Legal proceedings to determine compensation for almost 1,700 workers illegally sacked by Qantas have heard the airline would have still outsourced the jobs the following year due to financial targets and Australia’s tight Covid restrictions. Compensation hearings continued on Wednesday to resolve the years-long legal battle between the Transport Workers Union (TWU) and Qantas over its decision to outsource jobs across 10 airports in late 2020. The federal court found the move to be illegal because it acted against protections in the Fair Work Act, and was in part driven by a desire to avoid industrial action. Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup Qantas unsuccessfully appealed against the decision to the full bench of the court, and later the high court. The matter has now returned to the federal court where Justice Michael Lee will determine compensation entitlements for the 1,683 outsourced ground handlers and penalties the airline must pay. Each side is presenting counterfactuals as to what would have occurred if the illegal outsourcing did not occur in 2020, with three test cases of retrenched workers also heard. Qantas, in making the argument the workers would have been retrenched regardless the following year, is seeking to downplay the amount of money its workers would have earned had the unlawful outsourcing not occurred. Meanwhile, the TWU has suggested total compensation could exceed $100m. On Wednesday, Colin Hughes, who was executive general manager of airports at Qantas at the time of the outsourcing decision and later went on to serve as the airline’s chief operating officer, continued giving evidence before Lee. Hughes said if he had been in the decision-making position in 2021 and the ground-handling jobs had remained in-house, there would still have been strong commercial reasons in “the context of the pandemic” for choosing to outsource the roles. He said he interpreted legal advice on the outsourcing decision as carrying a low legal risk, but still expected a legal challenge from the TWU. Hughes also acknowledged there was a high level of political and reputational risk in proceeding with the outsourcing, whether that be in 2020 when it occurred or in a counterfactual scenario in 2021, but he said the airline would still have been in a tough financial position. “Australia had amongst the most restrictive controls [in] the world, and that’s not a comment on whether they were right or wrong, but it’s a fact that they were there and internationally Victoria had the highest lockdown of anywhere in the world, I believe, so these are all factors that weighed upon, and ultimately are a direct response [to the decision],” Hughes said. Hughes said “it was government action that was causing such a haemorrhaging of the aviation position”. Speaking to whether he would have taken the same outsourcing decision in 2021, Hughes said: “My position would have been, I would have recommended that we proceed with a proposal to outsource. That would have been almost illogical for me not to have that position.” “The business had financial targets, those financial targets were set with regard to how the business needed to recover coming out of the pandemic with an expectation that it would be competing with a leaner and meaner domestic competitor,” he said, referring to Virgin Australia, which underwent administration during the pandemic. “The reality was, the targets were real, they were significant and we had a proposal that effectively said you can save $100m, avoid $80m in capital [costs] … I can’t think of any Qantas manager that wouldn’t have recommended consideration of that proposal,” Hughes said. Earlier in the compensation hearings, the court heard some of the workers suffered significant psychological distress after losing their jobs and had to take medication to cope. One worker was taking four doses of Valium a day, the court heard, while another was prescribed antidepressants. A Qantas spokesperson said the airline “sincerely apologises and deeply regrets the personal impact the outsourcing decision had on these former employees”. “We want them to receive fair compensation as quickly as possible,” the spokesperson said. In addition to a mammoth compensation bill, Qantas also faces the prospect of being issued multimillion-dollar penalties for breaching the law.