By Byron Kaye

SYDNEY (Reuters) - A court on Monday ordered Australia's Qantas Airways to pay a combined A$170,000 ($114,000) to three baggage handlers it unlawfully sacked in 2020, implying a big damages bill for a lawsuit involving about 1,700 former workers whose jobs were outsourced.

Federal Court Judge Michael Lee said Qantas must pay each of the fired workers A$30,000, A$40,000 and A$100,000 respectively for non-economic loss to reflect the "harm sustained" when the airline laid off them and their colleagues to prevent industrial action.

The carrier must use those payouts as "test cases" as it negotiates with a union on a total damages bill for all of the former ground workers. Qantas had claimed the sackings were warranted as a cost-cutting measure during the COVID-19 pandemic and fought the industrial lawsuit all the way to the High Court.

Lee said he found if Qantas had not illegally outsourced its ground handling operations in 2020, it would have done so lawfully in 2021 to help save about A$100 million a year.

Though the ruling did not give a final payout figure, it sets the tone for the last major legal battle for the airline as it tries to recover from a reputational horror stretch in relation to its actions during and immediately after pandemic restrictions from 2020 to 2022.

The airline said it May it would pay A$120 million to settle a regulator lawsuit accusing it of selling tickets on already cancelled flights in the months after Australia's international border reopened. It was also accused of pressuring the federal government to stop rival Qatar Airways from offering more flights to Australia.

"Qantas says it's turned over a new leaf," said Michael Kaine, national secretary of the Transport Workers Union that brought the industrial dismissal case.

"It's time to prove it. After relentlessly prolonging this case and denying workers justice, Qantas must do everything in its power to ensure appropriate compensation."

Qantas CEO Vanessa Hudson, who started in the role in November 2023, said in a statement the company apologised to the workers impacted by its decision "and we know that the onus is on Qantas to learn from this".

Lee, the judge, told Qantas and the TWU to discuss compensation for all the sacked workers and return to court on Nov. 15.

($1 = 1.4916 Australian dollars)

(Reporting by Byron Kaye; Editing by Jamie Freed)