In a statement, Qantas said that about 65 per cent of the misclassified employees had missed out on one or more benefits owed to them, such as rostered days off or overtime.

Majority 'better off overall'

But most staff were also overpaid their base rates and received bonuses to which they would not have been entitled.

"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," the airline said in a statement.

"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."

The total staff underpaid their entitlements has blown out by more than 10 times since the airline first detected the errors in February last year.

At the time, Qantas said it had misclassified about 220 workers and that just 55 workers, on about $90,000 a year, were underpaid.

Unlike other major employers, such as Coles and Spotless, the airline failed to reveal the updated underpayment total in its earnings results last month, despite initiating its review more than a year ago and signing the enforceable undertaking with the regulator about a week later.


A spokesman said at the time that the underpayment was probably not material and that the overpayments exceeded the underpayments.

In its 2019 annual report, Qantas said the misclassifications had resulted in cuts to its executive bonuses.

The FWO's enforceable undertaking requires Qantas to conduct an independent review to determine whether there are further underpayments and if so, to pay an even higher contrition payment of 7 per cent, plus $2000 per employee. It must conduct audits for the next three years.

Despite describing the underpayments as "significant", Ombudsman Sandra Parker said an EU was appropriate after Qantas proactively notified the FWO and fully cooperated with the investigation.

“This independent analysis will reduce the burden on the Fair Work Ombudsman, and subsequent cost to the taxpayer, for ensuring that Qantas back-pays its staff correctly," she said.

“Viewed together, the back-payment bill, interest paid on underpayments, additional payments made to impacted staff and contrition payment impose a significant cost on Qantas."


However, Australian Services Union assistant secretary Linda White criticised the regulator's agreement as an incentive to underpay workers given Qantas made "record profits" and "significant earnings" during the period.

“If you can steal $9 million, which would have earned millions in interest over that period and only get fined $390,500, companies will keep doing it, because they profit from the practice," she said.

Ms White said Qantas had "deliberately put in place processes to avoid the enterprise bargaining agreement by abandoning the standard HR practice of having position descriptions attached to jobs, opening the door to underpayments".

“This was not a misclassification or ‘bungle’ – it was a deliberate and systemic abuse of workers."

Qantas Group executive Rob Marcolina said that the airline had 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."

Qantas must rectify the underpayments by April 24 and complete the external review of the underpayments by October 14.