1,800 terminated Qantas workers entitled to up to 12 months’ pay for mental distress
On 21 October 2024, the Federal Court of Australia handed down a significant decision on the amount of compensation payable to ex-Qantas workers for non-economic loss resulting from the termination of approximately 1,800 staff because of the airline’s COVID-19 outsourcing strategy.
Justice Lee held that the affected workers are to be compensated for the emotional distress suffered, based on the test cases of Mr Carney, Mr Bennett, and Ms Piggott (the test case individuals). These individuals and other affected workers are entitled to compensation for economic loss for up to 12 months following the outsourcing decision.
The Federal Court’s decision shows that, in circumstances where an employee can demonstrate that an adverse employment decision caused them significant injury and/or psychological harm, the court may award compensation for these non-financial impacts, in addition to any economic loss claimed.
During the COVID-19 pandemic, Qantas made a strategic decision to outsource its ground handling operations to various third-party handling companies at 10 of Australia’s airports. Many existing roles were thereby declared redundant.
The Transport Workers’ Union of Australia challenged this decision, claiming that Qantas had taken adverse action against the workers because of an “anticipated” workplace right – being the workers’ ability to engage in protected industrial action in future. Effectively, Qantas sought to minimise industrial disruption by removing the workforce before they were allowed, under the Fair Work Act, to engage in lawful industrial action.
Justice Lee was satisfied that the Fair Work Act’s adverse action protections could extend to the exercise of a future workplace right – a right that may not yet exist. He identified that the workplace right relevant to these proceedings was “the ability for the employees to organise and engage in protected industrial action and participate in bargaining in 2021.”
Justice Lee was also satisfied that an “appropriate causal connexion between the contravention [of the Act] and the loss claimed” existed, such that compensation was payable by Qantas to the affected employees. However, Justice Lee limited the ex-Qantas workers’ economic loss claims to 12 months following the outsourcing decision as his Honour found that the workforce was going to be eventually made redundant due to the pandemic.
In terms of non-economic loss, Mr Carney was awarded $30,000 for emotional stress. He described to the court “feelings of loss of security, anger, hurt, humiliation and distress,” which led to an “inability to sleep, racing thoughts and panic attacks.” Justice Lee acknowledged Mr Carney’s suffering, even though he had not developed a diagnosable psychological injury or mental illness.
Ms Piggott received $40,000 in compensation for her “somewhat more serious non-economic loss” as her suffering from significant distress and emotional hurt affected not only her physical health, but her interpersonal relationships with her husband and children.
Finally, Justice Lee accepted that Mr Bennett developed a “major psychiatric illness” due to Qantas’ conduct. His Honour noted that Mr Bennett “suffered acute symptoms arising from major depression, including suicidal ideation, low mood, anxiety, sleep disturbance, depleted motivation and increased problematic alcohol use.” Because of the significance of his injury, Mr Bennett was awarded $100,000 in compensation for non-economic loss as his quality of life was impacted to a substantial degree.
Final orders for compensation were to be set down on 15 November 2024. Following this, the Federal Court will make further orders regarding the total compensation payable to all affected workers.
In arriving at this decision, Justice Lee stated that he examined the impact “not from a loss of employment, but from the contravening conduct and consequential suffering upon the happening of the contravening conduct in 2020.”
This decision illustrates that, in appropriate circumstances where an employee can demonstrate that the impact of an adverse employment decision has caused them significant injury and/or psychological harm, a court may award compensation for those non-financial impacts (in additional to any economic loss that is claimed).
Further, if the evidence shows that the impact has led to a sustained and significant injury, the quantum of compensation may be significant. This is an important reminder for employers to ensure fair treatment in business decisions that might attract general protections claims under the Fair Work Act.
You can read the full judgement here: Transport Workers' Union of Australia v Qantas Airways Limited (Compensation Claim) [2024] FCA 1216.
Belinda Hapgood is a Special Counsel and Sophie Wyatt is a Lawyer, both in the Workplace Relations & Safety team at Holding Redlich in Brisbane.
