Qantas has entered an enforceable undertaking with the Fair Work Ombudsman as part of rectifying a misclassification issue impacting around 1,000 current and former employees – some 640 of whom were owed $7.1 million in backpay.
The issue was self-reported by the airline in February 2019 and involved staff who should have been covered by the enterprise agreement that Qantas has with the Australian Services Union. Instead, these employees were placed on other terms and conditions, and received the wrong mix of benefits as a result.
This resulted in approximately 65 per cent of misclassified employees missing one or more benefits owed to them (such as rostered days off, overtime). In total, the majority of people (83 per cent) were better off overall than they would have been under the agreement, due to higher base salaries and bonuses.
Based on rectification to date, cash payments in excess of the agreement are expected to total $22 million (excluding bonuses) and total underpayments are expected to total $7.1 million across the 1,000 current and former employees, dating back to 2011.
Qantas will not recover money paid in excess of the agreement and has grandfathered current benefits (such as higher base salaries and bonuses) as well as adding entitlements required by the enterprise agreement, such as rostered days off.
Employees who received a lower base salary or superannuation than they should have been paid backpay with interest. Anyone who missed out a monetary entitlement has received an additional payment of $1,000 by way of apology. Work to rectify the issue will be completed by the end of April 2020, with the vast majority of rectification payments already made.
As part of the Enforceable Undertaking it has signed with the Fair Work Ombudsman, Qantas has committed to independent audits for the next three years to ensure full rectification and ongoing compliance. It will also make a contrition payment calculated at 5.5 per cent of underpayments to employees and is expected to be around $400,000 (to be confirmed once the rectification figure is finalised).
In its 2019 Annual Report, Qantas disclosed that the employee misclassification issue had contributed to a reduction in Executive Management bonuses in that year, as it fell short of the Group’s high standards.
COMMENTS FROM ROB MARCOLINA, QANTAS GROUP EXECUTIVE
“We sincerely apologise to all our employees caught up in this misclassification issue, especially to those who were underpaid as a result. We take our obligations as an employer very seriously and have worked with the Australian Services Union and Fair Work Ombudsman to fix this.
“Since we first reported this issue in February last year, we’ve put a lot of resources into calculating the full impact, fixing it for those affected and putting systems in place to make sure it doesn’t happen again. We realise this type of conduct by companies doesn’t meet community expectations, and it doesn’t meet our own commitment to our people or compliance.”