Qantas (ASX:QAN) in trouble for pocketing JobKeeper

Federal Court rules against Qantas in a decision that could have ramifications for all Australian businesses that have relied on JobKeeper.

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Qantas Airways Limited (ASX: QAN) has lost a Federal Court case regarding the way it handled JobKeeper payments.

In a decision that could also affect other businesses that have utilised JobKeeper to improve their bottom lines, the court ruled the airline misused the COVID-19 assistance scheme.

The case brought on by unions concerned penalty wages paid in arrears and whether they could be counted towards the $1,500 JobKeeper payment for that second fortnight.

For example, a Qantas worker performs $2,500 worth of overtime in fortnight number 1. Penalties are paid in arrears so they receive nothing out of Qantas' pocket but do receive $1,500 from JobKeeper.

Then in fortnight number 2, the worker doesn't do any shifts but receives the $2,500 they're owed from the previous period.

Qantas' argument was that the $2,500 counts towards the JobKeeper allowance for fortnight 2. So the airline has been giving such workers just the $2,500 while the company keeps the $1,500 from the government assistance.

The Federal Court disagreed with Qantas on Thursday, and ruled that employees should be receiving both the $1,500 and $2,500 for fortnight number 2.

The court's logic was that money owed for work from other periods can't be counted towards JobKeeper for the fortnight of payment. That is, JobKeeper can only offset wages earned in the same fortnight.

Many Australian businesses could owe backpay

Qantas has a large workforce on shifts, fortnightly pay and 'period on and period off' cycles due to the nature of the aviation industry.

The court has yet to decide on remediation orders. But Thursday's decision could mean the airline is up for a large backpay bill.

"The judgment will likely have adverse implications for all companies receiving JobKeeper, who are already reeling from the impacts of COVID," stated Qantas.

Justice Geoffrey Flick acknowledged his decision could result in a "windfall" for employees.

"It remains a matter for the legislature to 'tweak' or adjust the scheme if it sees fit," he said in the ruling.

According to Qantas, it had followed ATO guidance in handing out the 'safety net' assistance of $1,500 per fortnight.

"That 'safety net' assurance is a central part of the government's JobKeeper policy," the airline stated. "Today's judgement appears to cut across that principle."

The ruling especially impacts 8,000 Qantas workers terminated this year, as they would not have had subsequent fortnights to make up for the shortfall.

Qantas has 28 days to appeal to the full Federal Court, which it is "carefully considering". 

The Australian Services Union has vowed it would "fight this all the way if we need to".

"This is money stood-down Qantas workers desperately need. Qantas should do the right thing by its workers and promise to pay you what you are owed as soon as possible," stated the union.

"This is money that Qantas workers will spend in their local businesses, helping our economy to bounce back as soon as possible."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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