Qantas proposed outsourcing ground services roles two years before illegally firing 1700 workers

Embattled airline Qantas had raised the prospect of outsourcing ground services roles two years before it illegally fired 1700 staff in favour of contractors, a court has heard.

The Federal Court ruled in 2021 that the airline had acted unlawfully when it sacked the ground services employees a year earlier and outsourced their roles.

Qantas’ attempts to quash the verdict were unsuccessful, and it is now battling with the Transport Workers Union over the amount of compensation to be paid to former staffers.

On Thursday, TWU barrister Mark Gibian SC pointed to internal documents which showed the airline had been considering outsourcing ground services roles in 2018.

He said Qantas proposed to outsource the ground services roles amid an ambitious years-long effort to install non-stop flights from Australia to London and New York.

The documents showed the proposal had been prepared and reached the stage of obtaining external legal advice about the risks of such a decision, Mr Gibian told the court.

Yet former Qantas CEO of Domestic and International, Andrew David, told the court he wasn’t aware of the outsourcing plan during his time at the helm.

Two years later, he made the decision to fire 1700 ground services workers and outsource their roles to third party contractors.

Mr David said he made the “judgment call” because the airline was “under a lot of pressure” to cut $900 million in costs over three years.

One of the biggest risks for the company in making the decision was the possible response from the government, he told the court.

The former CEO of Domestic and International told the court Qantas had accepted $850m through the government’s JobKeeper program which was “designed to keep people in jobs”.

“I was very cognisant … that us outsourcing 1700 workers in the context of JobKeeper scheme was an issue that needed to be managed carefully with government,” he said.

“The counterbalance to that was the huge pressure of losses Qantas was undertaking as a result of Covid on the business.”

Through negotiations, Mr David said Qantas was able to get the government “to a position to understand” the decision before the airline announced the mass lay-offs in August 2020.

He told the court he thought the risk of workers launching industrial action was high, but he hadn’t focused on the risk of a legal challenge.

“What was explained to me was the commercial reasons for outsourcing were lawful reasons,” the former Qantas executive said.

“It was on that basis I moved forward with (the outsourcing).”

He told the court he ultimately determined the legal, operational, government and industrial risks were “manageable in the context of the size of the commercial rewards”.

The TWU has estimated Qantas 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.

The airline contends its payout should only extend to April 2022 because the employees would have lost their jobs in 2021 anyway due to the ongoing effects of the pandemic.

Mr David told the court he would have “reached the same conclusion” to outsource the 1700 roles in 2021.

“The case for me would have been as compelling as it was in August 2020,” he said.

“If anything, the commercial imperatives had become more pressing and more urgent.”

By August 2021, Qantas had lost $16bn in revenue and was projected to lose $4bn more over the next four months.

Former Qantas Chief Operations Officer Colin Hughes agreed, telling the court he would have made the same recommendation to outsource in 2021 to save the airline $100m.

However Mr Gibian argued it was unlikely the airline would have made the decision when domestic flights were projected to return to 80 per cent of pre-pandemic levels by mid-year.

“You would not have (recommended outsourcing) in March 2021 because there was growing demand,” he suggested to Mr Hughes.

“I reject that,” Mr Hughes replied.

The former Qantas COO denied his testimony was “self serving (in a bid) to help Qantas’ case”.

The hearing will continue before Justice Michael Lee on Friday.

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