Australia: Employment Update: Further Changes To Unfair Dismissal Law

Last Updated: 15 September 2008
Article by Peter Punch

The Rudd Labor Government shows all the signs that it is determined to implement the industrial relations policies it went to the election with. It has already had legislation passed overturning the Howard governments WorkChoices legislation with respect to Australian Workplace Agreements (AWAs).

Insofar as changes to the current unfair dismissal laws are concerned, the Government is currently consulting stakeholders in industry as to the form the legislation will take. A Business Advisory Group has been set up by the Government to advise it as to the views of employers on the proposed legislation. No doubt the Government will also be consulting with the Trade Union movement, which campaigned heavily against the Howard government's WorkChoices legislation.

While the Government is consulting widely it has given every indication that it intends to honour the commitment it made to the electorate with respect to the dismantling of WorkChoices and in particular the Unfair Dismissal provisions. It is proposed that the changes to the unfair dismissal laws will become operative from 1 January 2010 the date upon which the bulk of the substantial changes to WorkChoices will take effect.

What then does the Government propose in relation to unfair dismissal?

Under WorkChoices unfair dismissal applications are restricted to employees of employers with more than 100 employees and a claim can not be made unless the employee has in excess of 6 months (the qualifying period) employment with the employer. Further if the termination of employment is for "genuine operational reasons" no claim can be made.

What the Labor government proposes is that there be no cap on the number of employees insofar as accessing the unfair dismissal laws but there will be different qualifying periods with respect to the period an employee must have worked for an employer based on the number of employees employed by the employer. The Government has made concessions to small business proposing that an employee of a business with less than 15 employees is unable to bring an application for unfair dismissal unless the employee concerned has been employed for more than 12 months. Insofar as employees of employers with more than 15 employees are concerned the time period is 6 months, the same as under WorkChoices for more than 100 employees.

Labor also proposes that unfair dismissal claims be made "usually" within 7 days of the dismissal. The rationale being that where reinstatement is appropriate, it remains a viable option if the claim is made quickly. Labor also proposes that that under its system employees can be dismissed in cases of redundancy and where the redundancy is genuine there is no unfair dismissal. Employers with less than 15 employees are excluded from the National Employment Standard for redundancy payments.

Unfair Dismissal claims will be dealt with by a new body called Fair Work Australia (FWA). Its functions will be similar to the functions performed by the Australian Industrial Relations Commission i.e. review the application and call the parties together for a conference to determine the matter. There will be local offices in regional and suburban areas and FWA will be able to go to a workplace or other agreed venue to conduct the conference. During such conference FWA will be required to reach a conclusion as to whether the dismissal was unfair, considering all the circumstances of the dismissal, including the conduct of the parties.

FWA will be able to ask the parties questions and seek their views about the issues raised. There will be no formal written submissions, no cross examination and no hearing.

In cases where it is determined that an employee has been dismissed unfairly, FWA will be required to determine an appropriate remedy, ensuring "a fair go all round" to both parties. Errors of a procedural or technical nature will not automatically result in a finding that a dismissal was unfair.

The primary remedy will be reinstatement unless of course reinstatement is not in the interests of the employee or the employer's business. In such circumstances, compensation will be ordered but which will be capped.

In the Labor Party document Forward with Fairness – Policy Implementation Plan the following interesting statement is made:

  • Where an employer complies with Labor's code, the dismissal will be considered a fair dismissal.
  • For example where an employer has reported an employee to the police for suspected theft, fraud or violence in the workplace the dismissal will be a fair dismissal. Employees who engage in stealing, violence or disruption at work don't deserve protection from dismissal.

The last sentence of that quote we agree with. However we would not want to suggest that the mere reporting of an incident to police is sufficient or appropriate grounds for terminating an employee's employment unless of course the employer is reasonably satisfied that the employee, on proper investigation, has committed such an offence. It is one thing to allege that an employee has committed one of the offences listed above and to report such to the Police. However not every matter reported to police ends up being the subject of charges. If an employee were to be dismissed on the basis of a report to police which was not subject to charges such dismissal would often be an unfair dismissal. So we caution our clients not to interpret the above statement as being an absolute "water tight" ground for termination of employment. Such a statement, in our respectful view, is a political statement made to overcome criticism of decisions in which allegations of a criminal act has been the ground for terminating an employee's employment but has not been made out in arbitral proceedings.

Despite the above, until legislation is passed by both houses of the federal parliament, the unfair dismissal provisions provided by the WorkChoices legislation will continue to apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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