Full Federal Court throws out Qantas appeal over staff outsourcing decision

The Full Federal Court has quashed Qantas’ bid to prove that its outsourcing of 2,000 ground-handling staff was lawful.

Maurice Blackburn principal Josh Bornstein, who acted for the union, described the 4 May judgment as “a legal first”.

“The judgment has sent a strong message that companies cannot simply avoid collective bargaining by sacking their workers and engaging other workers through third parties. This is a significant victory for employee rights for employees across Australia,” Bornstein said in an article published by the firm.

The judgment opens Qantas to millions of dollars in potential penalties and compensation orders.

The ruling follows the Federal Court’s earlier finding that the airline mogul breached Fair Work legislation when it outsourced the baggage handling and cleaning roles for both Qantas and Jetstar in late 2020. According to the AFR, the decision to outsource reduced staff costs by over $100m per year, eliminated the $80m expenditure related to in-house equipment upgrades and allowed the airline to “better match resources to fluctuating demand.”

Qantas remained adamant that its outsourcing decision was made based on “lawful commercial reasons in response to the unprecedented impact of the COVID-19 crisis.” The airline contended that its active recruitment of ground-handling staff prior to the pandemic was “a sign that [Qantas] had no intention of outsourcing.”

However, the Full Federal Court found that the outsourcing decision was made in part to prevent Qantas employees from engaging in protected industrial action (PIA) that would interfere with the airline’s operations.

“The making of the outsourcing decision…meant that any scope for PIA in 2021, and any preparation for such PIA for the balance of 2020, was effectively eliminated,” the court said, adding that dismissing employees to prevent industrial action “has been proscribed by federal industrial legislation since 1920.” 

Despite throwing out Qantas’ appeal, the Full Federal Court refused an appeal by the Transport Workers’ Union to reinstate the workers, finding that Qantas would retrench any reinstated employees “as soon as legally possible”.

The airline said that it would appeal the Full Federal Court’s decision in the High Court.

“Today’s judgment does not mean Qantas is required to pay compensation or penalties,” the company said in a statement. “We will be asking the court to stay any further hearings on the issue [of compensation and penalties] until after the High Court process.”