SYDNEY - Australia's top court on Thursday ruled Qantas Airways broke the law by sacking 1,700 ground staff and replacing them with contractors early in the COVID-19 pandemic, reinvigorating public criticism of a company already facing multiple scandals.

The High Court of Australia said Qantas had commercial reasons for its actions in 2020 - the height of pandemic-driven border closures - but broke industrial law because it "sought to thwart" the unionised employees' rights to engage in industrial action and collectively bargain.

The ruling builds on a sense of public fury towards the flagship carrier that culminated in the early retirement of its long-serving CEO this month following an antitrust lawsuit accusing the airline of selling tickets to thousands of flights after they were cancelled.

The company has also been accused of pressuring the federal government, successfully, to deny a Qatar Airways request to sell more flights to Australia, removing competition that might have lowered fares.

Qantas has declined to comment on its lobbying. Its shares have fallen nearly 17% since July 24 amid intense scrutiny of its reputation.

The lower-ranking Federal Court in 2021 found Qantas broke the law by outsourcing the ground handling jobs, but the airline appealed the ruling in the High Court which upheld the decision on Thursday. The matter now returns to the Federal Court which will decide penalties and compensation for affected employees.

"These workers have been put through hell," said Michael Kaine, secretary of the Transport Workers Union (TWU) which brought the lawsuit.

"Their families have been put through hell, their lives have been dislocated, some of them forever," he added, speaking to journalists.

Qantas must return to the Federal Court and "do everything you can to expedite compensation for the workers so that they can get some justice and solace for themselves and their families," Kaine said.

Qantas said in a statement that it accepted the High Court decision and noted the Federal Court had already ruled out forcing the company to reinstate the workers. It said it had already made an unspecified provision in its accounts for penalties and compensation for affected employees after the Federal Court decision.

"As we have said from the beginning, we deeply regret the personal impact the outsourcing decision had on all those affected and we sincerely apologise for that," the airline's statement said.

Qantas shares were down 0.4% in morning trading, less than the broader market decline of 0.8%.

When it outsourced the baggage handling roles, the airline said it would save an estimated A$100 million ($64.15 million) a year in operating costs as well as A$100 million of investment in equipment over five years. It also allowed Qantas to avoid potential future strikes by the TWU.

The company posted a record annual profit last month as strong demand for international travel pushed up fares. ($1 = 1.5588 Australian dollars)

(Reporting by Byron Kaye in Sydney and Roushni Nair in Bengaluru; Editing by Subhranshu Sahu and Jamie Freed)