Qantas has agreed to pay $120 million in compensation to 1,820 baggage handlers who were illegally outsourced in 2020, marking another costly chapter in the fallout from the airline’s controversial decision.
The settlement was announced on Tuesday following a prolonged legal battle between Qantas and the Transport Workers Union (TWU) including baggage handlers. After Qantas lost appeals in both the federal court and the high court, the two sides spent over a year in mediation to determine compensation for economic losses tied to wages.
The federal court, led by Justice Michael Lee, examined test cases involving three baggage handlers with varying circumstances. In October, Lee ruled that individual compensation payments should range between $30,000 and $100,000, with economic losses capped at 12 months since Qantas would have retrenched the workers in 2021 regardless, due to its aggressive cost-cutting strategy. The final payouts also included compensation for “non-economic loss” caused by the hardship and distress of the decision.
Payments will be distributed through a compensation fund, to be managed by legal firm Maurice Blackburn, starting early next year.
Beyond the $120 million in compensation, Qantas still faces significant penalties for violating labor laws, to be determined in 2024. The total cost of the outsourcing decision has now exceeded the $70 million Qantas allocated in its recent financial reports.
Despite these expenses, Qantas’ strong financial position – with a $2.1 billion underlying profit in the last financial year and a record $2.47 billion profit the year prior – ensures that the payout will not destabilize its finances.
This settlement follows other major payouts by Qantas, including $100 million in civil penalties and $20 million in compensation to customers for selling tickets to cancelled flights.
Qantas CEO Vanessa Hudson, who was CFO under former CEO Alan Joyce when the outsourcing occurred, issued an apology to the affected workers. She described the agreement with the TWU as a step toward closure, adding that Qantas was pleased to resolve the matter before Christmas.
TWU national secretary Michael Kaine called the settlement the end of “four gruelling years” for workers who endured “family breakdowns, financial stress, and mental hardship.” Kaine emphasized that the workers had been instrumental in building Qantas’ reputation as the “Spirit of Australia” and reiterated calls for a Safe and Secure Skies Commission to reform the aviation industry.
The federal court’s original 2021 ruling deemed Qantas’ outsourcing illegal, citing breaches of the Fair Work Act and evidence that the decision was partially motivated by a desire to avoid industrial action. During the hearings, the court also heard about the significant psychological toll on workers, with some requiring medication to cope with their job losses.
