Qantas deemed decision to illegally fire 1700 workers had ‘low’ legal risk

A Qantas executive has revealed the airline believed its decision to fire 1700 workers carried a low level of legal risk, a conclusion that has been torpedoed as the company prepares to pay compensation.

Former Qantas chief operations officer Colin Hughes fronted the Federal Court on Tuesday amid a battle between his former employer and the Transport Workers Union.

The union and the airline are engaged in a heated debate about compensation payouts for 1700 workers who were illegally sacked by Qantas in November 2020.

A year later, the Federal Court ruled the decision to fire the workers and outsource their roles to third party contractors was unlawful.

Before the decision was announced in August 2020, Mr Hughes said Qantas had been advised the risk of legal repercussions was low.

He met with lawyers from Herbert Smith Freehills about the proposal in June 2020 alongside other executives who outlined the division’s need to satisfy Qantas’ “requirement for savings”.

Mr Hughes said the initial advice from the lawyers was “outsourcing is not inherently unlawful” but the airline needed to have “sound commercial reasons” to justify the action.

He told the court the lawyers cautioned the airline to ensure it was protected against adverse action claims likely to be brought over the decision, and it should not breach any agreements.

“(They said) expect a challenge,” the former Qantas COO recounted.

“I don’t think we needed that advice. It wasn’t a revelatory piece of information.”

In a second meeting later that month, he said the lawyers told Qantas executives that the reasons for outsourcing, which focused on cutting costs, were “legitimate legal reasons”.

“We understood there were certainly no legal barriers to progressing and the legal risk was low,” Mr Hughes said.

He conceded the lawyers had not used the phrase “low risk” but clarified it was his “characterisation based on what I heard”.

Based on advice he received from the lawyers and various other parties, Mr Hughes assessed the legal risk and risk to operational continuity were both low.

However, the risk of provoking a government response and endangering Qantas’ brand and reputation was rated as high.

Ultimately, Qantas decided the benefits of saving $100m outweighed the risks.

It proceeded with the decision to fire 1700 staff and outsource their roles to third party contractors, which was later found to be illegal.

Mr Hughes gave evidence on the third day of a hearing that will determine the amount of compensation Qantas will pay its former ground services employees.

The TWU has estimated the airline will have to pay “many, many millions” in compensation for what it has declared to be the largest case of illegal sackings in Australia’s corporate history.

Qantas contends its payout should only extend to 12 months beyond April 2021 because the employees would have lost their jobs the next year anyway.

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