Return of the Unfair Dismissal Laws

The Federal Opposition has conceded that the majority it gained in the Senate, as a result of the 2004 Election, has proven to have been a poisoned chalice. The WorkChoices legislation, epitomised by the virtual demolition of the unfair dismissal laws, provided the 2007 Rudd Government with an emphatic mandate to re-introduce a universal unfair dismissal regime.

Rather than react with the immediate replacement of the legislation with the reformist zeal of the Whitlam/Barnard early days, the Rudd/Gillard emphasis has been on creating a balance between business and labour.  It has taken twelve months of consultation and drafting before the release of the Fair Work Bill, with the new unfair dismissal laws not due to commence until 1 July 2009.

Removed : Employees of small/medium size businesses (100 employees or less) exemption.  This was the most controversial of the Work Choices laws.  This exemption, alone, removed the unfair dismissal protection from 56% of the workforce.

New : Increased qualifying period (12 months) on employees of small businesses (less than 15 employees).  This is clearly a sop to business interests as, logically, a longer probation period is less likely to be of benefit to small business.  Will provide protection to 80% of employees.

Defence to unfair dismissal for small businesses which use procedures of new Small Business Fair Dismissal Code.

Removed : 'Genuine Operational Reasons' exemption.  This became notorious as there were varying interpretations and the legislation provided no guidance.

New : 'Genuine Redundancy' exemption.  Must comply with award consultation requirements and redeploy if possible.

Removed : Casual employee exemption.

New : Retained fixed term and fixed task exemptions.

Removed : Australian Industrial Relations Commission (FWA) with conciliation and arbitration.

New : Fair Work Australia (FWA) as investigator, inquisitor in private sessions.  Less reliance upon formal, public hearings.

Removed : Applications must be lodged within 21 days of effective termination date.  Created market for lawyers/advocates in applications for extensions.

New : Applications must be lodged within 7 days of effective termination date.  Explanatory Memorandum justifies this on the basis that it will promote quick resolution.

Unlawful Terminations

The good news for employers is that the decrease in unlawful terminations (discriminatory terminations) is likely to be inversely proportional to the increase in unfair dismissals.  This is good news as unlawful terminations tend to be more legalistic than unfair dismissals and they are uncapped (ie there is no 6 months earnings limit on compensation).

There will be a new prohibition on employers taking 'adverse action' against employees with certain attributes such as age, sex and disability.  This appears to be a move to simplify the process by removing the requirement for the 'comparator test' to establish that such an employee was treated differently because of the employee's attribute.

Lessons

Businesses with 100 or less employees may need to give consideration to the termination of poorly performing employees before the commencement of the new laws on 1 July 2009.  They should be wary of terminating employees where it could be argued that a reason for the termination was a discriminatory ground, such as temporary absence due to illness or injury; family responsibilities or trade union membership.

This article appears courtesy of Mason Sier Turnbull