered their HR boss Catherine Walsh, who joined the airline last year from PwC.

Was it a pragmatic cost of doing business for Qantas?

As Justice Lee’s judgment said, it may have been an “informed and deliberate” decision by the Qantas legal team given it would have been reasonable for Hudson to be asked about the extent of her knowledge of and involvement in the outsourcing decision.

Qantas, which made a $1.39 billion in underlying profit before tax for the December half year, may have preferred to pay a $121 million penalty than risk Hudson appearing before the court.

The judgment may bring the fallout to a close for Qantas, but it raises the stakes for the rest of corporate Australia with the awarding of at least $50 million of the penalty to the TWU for bringing the illegal conduct to light when no government body showed interest.

Justice Lee noted the payment would “strongly incentivise” unions to bring prosecutions under the Fair Work Act against corporates with deep pockets – which is exactly what the big end of town fears.

But he also proved sceptical when it comes to relying on the union’s discretion to decide how much of the $90 million penalty would be handed to the sacked workers.

Justice Lee said he would hold further hearings on how the remaining $40 million will be shared between the union and affected workers.

If the judgment raises questions about Hudson’s cultural revolution at the airline, investors can at least take heart that Qantas chairman John Mullen is less than a year into his role.

Mullen is finally making his presence felt, with marketing guru Todd Sampson being shown the boardroom door this month. His departure should not be the last.

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