Opposition Minority Report
Minority Senate Report into the Workplace Relations Amendment (Unfair Dismissals) Bill
1998
Labor
Minority Senators believe that the proposal in the Workplace Relations
Amendment Bill (Unfair Dismissals) Bill 1998 to:
-
Require a 6 month qualifying period of employment before new
employees (other that apprentices and trainees) can access an unfair dismissal
remedy under the Act; and
- Exclude new employees of small business (other than apprentices
and trainees) of 15 or fewer employees from the unfair dismissal remedy under
the act,
is seriously
flawed and its introduction is not supported by credible evidence.
History
In 1996 the
Government introduced the Workplace Relations and Amendment Act which amended
the previous Labor Government’s unfair dismissal laws.
Regulations
to exclude access to the unfair dismissal laws by employees with less than 12
months continuous employment and those who worked for a business of 15 or fewer
employees were introduced by the Government in July 1997.
The Senate
disallowed these regulations.
The
Workplace Relations Amendment Bill 1997, proposing a permanent exemption for
small business of 15 or fewer employees from the unfair dismissal laws was
introduced into the Senate in September 1997 and referred to the Senate
Economics Legislation Committee for inquiry and report.
Minority
Labor and Democrat Committee members presented dissenting reports recommending
that the Bill not be passed.
The Bill was
defeated in the Senate in October 1997.
A further
bill with identical provisions was introduced into Parliament in November 1997
and defeated in the Senate in March 1998.
On the 12th
November 1998 the Government introduced the Workplace Relations Amendment
(Unfair Dismissal Bill) 1998 into the House of Representatives.
On the
second of December 1998 the Senate referred this Bill to the Senate Employment
Workplace Relations, Small Business Education Legislation Committee for
examination.
The measures
proposed in the Bill were contained in the Workplace Relations Amendment
Regulations 1998 (no 2) ( SR No 338 of 1998) which was gazetted on the 18th
December 1998.
Labor
Senators have serious concerns about the Minister’s actions in introducing
these regulations particularly when the legislation bill had been referred to
the Committee for inquiry.
Mr Reiths
“ Evidence”
In his
second reading speech Mr Reith spoke of the evidence to support the small
business exclusion. He claimed:
“
Senators who spoke against the previous bill to introduce the Small Business
exclusion said there was insufficient evidence of the need of the Bill and its
benefits. There was plenty of evidence but they would not allow themselves to
be convinced.
That
evidence included the Morgan and Banks’ 1996 survey, the April 1997 Recruitment
solutions survey, and the May 1997 New South Wales Chamber of Commerce and St
George Bank survey. The Council of small Business Organisations of Australia
said that small business would create 50,000 jobs if the Bill was passed....
Then
there was the Yellow Pages Small Business Index Survey conducted in October and
November 1997 and further surveys conducted in March 1998 and July 1998 by the
New South Wales, South Australian and Queensland Chambers.
These
surveys, and others like them, make completely plain the importance which
business attaches to this issue.”
The
difficulty for Mr Reith is that his claims do not stand up to close analysis.
An examination of the evidence he cites indicates that he has either
selectively chosen statistics which buttress his case, has relied on surveys
with dubious methodology, relied on guesses or simply ignored data which he
views as not helpful to his case.
Mr Reith has
then directed his own Department to follow his example. This has placed the
Department in an invidious situation of having to ignore definitive unbiased
surveys such as its own AWIRS 95 survey, which contradict the Ministers rhetoric.
The Minister
has also further compromised officers of his own Department by directing that
they present his selected witnesses from small business to a hearing by the
Committee on this Bill as part of its own submission to the Committee. The inappropriateness
of this directive was demonstrated when one of the witnesses testified about a
case that is currently before the Australian Industrial Relations Commission.
This matter
has been referred to the procedures committee with the respect to the Minister’s
lack of regard for due process and his disregard for appropriate convention.
A Review
of the Current Law
In
considering the proposed amendments to the Governments own unfair dismissal
laws it is worth considering the changes that the Howard Government made to the
previous Labor Governments Unfair Dismissal Laws.
What has
fundamentally changed since the amendment of the former Labor Governments
legislation is the onus of proof from the employer to the employee in unfair
dismissal cases.
With the
introduction of the unfair dismissal provisions of the Workplace Relations Act
1996 the onus of proof placed upon the employee to prove that they have been
subjected to unfair, harsh or unjust treatment in the dismissal process.
This
is a significant and fundamental change.
Unfair
dismissal hearings are now heard in the Industrial Relations Commission instead
of the Federal Court, which reduces costs to the applicant. However costs may
be awarded against the employee if it is considered that the claim was
vexatious or frivolous.
The
Government introduced an application fee of $50 as a disincentive to spurious
or frivolous claims. Additionally the Commission is required when assessing an
unfair dismissal claim not only to assess whether an employee has been dealt
with unjustly or harshly but whether or not the employer is able to viably deal
with any costs or award of damages in lieu of reinstatement
Accordingly
you could, as an employee, have a scenario where the Commission recognises that
you have been unfairly and unjustly dealt with by your employer but you are
unable to seek appropriate restitution due to the financial viability of the
employer.
Procedural
fairness is no longer a mandatory requirement, probationary employees are
excluded from access to the unfair dismissal legislation and casual employees
cannot access the legislation until they have been employed for a 12 month
period. Also those on term contracts are denied access to the unfair dismissal
laws.
It is our
view that the existing legislation favours employers with respect to unfair
dismissal with the ancillary effect of encouraging small businesses to put
employees on limited term contracts.
Our position
Labor
Senators will not support the Bill
We have in
our previous minority report stated our objections and dealt with arguments put
forward to amend the unfair dismissal provisions of the Workplace Relations Act
1996. None of these concerns have been adequately addressed in spite of
Minister Reith’s rhetoric.
Core
Concerns
In arguing
against the bill Labor Senators categorise their concerns in 3 core areas.
Indeed we would restate our concerns as we have done in our previous minority
report.
- Our
concern remains that the Bill contravenes the Prime Ministers key commitment to
the Australian people when he claimed that under his Government employees would
not be worse off under his government’s industrial relations legislation.
- Our
concern remains that the exemption is unfair.
- Our
concern remains that the exemption is unnecessary.
Core
Concerns
- That
the Amendment remains a breach of the Prime Minister’s key commitment to the
Australian people when he claimed that under his Government employees would not
be worse off.
We have
consistently seen past evidence of the Government reneging on election
commitments and on core and non-core promises.
The
Government first introduced changes to its unfair dismissal laws, by
Regulation, in April 1997. This action completely contradicted the public
position of the Coalition cited in an article in the Sydney Morning Herald on
the 20th February 1996 where a small business exemption was
explicitly ruled out:
“ The
Coalition has flatly ruled out any exemption for small business in its
redrafted unfair dismissal laws, despite a plea that the sector should not be
subject to the same treatment as ‘ the big end of town’. The author of the
policy, the Opposition’s industrial relations spokesman, Mr Peter Reith, said
the redrafted system would not contain any exemptions”
In the lead
up to the 1996 election Peter Reith publicly promised that all employees would
have access to appeal against unfair dismissal:
“ Look,
our position’s very clear. If you’ve been unfairly dealt with at work, you
should have a right of appeal.” (ABC daybreak, 28 February 1996)
This
commitment was reflected in the Coalitions pre – election policy “Better Pay
for Better Work” which stated:
“The
Coalition believes that employees should have access to a fair and simple
process of appeal against dismissal – based on the principle of a ‘ Fair Go All
Round” (18th February 1996)
The most
damning piece of evidence with respect to the Governments breach of its
commitments comes in Senator Andrew Murray’s October 1997 Minority Report on
the unfair dismissal law amendment. In this report Senator Murray states:
“ Prior
to the 1996 Election, the Coalition promised to replace Labor’s Laws with a
‘fair go all round for’ for employers and employees. While little detail was
provided, it was clear that all workers would have access to the regime, and
that the test for unfair dismissal would be closer to the pre 1993 rules.
“The
Democrats prior to the election and since, supported the Coalition’s policy
direction. During the election campaign, COSBOA asked the Coalition, the
Democrats and the ALP to support an exemption for small business and all three
parties refused, on the basis that it would breach the ‘fair go all round’
approach.”
Mr Reith has
made much of his so-called mandate arising from the 1998 Federal Election
campaign. In his second reading speech on the Bill he claimed:
“ These
initiatives were specifically outlined by the Coalition parties during the
recent Federal Election campaign in our workplace relations policy, More Jobs,
Better Pay. We have a specific electoral mandate to proceed with their
implementation as a matter of priority. In regard to the small business
exemption we have a fresh mandate, given the rejection by the Senate of similar
proposals during the first term of the Howard Fisher Government.”
The fallacy
of the so called mandate is amply demonstrated by the fact that the Coalition
obtained less than 50% of the vote for the House of Representatives and
approximately 40% of the vote in the Senate.
The
Government’s amendments to the unfair dismissal laws clearly discriminate
against workers of small business with 15 or less employees. It also clearly
discriminates against those new employees on a six-month qualifying period.
These
employees will be demonstrably worse off under the proposed legislation. It
removes a substantial group of employee’s rights to access appropriate
protection from unfair dismissal. How then can the Government claim that
workers are not worse off under this legislation and have been given a ‘fair go
all round’?
- The Exemption
Remains Unfair
As Labor
Senators noted in the previous minority report the exemption is discriminatory,
arbitrary and it will add to job insecurity. None of these issues have been
addressed in the current Bill.
If anything
the evidence to this inquiry has amplified the unfairness involved.
The case
studies presented by the SDA highlight the unjust behaviour which will be
allowed to occur without redress if this Bill succeeds.
Alternatively
workers may be driven to high cost common law remedies such as those which have
occurred in the United States recently. Such a recourse would involve high
risk and high cost for both employers and employees.
Additionally
we have seen the lengths that employers will go to create $2 shelf companies to
avoid their obligations to workers. The waterfront dispute with Patricks is
the most obvious example. An exemption set at 15 employees will encourage
unscrupulous employers to structure their company arrangements to avoid their
obligations to provide secure employment.
This is not
a “ fair go all round.“
- The
Exemption Remains Unnecessary
The
Government has provided much rhetoric as to why small business exemption to
unfair dismissal laws is warranted. We contend that it is not necessary and
that evidence that the government claims that supports a change is not
credible.
There are
three key reasons why the proposed small business exemption to the unfair
dismissal laws is unnecessary.
- The
Government has already amended the unfair dismissal law and had stated that no
further change was necessary.
- That
those changes had already affected the unfair dismissal claims and had made
further amendment unnecessary.
- There
is no credible evidence to suggest that the unfair dismissal law needs to be
changed.
We would now
address these key reasons
- The
Government has already amended the unfair dismissal law and had stated that no
further change was necessary.
As has
canvassed previously Labor’s unfair dismissal laws were extensively amended by
the Government Workplace Relations Act and came into effect on the 1st
January 1997.
Statements
by John Howard such as:
“ We have
swept away Labor’s jobs destroying unfair dismissal laws”
(Ministerial
statement in response to Bell Report 24th March 1997)
and Peter
Reith:
‘ We have
delivered a workable system for dealing with unfair dismissal”
(Speech on
return of the Bill from the Senate, 21st November 1996)
clearly
demonstrated that the Government had not believed that the introduction of
further amendment to the unfair dismissal law was warranted.
Additionally
the Democrats certainly believed that an exemption for small business was
unnecessary.
In his
minority report in October 1997 when commenting on the unfair dismissal
provisions of the Workplace Relations Amendment Bill 1997 Senator Andrew Murray
commented:
“ The
Federal Government now has the law it wanted in these respects with only
minimal changes. Indeed the new Federal law (WRA 1996) is even more attuned to
the needs of small business than the pre- Brereton 1993 State laws. The
Democrats have delivered what we think is a fairer balancing between the rights
of employers and employees. To go further would be to create a new unfair
dismissal problem in reverse – the same sort of situation which, in 1993, lead
to the campaign for Federal laws on unfair dismissals in the first place”
Indeed when
the Government introduced its first attempt to amend the unfair dismissal
legislation in 1997 Senator Murray scathingly hypothesised in his minority
report on the real motives of the Howard Government in putting forward the
legislation:
“ It
remains my belief that the Coalition introduced this single issue Bill
encapsulating gross unfairness, to provoke the Senate to absolute rejection.
“It
remains my belief that this Bill was conceived to achieve a double dissolution
trigger. And in that act of creation is exposed the Coalitions utter
heartlessness. It would create job insecurity and arbitrarily discriminate
against one to two million employees for a political end.”
The
Democrats quite rightly presumed that an exemption for small business was
unnecessary.
Even a
Government commissioned task force into small business concluded that the
exemption for small business was unnecessary
The Bell
Taskforce, chaired by Mr Clarie Bell concluded that an exemption was
unnecessary. After an extensive and detailed report the only recommendation
that the taskforce came up with in relation to unfair dismissal laws was that
the unfair dismissal laws be reviewed after 12 months operation to ensure that
it is delivering a more balanced and flexible approach for small business.
The
Ministers subsequent review has been as limited and selective as the evidence
and analysis presented to this and previous inquiries.
- That
changes had already affected the unfair dismissal claims and made further
amendment unnecessary.
In its
evidence to the Economics Legislation Committee which examined the 1997
Workplace Relations Bill the Department of Workplace Relations produced the
following data in relation to the effect of the Governments amendments to the
unfair dismissal laws.
“ As a
result of the amendments, there has been a significant decrease in the number
of applications made under the federal unfair dismissal legislation. In the
first 37 weeks there were 10,408 applications under the then Industrial
Relations Act 1988;in the first 37 weeks of 1997(up to 12 September 1997) there
were 4,801 applications under the Workplace Relations Act – that is a decrease
by 54%. This decrease is not only the result of the change to the scope of the
federal jurisdiction. Combined totals of Federal and State applications
(excluding applications in Queensland, in either federal or state
jurisdictions) decreased by 20%, for the period from January – July 1997
compared with January – July 1996.
More recent
data has been provided by the Department of Workplace Relations and Small
Business in its submission to the Employment, Workplace Relations, Small
Business and Education Committee on the 21 January 1999.
“ In the
period 13 December 1996 to 31 December 1997, the first 12 months of operation
of the provisions, 7,461 applications were filed. This represented a 49%
reduction in claims compared with the same period in 1996. .....
From 1
January – 31 December 1998, there were 8,186 applications in respect of
termination of employment in the federal jurisdiction. This represents a 44%
decrease, compared to the same period in 1996.”
This trend
has assisted small business as the number of small business claims has remained
in proportion to their share of the workforce during this decline.
- There
is no credible evidence to suggest that unfair dismissal laws need to be
changed.
In their
submission to the committee the Department of Workplace Relations and Small Business
cited numerous surveys and other “credible” anecdotal and other data to support
its case.
Examples of
this selectiveness are detailed in the following surveys cited by the
Department and in one surveyed it ignored.
Australian
Workplace Industrial Relations Survey 1995
One point
that astounded Labor minority members was the continued omission of data from
the most comprehensive survey of employment – including small business ever
conducted in Australia – the Australian Workplace Industrial Relations Survey
1995.
It is all
the more extraordinary given that the AWIRS 95 specifically addresses the
question whether the unfair dismissal laws prevented small business from
employing new staff.
It is
important to again note that this survey was conducted in 1995 when Labor’s
unfair dismissal laws were in operation and when unfair dismissal law had been
targeted by the then Coalition in a major campaign.
In response
to a survey which asked, why haven’t you recruited new employees? 68% of
businesses responded that they didn’t need any more employees. 33% gave as
their reason insufficient work, lack of demand for their product or low
profitability.
Unfair
dismissal law did not rate a mention but may have been a fraction of the 6%
response of high employment costs.
Another
survey in the AWIRS specifically asked small business
(categorised
as businesses employing less than 20 employees) : why haven’t you recruited
more employees?
Again only
6% of respondents mentioned high employment costs. It must be assumed that a
fraction of the respondents couldn’t recruit more employees because of the
unfair dismissal laws.
In a third
AWIRS survey small businesses were asked: what, if any, significant efficiency
change would you like to make at your workplace but are unable to?
The leading
response, by 21% of small business, was to improve or change buildings and
equipment.
Other
leading responses were to improve technology (16%), change staff numbers (9%),
increase productivity (7%), have an enterprise agreement (7%) , abolish penalty
rates (7%) and other significant efficiency changes (20%).
The Response
‘ change unfair dismissal laws’ was provided by only 6% of small business
respondents.
The most
relevant piece of AWIRS 95 survey evidence, that was unpublished, but was
reported in an ACCIRT reference was a survey into reasons for not recruiting
employees during the previous 12 months
66.2% of
small business respondents indicated that they didn’t need any more employees.
23% listed insufficient work as the main impediment.
Only 0.9%
of respondents nominated that they had not recruited employees due to unfair
dismissal legislation.
It is
obvious why the Department did not refer to its own data. It demonstrates that
there is no need to change the unfair dismissal law.
The
Yellow Pages Small Business Index Surveys (1997 and 1998)
In its
submission DEWRSB referred to the Yellow Pages Small Business Index surveys
that were undertaken in 1997 /1998. The Department referred to one particular
survey conducted from the 30th October 1997 to 12th
November 1997 where specific questions were asked about unfair dismissal laws.
Whilst this
yielded figures such as 79% respondents thought small business would be better
off if they were exempted from unfair dismissal laws and 38% said they would
recruit more employees if they were exempted from unfair dismissal laws the
methodology of this survey has been called into question.
Associate
Professor Rosemary Claire, Principle Researcher of the Justice Research Centre,
raised concerns regarding the methodology utilised in the survey questions on
unfair dismissal in this October 1997 Survey.
When
appearing before the Committee inquiry into the 1998 Unfair Dismissal Bill
Associate Professor Claire was asked to identify the flaw in the methodology of
the question:
Would you
be more likely to recruit more employees if you were exempted from current
unfair dismissal laws?
This survey
question was asked in the 1997 October Yellow Pages survey ”
Associate
Professor Claire responded:
“ It is
what we call in law a ‘leading question.’ A question that simply asks, ‘ would
you be likely to recruit if you were exempt from the unfair dismissal laws?’ is
inevitably going to achieve a response which is very different from the response
that you would get if you said, for example, “ What would help you to hire
people?’
That is a
more open ended question which allows the respondent to take into account the
range of factors that might be impacting on them rather than simply drawing attention
to a single factor which is then presumed to be the only factor operating in
this situation.”
It is also
instructive to note what data from Yellow Pages Surveys from May 1997 –
November 1998.that was omitted by the DWRSB in its submission to the Committee.
Information that the Department assessed was quite clearly detrimental to the
Minister’s case for amendment of the unfair dismissal law.
In the May
1997 Yellow Pages Survey in the section” The Prime Ministers Response to the
Bell Task force, More Time for Business Statement”. 37% of
Businesses
surveyed were aware of the Statement. Of this 37%, 15% were aware of the
unfair dismissal bill initiative.”
In the May
1998 Survey in the area of “Small Business Issues”, respondents were asked to
rate the importance to their business prospects of 12(apparently unspecified)
policy initiatives. A four-point level of importance scale was also used in
conjunction with this question.
Unfair
dismissal changes rated 7 out of 12 in priority with a mean rating of 2.68 on
the Four Point importance scale.
Following
this question small business proprietors were asked to nominate which of the 12
factors was the most important issue to them. 6% mentioned unfair dismissal
laws.
In the
August 1998 Survey under the category of “Small Business Issues” proprietors
were asked what the most important small business issues were for government.
6% of respondents nominated unfair dismissal laws.
St George
Bank / State Chamber of Commerce (NSW) Survey
Further
evidence of the selective utilisation and interpretation of data manifested
itself in the Departments submission to the Committee which cited a press
release dated 22 March 1998 by the NSW Chamber of Commerce.
It appears
that the Department chose to utilise the press release issued by the Chamber
rather than analyse the data provided in the actual survey, which was conducted
in December 1997.
In its
evidence the Department claimed that it had not seen the actual survey when
subjected to questions on this issue by Senator Jacinta Collins at the
Committee hearing into the Unfair Dismissal Bill on the 29th January
1999:
Senator
Collins asked:
“ Are you
aware of the fact that roughly 50% of the New South Wales Chamber of Commerce
and Industry employers surveyed who responded positively to the question that
they had experienced an unfair dismissal claim did not believe it affected
their hiring intentions”
A
Departmental Officer Mr Leahy responded:
“ We do
not have that information Senator”
Additionally
the Department in its submission, when citing the NSW Chamber of Commerce press
release claimed that 51% of small businesses surveyed stated that the current
unfair dismissal laws were a deterrent to employing more staff.
In fact the
actual data from the survey indicated that of the approx 32.5% of small
business respondents that had been involved in an unfair dismissal case, only
half confirmed that the current laws were a deterrent to new staff.
Unfortunately
despite the Ministers claims with respect to evidence,
the
Department neither sought nor claimed to provide a comprehensive discussion or
analysis of all the survey material, research findings and points of view
relevant to the subject matter of the Bill”
The
references to surveys and related material included in the submission
were
included for the purpose of explaining the Governments policy position.”
Evidence
Concerning the Proposed 6 Month Probationary Period
The only
evidence before the Committee (which includes material from the SDA, ALHMWU
and the ACTU not cited in the majority report), supports the view that the
present legislation provides sufficient scope of flexibility and that there is
no need to institutionalise a period of six months. Discretion on this matter
should continue to reside with the AIRC.
Conclusion regarding evidence
There have
been several surveys and reports of concern with unfair dismissal laws by
organised employers but any correlations with jobs growth has not been
established. No independent report or analysis confirms the Employer /
Ministers claims.
Alongside
the reports of organised employers seeking to have their responsibilities
reduced stand in evidence the examples of workers who would lose their rights
under this legislation and the lack of any credible correlation with a public
gain such as increased employment that would justify such change.
We cannot
agree with the majority logic at point 1.85 of their report which equates to
the argument that if you say something often enough people will actually
believe you.
We would
suggest the Minister listen to Mr Bastian of COSBOA who pleaded for us to “redefine
the debate”. The Government should focus on the real priorities of small
business and discontinue this red herring which is inciting perceptions
maintaining this debate.
Recommendation
We
recommend that the bill not be passed.
Senator Jacinta Collins
ALP Senator for Victoria |
Senator Kim Carr
ALP Senator for Victoria |
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