The fall-out from Qantas

$90 million.

The industrial relations world is still coming to terms with the sheer scale of the Federal Court’s decision on Monday. Justice Lee imposed a penalty of $90 million on Qantas for its pandemic-era decision to outsource ground operations across ten airports, displacing approximately 1,820 employees.

Qantas’ decision, challenged by the Transport Workers Union, was found unlawful because it was made in part to prevent employees exercising future workplace rights. 

With the unlawfulness of Qantas’ conduct already determined by Justice Lee and the High Court, and compensation agreed to the amount of $120 million to the dismissed employees (in addition to redundancies already paid), the last stage of the proceedings was to determine what pecuniary penalty Qantas should pay in respect of its breaches (i.e. the ‘fine’).

Penalty decision

Justice Lee’s decision to impose a penalty of $90 million was triggered by 1,820 separate breaches, one for each of the affected employees. The Judge considered the conduct to be “of a singular scale and character”. 

The Court made comments that the relevant decision makers must have known about the unlawfulness of the prohibited reason and also suggested that considerable efforts were made to ensure that relevant records did not record reasons for the decision.

A central theme of the penalty judgment was the Court’s belief that Qantas had not behaved in a way which suggested it was truly contrite but rather was engaging in ‘performative remorse’. 

Already notorious for its ‘combative industrial relations culture’, the Court noted that Qantas’ consistent PR campaign throughout the litigation suggested that it did not accept that its decision was unlawful, that it had sound commercial reasons for making the decision and that it would not have changed the decision. Further, it had consistently sought to minimise the Court’s liability findings and had published immediate statements disagreeing with findings of the Court (presumably before those reasons had been properly considered). 

In total, while Justice Lee accepted Qantas was sorry, his Honour was not convinced that it was the ‘right kind of sorry’.

The amount

The $90 million penalty was made up of a $50 million award to the Union with the remaining $40 million to be determined at a later time.

The award to the union was made due to the risks and costs incurred in running a five-year case. 

Implications

As acknowledged in the judgment, Justice Lee’s decision applied relatively uncontroversial principles about penalties. Respectfully, the decision does not change the law.

On any view, the award of $50 million from an employer to a trade union is remarkable. 

While very few decision makers will make decisions involving the termination of 1,820 employees in one go, large scale redundancy decisions are common and invariably arise for complex reasons and in difficult scenarios.

As was noted in the case; the penalty will ‘send a message’ to well-resourced employers that breaches of the Act will not only result in significant penalties, but that those penalties will have the compounding effect of financially empowering unions as ‘enforcers’ of the Act and advocates for improved conditions.

The prospect of securing meaningful penalties against large employers will provide an attractive carrot for unions and fear-inducing stick for employers.

Applicant or class-action ‘for profit’ law firms are also likely to have taken note with the prospect of pursuing penalties as part of a revenue generating business model.

For employers, the case demonstrates the serious risks of running an aggressive industrial strategy and losing. 

Many employers will no doubt be left considering whether an approach of candour, compromise, cooperation and (if necessary) contrition may better serve their ends. 

At the very least, even if you are not sorry, it may save you a great deal of money to at least act like it.

As always, if this case has raised any questions please contact us at info@ablawyers.com.au or call 1300 565 846.