Last week, Qantas was hit with the largest fine in Australian employment law history – a $90 million penalty – after unlawfully sacking 1,820 employees during the COVID-19 pandemic.
Background
In November 2020, Qantas announced it would outsource its ground handling operations at ten airports to third-party providers. The move resulted in 1,820 terminations.
The Transport Workers’ Union of Australia (TWU) challenged the decision in July 2021. After a lengthy legal battle, including a High Court appeal, the Courts found that Qantas’ outsourcing amounted to adverse action under the Fair Work Act 2009 (Cth) (the Act).
The key issue was that Qantas made the decision, at least in part, to prevent employees exercising workplace rights – specifically, the right to take protected industrial action and to participate in enterprise bargaining in 2021. In total, there were 1,820 breaches of the Act. The TWU argued that this represented the most serious breach of the Act’s general protections framework to date, and sought the maximum penalty available of over $121 million.
The $90m Fine
While Qantas conceded that a substantial penalty was appropriate, it argued that the case already served as a ‘wake-up call for corporate Australia’ and that the maximum fine would be excessive.
The Court ultimately imposed a $90 million penalty, considering:
- the scale and seriousness of the contraventions,
- the financial advantage Qantas sought through outsourcing,
- the mixed level of remorse shown, and
- the senior management’s calculated involvement.
The Court stressed that penalties should be proportionate, serving deterrence without being oppressive. Of the total penalty, $50 million will be paid directly to the TWU, while $40 million will be distributed between the TWU and the affected workers.
Key message for Employers
This decision is a stark warning showing that breaches of the Act can result in extraordinary financial consequences. Courts will not hesitate to impose record-breaking fines where employer conduct undermines employee rights on a large scale.
The case highlights two important takeaways for employers:
- Adverse action provisions are broad.
Employers must carefully consider whether decisions could be seen as interfering with current and/or future workplace rights. For example, this means that if an employee is about to complete the minimum engagement period and you want to terminate them quickly to avoid an unfair dismissal claim, that hurried termination made with the idea of circumventing a claim, could lead to a much more serious general protections claim. When contemplating taking action against employees, get advice early and prior to putting the wheels in motion.
- Deterrence is key.
Courts will impose penalties that send a strong message to other employers, particularly where senior management is directly involved.
For employers, this is a blunt reminder to treat the legal and cultural risks of workforce decisions as seriously as the commercial drivers behind them. Although, notably, Qantas reported that the sackings in this matter saved them an estimated $500m, so they could clearly afford the $90m fine. Can you?
Get in touch to discuss your options with our team.