Australian Democrats' Report
Inquiry into Workplace Relations
Amendment (Termination of Employment) Bill 2002
The
provisions covering termination of employment in the Workplace Relations Act
(WRA) include provisions concerning unlawful and unfair dismissals, and have
been the subject of intense political and policy debate for the past decade.
As
the Majority Report indicates, these matters have been the subject of several
previous Bills and previous inquiries.[1]
In
my capacity as Workplace Relations Spokesperson for the Australian Democrats I
have provided substantial Minorities for a number of these Reports, so will not
seek to repeat their arguments here, since those Reports are readily available
from the Committee. For any researcher interested in the unfair dismissal
area, there are also extensive remarks from me over the years, on the Hansard
record.
The
appendices to this Minority Report provide some useful statistical data on
unfair dismissals.
These
comments would normally constitute Supplementary Remarks rather than a Minority
Report because while we have a number of criticisms of elements of the Bill, the
Australian Democrats support the central proposition of the Bill, to extend
coverage of the Federal WRA.
However
the Coalition Majority once again perpetuates a view on unfair dismissals’
economic and employment effects for which there is still little hard evidence.
We do not agree with the Majority view.
Our
criticisms of a number of items in the Bill go to attempts to yet again reduce rights of certain
employees, and to reduce the discretion of the Australian Industrial Relations
Commission (AIRC).
Second step toward a Unitary Industrial Relations System
The
first step towards a unitary industrial relations system was a major one – the
referral of the Victorian system to the Commonwealth from 1997. With that
referral also came a category of several hundred thousand Victorian employees
under inferior employment conditions under the State law of the time. This
category of workers were put under Schedule 1A of the WRA.
To
its shame, the Coalition has refused to date to transition Schedule 1A workers
across to the full benefits of the WRA. I look forward to the day the Federal
Government will be successfully pressured to do so by a Victorian Labor Government
that for the first time now controls both houses.
This
Bill
is the second step towards a unitary industrial relations system, using the
unlikely field of unfair dismissals to significantly increase the coverage of
federal law.
There
is an odd contradiction in seeking to extend the coverage of Federal law on
unfair dismissals, while simultaneously proposing to exempt small business from
unfair dismissal law through the (again Senate-rejected) Workplace Relations
Amendment (Fair Dismissal) Bill [No 2].
Such
an inconsistent approach is easily understood when we remember that the sole
purpose of the latter Bill is political, to provide an easy double-dissolution
trigger.
The
Democrats consider it important that the Commonwealth attempt to procure some commonality
across industrial relations jurisdictions as a first step to a uniform system.
In this sense, we welcome the Government’s decision to attempt to double the
coverage[2]
of their unfair dismissal provisions, and halve the coverage of the states. It
will be helpful to have more commonality in this area.
There
are areas of policy and jurisdiction the States no longer have sensible
involvement in. After seventy plus years we finally got a unitary system of
trade practices law. After one hundred years states rights and vested
interests finally gave way to one unitary financial system for Australia. Although
the process was messy in execution we have a unitary system in corporations
law.
The same shift is necessary in industrial
relations.
As
far back as seventeen years ago, the Hancock review of Australia’s IR system called for a complete overhaul, and
pointed to the desirability of a unitary system. Like his predecessor Minister Reith, Minister Abbott has
signalled the Coalition’s support for a unitary system, and that is to the
good.
We
need one industrial relations system not six. We have a small population, yet
we have nine governments and a ridiculous overlap of laws and regulations. There
are areas of the economy that genuinely require a single national approach. Like
finance, corporations or trade practice law, labour law is one of those areas.
Globalisation
and the information revolution have created competitive pressures that require
us as a nation to be as nimble as possible in adapting to changing
circumstances.
It
will be a difficult task but it is time we moved toward a national system of
industrial regulation that will do away with unnecessary replications,
conflicts and complexity.
The
Australian Democrats negotiated the passage of the WRA with the Coalition
Government in 1996. We supported the referral of Victoria’s State industrial
relations powers to the Commonwealth. We supported subsequent amendments to the
WRA in 2001 affecting termination of employment.
It
is logical for us to back the extension of provisions we already support that
will double the coverage of Federal unfair dismissal provisions, and halve the
coverage of the States. It will be helpful to have more commonality in this
area. Given the great confusion evident by employees and employers over which
system they fall into, and the provisions that apply to them, the case is
strong for more uniformity.
This
is not to argue that a more unified system would solve all problems. But how
much better off has Victoria been with one system, not two.
There
are just too many conflicting workplace laws, too many courts, tribunals and
agencies regulating industrial relations. Too many vested interests, too many
fee takers and rent seekers.
We
agree the most effective way to get a single IR system would be by referral of
powers to the Commonwealth by the States. Victoria successfully did that with Democrat support. But
further referrals are presently unlikely.
Apart
from the attractions of efficiency and simplicity, a unitary system would mean
that all Australians, employers and employees alike, would have the same
industrial relations rights and obligations, regardless of where they live.
The
Democrats consider a unitary system would have three prime motivations.
First,
it would achieve common human rights across Australia – at present they differ.
The
second motivation is economic. Common easily administered rules and laws make
for more efficient, competitive and productive enterprises.
And
thirdly, it would facilitate more comprehensive coverage for workers. There
have been estimates of up to 800,000 employees not covered by federal or state
awards or agreements.
The
Bill
cannot go as far as it needs to. Constitutional limitations prevent complete
coverage. As we have stated earlier[3]
the Democrats are concerned that relying on the Corporations power alone will
still leave large chunks of employees working for non incorporated business,
many of these small business, with no protection from State or Federal laws.
The
Democrats acknowledge concerns raised during this inquiry that some employees
such as short-term casuals, those on fixed term or task contracts, and
‘high-earning’ non-award workers and trainees, who in some States are able to
challenge their dismissal, would not be covered by the Federal system.
For
instance, casuals are excluded for 12 months in the Commonwealth (including Victoria, ACT,
and the NT) and Queensland jurisdictions, for 6 months in New South Wales
and South Australia, and there is no exclusion in WA and Tasmania.
Due
to a lack of available statistics we do not know how many employees within
these categories do actually currently utilise the state laws and therefore it
is difficult to estimate how many employees would in fact be disadvantaged.
Balanced
against those considerations, on the plus side is that the Bill will
capture a potentially very large number of individuals currently not covered. For
instance, as pointed out in the Bills Digest[4]
the Bill is likely to provide an
unfair dismissal redress for employees of incorporated businesses for which
neither federal nor state awards are binding. The former employees of One.Tel
were employed under non-award circumstances...The Bill will provide a termination
jurisdiction to this growing sector of the workforce.
Unfair dismissal laws for Small Business
The
Coalition Government have repeatedly sought to justify its attempts to exempt
small business from unfair dismissal laws by arguing that they deter small
business from recruiting employees, and place a greater burden and cost on
small business.
In
other words that taking away the rights of a little over 2000 annual Federal
small business employees’ applications for relief from unfair dismissal is
justified by job creation and cost savings.
In the Majority Report at para 12 page 4 - they use an
excerpt from Professor Hancock’s submission
to support their view that small business are disadvantaged because of
economies of scale. Professor Hancock did indeed
say this but then went on to say at page 3 that there are other considerations:
There are a wide
variety of forces at work that determine the 'make-up' of the economy between
small and large business. Some of these favour large business and others small
business.... It (unfair dismissal) is an aspect of the economic environment
which all business have to come to terms with.
There
continues to be no hard evidence to support the view that unfair dismissal laws
have an adverse effect on overall employment levels. If there were an effect
we would expect to see some correlation between the introduction or variation
of unfair dismissal laws and employment rate. The experiment under Queensland State laws,
when their then Coalition government introduced an exemption for small
business, had no evident effect on job creation.
The
Majority Report refers to the new study by Don Harding of the Melbourne Institute of Applied Economic and
Social Research, entitled The Effect of Unfair Dismissal Laws on Small and
Medium Sized Businesses, which the government are using to support their
case that unfair dismissal laws place a greater burden and cost on small
business.
The
Democrats have a number of concerns with this study (commissioned specifically
by the Government), including:
- It does not compare the human
resource management practices (recruitment, contract, and performance
procedures) of those who stated that unfair dismissal laws have no influence on
the operation of the business; and
- it asked the respondent to
‘estimate’ the costs to business of unfair dismissal laws; the resulting figure
was then aggregated by Harding to provide a total estimate in compliance costs
for small business.
As an example at para 25, page 8 - The calculations
for job loss is based on a very small number of firms, which are given a false
sense of significance. Yes there were 1802 businesses surveyed but there were
only 158 businesses who answered this question, 17 of which said that UFD had a
major influence on a firm’s decision to reduce employees; 10 of which said that
UFD had a moderate influence on firms decision to reduce employees; and 14 of
which said that UFD had a minor influence on the firm’s decision to reduce
employees.
Yet the authors have aggregated these three responses
and then multiplied them to the rest of the small business population to get
the figure of 77,000. There is a real danger of exaggeration through this
technique.
More
importantly, the fact that unfair dismissal laws - laws which encourage good
human resource and management practices - impose compliance costs upon business
is not, as Professor Andrew Stewart[5] points out, a reason in itself for abolishing or
weakening them.
The Majority has incorrectly quoted and misrepresented
Stewart’s point (para 15, page 5) - he does not say, ‘as the law stands’
he says ‘as it stand’ and then Stewart goes on to later say that ‘this
is simply the reality of any litigation system’.
It
is worth quoting Dr Barrett at some length.[6]
She was referring to the KFC[7]
case:
The expert witness for the Minister
for Workplace Relations – Professor Mark Wooden – was unable to show there was
any evidence to support Tony Abbott’s claim that unfair dismissal legislation
inhibited small business employment growth...under cross examination he said
‘there certainly hasn’t been any direct research on the effect of introducing unfair
dismissal laws’...Furthermore, Professor Wooden agreed with the statement that
‘the existence or non-existence of unfair dismissal legislation has very little
to do with the growth of employment and that it is dictated by economic
factors.
The
Government Majority in the Committee asserts that because small business perceive
the unfair dismissal laws an impediment that it justifies abolishing them.
Economics
aside, the Democrats fundamentally have concerns with reducing the rights of
employees employed by small business, on human rights and equity grounds.
Additional Amendments – Schedule 3
The
Bill
has proposed a number of measures to reduce employee protections under the law.
No real case has been made for a number of these. For instance, in line with
our test of fairness the Democrats will not support:
- the proposed reduction in the
maximum amount of compensation that can be awarded to applicants dismissed from
small business;
- an increase in the qualifying
period with the employer before an employee of a small business can make a
claim for unfair dismissal;
- proposed changes to some of the
criteria that the Commission must consider in determining whether a dismissal
is unfair, especially when it reduces the discretion of the Commission.
The
Democrats will be proposing amendments at the Committee stage of the Bill. We will
not be supporting items in the Bill that we consider unfair and reductionist in nature.
The
Democrats are always wary of attempts to limit the AIRC's discretionary powers
and will need to consider items affecting their powers closely.
Senator Andrew Murray
Attachment 1
Table: Features of Federal and State
termination laws
|
|
Cmwth, Vic, ACT & NT
|
NSW
|
QLD
|
SA
|
WA
|
Tas
|
|
Employee able to apply for remedy?
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Max time period after termination to apply
|
21 days
|
21 days (out of time applctns possible)
|
21 days
|
21 days
|
28 days (out of time applctns considered)
|
21 days
|
|
Salary cap
|
$81 600 for 'non- award conditions' employees
|
$81 500 and not covered by award
|
$75 200
|
$77 681 for non-award employees
|
$90 000 for non award etc employees
|
|
|
Filing Fee
|
$50.00
|
$50.00
|
$48.00 unless union application
|
$0.00
|
$50.00
|
$0.00
|
|
Casuals et al excluded, for what period?
|
12 months
|
6 months
|
12 months, except for invalid reasons
|
6 months
|
No
|
No
|
|
Statutory default probationary period
|
3 months
|
No 3 months (may be less)
|
3 months
|
No
|
3 mnths (but not blanket exclusion)
|
No
|
|
Conciliation before arbitration
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes, Registrar may mediate
|
Yes
|
|
Certificate issued if conciliation fails?
|
Yes
|
No
|
Yes
|
Assess-ment made
|
No
|
No
|
|
Penalty for disregarding assessment?
|
Yes
|
No
|
No
|
Yes
|
No
|
No
|
|
Commission to consider size of business?
|
Yes
|
|
|
|
|
|
|
Penalties against advocates for vexatious claims
|
Yes
|
|
|
|
|
|
|
Requirement to disclose 'no win no fee'
|
Yes
|
|
|
|
|
|
|
Dismiss claims which have no prospect of success?
|
Yes
|
|
|
|
|
|
|
Consider size of business & skills of small business
re HR matters
|
Yes
|
|
|
|
|
|
|
Is salary compensation capped?
|
6 months remuneration. Limited to $40,800 for 'non-award'
employees
|
6 months remuner-
ation |
6 months average wage
|
6 months
remuner-
ation or
$38,800 which ever is greater |
6 months remuner-
ation |
6 months ordinary pay
|
Note:
- Termination provisions contained in the CCH Australian
Employment Legislation at 21 December 2001.
- Provisions updated in August 2002 for new WA amendments
and the Commonwealth salary/compensation cap.
- No attempt has been made to include other authority a
tribunal might rely on to deal with a matter beyond those prescribed under
the particular termination provisions.
WA Provisions (August 2002) (Advice from Labour Relations
Branch DCEP):
- There is no exclusion
of casuals.
- There is a
requirement for the WAIRC to take account of a probationary period of up to 3
months in deciding the merits of a claim (see new S23A(2)). This does not
preclude probationers from lodging claims or having them determined but does
compel the WAIRC to consider them.
- The filing fee has
increased to $50.00.
- The Registrar of the
WAIRC can have functions of the Commission
delegated to them. In
effect the Registrar may now deal with preliminary matters (ie: may mediate a
claim). They will not be able to issue orders (see new S96 - inserted by Clause
161 of the LRRA 2002).
- The blanks against WA
in the table are technically ‘no’ since there is no express power provided. However, there is some ability provided through the general powers of the
Commission (see S27 of the IR Act).
The following websites
have been referred to in this update
http://www.airc.gov.au/termination/practice/home.html
http://www.dir.nsw.gov.au/workplace/practice/endemp/unfair.html
http://www.wageline.qld.gov.au/dismissal/index.htm#unfair
http://www.industrialcourt.sa.gov.au/frameset.php?location=07
http://www.wairc.wa.gov.au/
http://www.justice.tas.gov.au/oir/eir_guide/page8.htm#unfair
Prepared by Steve O'Neill; Information Research Service
Parliamentary Library Canberra; as at: 29/08/02
Attachment 2
Federal Unfair Dismissal Cases
|
Australia:
Federal Unfair Dismissal Cases
|
|
|
|
Annual Reduction/Growth
|
Small Business 2
|
|
Date 1
|
Annual total
|
Number
|
%
|
%
|
Number
|
|
11/96
|
14707
|
-
|
-
|
-
|
-
|
|
11/97
|
7897
|
(6810)
|
(46.3)
|
-
|
-
|
|
11/98
|
8046
|
149
|
1.9
|
40
|
3218
|
|
11/99
|
7678
|
(368)
|
(4.6)
|
27
|
2073
|
|
11/00
|
7747
|
69
|
0.9
|
38
|
2944
|
|
11/01
|
8188
|
441
|
5.7
|
38
|
3111
|
|
11/02
|
7227
|
(961)
|
(11.7)
|
30
|
2168
|
|
Note:
1 Latest available figures.
2 Estimate from the
Australian Industrial Registry returns - small business as a percentage of
total employer responses received. |
Attachment 3
Other Relevant
Statistics
| Number of employing non-farm small businesses |
539 900 |
| Number of non-employing non-farm small businesses |
582 100 |
| Total[8] |
1 122 000 |
| Number of employing non-farm small businesses |
539 900 |
| Number of agriculture, forestry & fishing small businesses |
111 200[9] |
| Number of employees in non-farm small businesses |
2 269 400[10] |
| Number of employees in agriculture, forestry & fishing small businesses |
173 200[11] |
Note: The data can be very confusing. For instance Dr Rowena
Barrett, Director Family and Small Business Research Unit, Faculty of
Business and Economics, Monash University: Small Business and Unfair
Dismissal The Journal of Industrial Relations March 2003 – in Table 1 using
ABS (2000:6) – comes up with a figure of
3 259 100 employees in private
firms with less than 20 employees.
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