UPDATED: Qantas loses lawsuit over outsourcing

(Updates with response from Qantas)

Australia’s Qantas Airways on Friday (30 July) lost a lawsuit filed last year by ground handling staff who said the airline’s move to outsource about 2,000 jobs violated the Fair Work Act. The suit was filed by the Transport Workers Union, the main body that represents baggage handlers, aircraft cleaning and refuelling staff. Despite the win in Australia’s Federal Court, it is unclear what penalties Qantas will suffer. The justice hearing the matter, Michael Lee, said this will be decided later. Union members said the outsourcing was done primarily because the affected staff were simply union members.

Qantas said outsourcing the ground handling work would save it about A$100 million annually, reduce capital expenditure costs by A$80 million over the next five years and allow it to match fluctuating demand. Qantas failed to convince Justice Lee it outsourced the roles purely for commercial reasons and not to try to avoid collective bargaining and industrial disputes in the future, according to Australian media reports.

• Qantas culls another 2,000 workers
• Qantas announces 2,500 more job cuts and may outsource ground handling operations
• Qantas pain shows in annual loss and A$4 billion drop in revenue due to COVID-19 pandemic

“Senior Qantas management have serious questions to answer after this judgment,” TWU national secretary Michael Kaine said. “The judge made clear that Qantas targeted its ground workers for outsourcing because they were united to fight for decent standards at the airline.”

The move to outsource these jobs was first made last year when Qantas said about 370 Jetstar ground workers were sacked and a further 2,000 ground staff on its mainline brand notified their roles were under review. The airline later rejected a last-minute in-house bid from the union to try to save the jobs in November, saying the offer failed to meet some key hurdles. Qantas has repeatedly said the decision to outsource was necessary due to the heavy toll of the COVID-19 pandemic on its business, which had led to a A$2.7 billion loss last financial year. The carrier has terminated about 8,500 workers during the crisis and had stood down thousands more.

In a lengthy statement issued after the court’s decision, Qantas said it intends to appeal the decision, adding “While the court accepted that Qantas made the decision to outsource in response to the unprecedented impact of the COVID crisis, it found the TWU’s claim that preventing future industrial action was also a factor had not been disproven – which is the threshold for such cases. Qantas fundamentally disagrees with this judgment, particularly in light of the following:

• Prior to the pandemic, Qantas was actively recruiting into its ground handling function and investing in new equipment – a sign that had no intention of outsourcing.
• Qantas had three clear reasons right from the outset as to why the outsourcing was necessary in the wake of the massive impact of the COVID crisis:
• Using specialised companies could save Qantas up to $100 million a year – savings it desperately needed to unlock as part of its recovery from COVID.
• It would also remove the need for Qantas to spend $80 million over five years on necessary ground handling equipment like tugs and baggage loaders.
• Outsourcing would allow resources to be better matched with fluctuating levels of demand, especially when the same workforce is providing services to scores of airlines at the same airport. The need for this variability has been shown again by the latest set of lockdowns.

“Today’s judgment does not mean Qantas is required to reinstate workers or pay compensation or penalties,” Qantas said in its statement. “These matters have not yet been considered by the Court and Qantas will oppose any such orders. Qantas will also seek to have its appeal heard as soon as possible and before any remedy hearing.”

Qantas Group Executive John Gissing, said: “The TWU has put forward its persecution complex that our decision to save A$100 million a year in the middle of a global downturn was really about stopping them from walking off the job at some time in the future. The fact is, Qantas deals with the operational risk of industrial action on a regular basis given the 50-plus agreements across the group. That risk pales in comparison with a pandemic that has grounded our fleet and our people for months, and has so far cost us A$16 billion in revenue. The focus of the TWU’s case was on a few documents that made reference to industrial action while ignoring the hundreds that don’t. Any company acting prudently has to consider all operational risks when making a significant decision, but a reference to the risk of industrial action risk does not automatically mean that it’s a reason for the decision. Qantas was motivated only by lawful commercial reasons, and this will be the subject of our appeal.”

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