Qantas underpaid 638 employees by $7.1 million over eight years

The airline becomes the latest big company to disclose underpayments to workers.

Qantas Group CEO Alan Joyce. Picture: Dean Lewins/AAP

Qantas has underpaid 638 employees by $7.1m over eight years, becoming the latest major company to disclose the extent of multi-million-dollar underpayments to workers.

Revealing the big underpayment on Friday, Fair Work Ombudsman Sandra Parker said affected employees have been back paid with interest and an additional $1000 payment at an further cost to the airline of $2m.

Under an enforceable undertaking reached with the FWO, Qantas will make a “contrition payment” to government revenue of at least $390,500, an amount condemned as “meagre” by the Australian Services Union.

The FWO investigated Qantas after the airline “self-reported” that it incorrectly paid some of its marketing and administrative staff in line with the individual contracts rather than enterprise agreements that applied to the workers.

Ms Parker said Qantas had come forward and admitted to breaching the Fair Work Act for several years and significantly underpaying hundreds of its employees several million dollars.

“Viewed together, the back payment bill, interest paid on underpayments, additional payments made to impacted staff and contrition payment impose a significant cost on Qantas,” Ms Parker said.

“These additional measures, along with the cost of an independent expert and future audits, help to level the playing field for businesses who have complied with workplace laws.”

Qantas apologised to employees on Friday, saying the “misclassification issue’ affected about 1000 current and former employees, including the 638 underpaid workers.

It said the underpaid workers were not paid one or more benefits owed to them such as overtime or rostered days off.

But the company said about 830 of the current and past employees were “better off overall” than they would have been under the agreement due to higher base salaries and bonuses.

It said cash payments made over eight year in excess of the agreement were expected to be $22 million but Qantas would not seek to not recover that money.

Qantas group executive Rob Marcolina said on Friday: “We sincerely apologise to all our employees caught up in this misclassification issue, especially to those who were underpaid as a result”.

Linda White, the union’s assistant national secretary, said Qantas workers were outraged that the Fair Work Ombudsman had issued a “meagre” $390,500 fine to the airline giant “for more than $9 million in wage theft”.

Ms White said Qantas originally described the underpayments as an “embarrassing bungle” limited to just 55 underpaid workers. “This was not a misclassification or ‘bungle’; it was a deliberate and systemic abuse of workers,” she said.

She questioned the timing of the FWO announcement, saying it dropped the news on a Friday when it would be buried by coverage of the coronavirus.

“The airline industry is grappling with its most significant challenge in decades and workers are on tenterhooks about their future but after more than a year of investigation, the Fair Work Ombudsman has chosen today to ‘take out the trash’ and announce its deal with Qantas,” she said.

“That decision rubs salt in the wound for a community that is already struggling with a high cost of living and now faces an unparalleled period of uncertainty.”