High Court ruling on Qantas tipped to have wide-ranging impact on business

Australia’s biggest business organisation says employers will be on notice over how they move to outsource work, after a landmark High Court ruling that Qantas illegally sacked 1700 staff during the depths of the COVID-19 pandemic.

In another blow to the airline, the High Court on Wednesday upheld a Federal Court ruling that Qantas breached the Fair Work Act when it stood down workers in 2020 and began using third-party providers.

Qantas lost its High Court appeal over the sacking of 1700 workers. Credit: AP

Australian Chamber of Commerce and Industry (ACCI) chief executive Andrew McKellar said the ruling would have a “wide-ranging impact” on businesses of all sizes.

“This case was not about the legitimacy of labour hire or outsourcing as a commercial decision. The High Court did not, and would not, address that issue,” he said.

“It is specifically stated in the case that Qantas has sound commercial reasons for their decision to outsource. However, the High Court has decided that the manner in which they outsourced their operations was not in keeping with the general protections regime,” he said.

This means that, while the case has nothing to do with the government’s proposed industrial relations laws before Parliament, McKellar thinks it could still “have a wide-ranging impact on the day-to-day operations of businesses of all sizes, including small businesses”.

The Business Council of Australia declined to comment. Australian Industry Group (Ai Group) was also approached for comment.

On Wednesday the High Court unanimously upheld two rulings made by the Federal Court, which found the airline’s outsourcing of around 1700 baggage handlers, cleaners and ground staff – during the pandemic – was unlawful.

“When companies outsource workers like Qantas, they effectively avoid having to bargain with their labour. Instead, they engage labour hire agencies and dictate to those agencies what they are willing to pay for labour,” Maurice Blackburn principal Josh Bornstein – who represented the sacked workers – said.

“Outsourcing has been one of the reasons that employees have lost the ability to obtain real wage increases. Qantas engaged in a collective bargaining avoidance scheme and, thankfully, the High Court has recognised that it was illegal.”

The win is expected to embolden the federal government’s attempts to change Australia’s industrial relations laws which were already drawing opposition from corporate Australia.

Maurice Blackburn referred to companies with similar outsourcing issues such as BHP which operates with tens of thousands of contract workers who could be affected by the government’s same work, same pay provisions in the proposed legislation.

“BHP estimates the financial impact of SJSP to our Australian operations will be up to $1.3 billion annually. This cost is equivalent to the labour cost of approximately 5000 full-time employees across our operational workforce,” the company said in May this year.

Amanda Lacaze, the chief executive of rare earths group Lynas, also expressed concern if these laws were extended to the mining industry.

While Qantas accepted the High Court decisions and apologised to the affected staff, it did not resile from the action taken at that time.

“The decision to outsource the remainder of the airline’s ground handling function was made in August 2020, when borders were closed, lockdowns were in place and no COVID vaccine existed,” Qantas said. “The likelihood of a years-long crisis led Qantas to restructure its business to improve its ability to survive and ultimately recover.”

The court decision will put further pressure on the Qantas board ahead of its annual shareholder meeting which is due to be held in early November.

The company was forced to accept an early retirement date from former chief executive Alan Joyce after the competition regulator proposed fines in the hundreds of millions of dollars if found to have breached consumer laws.

The regulator alleges that Qantas was advertising tickets for thousands of already cancelled flights in 2022.

Qantas has yet to reveal the bonuses that Joyce will be paid for his final year at the embattled airline.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.