Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2002
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
WORKPLACE RELATIONS AMENDMENT (TERMINATION
OF EMPLOYMENT) BILL 2002
EXPLANATORY
MEMORANDUM
(Circulated by authority of the Minister for
Employment and Workplace Relations, the Honourable Tony Abbott MP)
• extend the operation of the federal unfair dismissal system by
making greater use of the corporations power in section 51(xx) of the
Constitution (Schedule 1);
• improve the operation of the federal
unfair dismissal laws as it impacts on small business (Schedule 2);
• make a number of other improvements to the way the unfair
dismissal laws operate (Schedule 3).
Each of these is discussed
below.
Expanded federal scheme
To ensure the effective operation of the new arrangements, the amendments
would also prevent employees within the scope of the federal unfair dismissal
jurisdiction (including those employees excluded from seeking a remedy) from
accessing remedies under comparable State unfair dismissal schemes. However,
the interaction of federal unfair dismissal law with other Commonwealth, State
or Territory laws - for example, anti-discrimination laws – remains
largely unaffected.
It is estimated that the number of employees
covered by the expanded system will increase from approximately 3.9 million to
around 6.8 million.
Measures to assist small business
This
Bill would also make amendments to the unfair dismissal jurisdiction as it
impacts on small businesses (those employing fewer than 20 employees). These
amendments will:
• extend the qualifying period from three to six
months for small business employees;
• permit the dismissal,
without a hearing, of applications made against a small business – on the
ground that the application is beyond jurisdiction or because the application is
frivolous, vexatious or lacking in substance;
• refine the penalty
provisions for lawyers and agents who encourage unmeritorious claims against
small business;
• streamline the criteria for determining whether a
termination by a small business employer was unfair; and
• halve
the maximum compensation payable to employees of small businesses to 3 months
remuneration.
Measures to improve the operation of unfair dismissal
law
This Bill will make several improvements to the operation of the
unfair dismissal scheme to:
• require the Australian Industrial
Relations Commission (the Commission) to have regard to conduct by an employee
which contributed to their dismissal;
• limit dismissal claims where dismissal is for operational reasons;
• require the Commission to have regard to the safety and welfare of other employees in assessing whether a dismissal was harsh, unjust or unreasonable;
• require the Commission to consider the size of an employer’s business in determining an appropriate remedy;
• require the Commission to take account of any income an employee who is to be reinstated may have earned since their dismissal, when making an order for back pay; and
• emphasise that reinstatement is the primary remedy available under
the WR Act.
FINANCIAL IMPACT STATEMENT
The measures in this
Bill aimed at expanding the federal unfair dismissal scheme will involve
additional matters coming before the Commission. Appointment of additional
members of the Commission may be necessary.
EXPANSION OF THE COMMONWEALTH UNFAIR DISMISSAL SCHEME
Current situation
1. The unfair dismissal provisions, contained in Part VIA, Division 3, Sub-Division B of the Workplace Relations Act 1996 (the WR Act), allow a dismissed employee to seek a remedy from the Commission on grounds that the dismissal was ‘harsh, unjust or unreasonable’ (ie: that the dismissal was unfair).
2. As the legislation now stands, many employees do not have access to this federal process and are left to seek relief in the various State tribunal jurisdictions. This is a result of the constitutional basis of the current provisions which cover:
• Victorian employees;
• Commonwealth public sector employees;
• Territory employees;
• employees in selected areas covered by the Constitution’s trade and commerce power; and
• employees in constitutional corporations who are also federal award employees.
− a ‘federal award employee’ means an employee any of whose terms and conditions of employment is governed by an award, a certified agreement, an AWA or an agreement made under the former provisions of the Industrial Relations Act 1988 (refer subsection 170CD(1)).
3. The federal provisions also allow for the possibility that employees eligible to bring a claim under the federal law may be able to choose between alternative remedies in the federal and State jurisdictions, provided that they do not attempt to pursue more than one remedy.
4. Section 170HA makes it clear that the unfair dismissal provisions are not intended to limit any other right to appeal against a termination, or to secure an award or order in relation to a termination. This leaves open the possibility of accessing State unfair dismissal laws, as well as remedies under other laws such as federal and State anti-discrimination legislation.
5. Section 170HB provides, however, that if proceedings under another law are commenced seeking relief on the grounds that a termination was harsh, unjust, unreasonable or unlawful, then no complaint of unfair dismissal can be made under the WR Act unless and until those other proceedings are discontinued or fail for want of jurisdiction. It also provides that the making of an application under section 170CE of the WR Act must be treated as an election to pursue rights under the federal termination of employment provisions to the exclusion of any other proceedings until the federal application is discontinued or found to be beyond jurisdiction.
Problem
6. The current arrangements have negative consequences for employees, employers and for the operation of the Commonwealth provisions themselves.
7. One consequence is that identical cases are handled differently merely because they fall into different jurisdictions, resulting in inequitable treatment for both the employees and employers concerned. In a speech earlier this year, the President of the Commission commented that such inconsistent application of unfair dismissal law diminished public confidence in the courts and tribunals[1]. For instance rules governing eligibility based on casual employment status, probationary status, out of time limits or on the level of the applicant’s wage vary from jurisdiction to jurisdiction. In addition, the factors that tribunals must consider and the relative importance they are required to give to them in determining the fairness of a dismissal, whether relief is warranted and the form and level of such relief vary depending upon the legislative framework and related case law that is being applied. Other factors, such as application fees and penalties, also differ.
8. Employers and employees are also confronted by the complexity of overlapping jurisdictions. This creates confusion. The May 2002 Senate Report on the Provisions of Bills to Amend the Workplace Relations Act 1996 found that many employers were unsure as to whether federal or State dismissal laws covered them.
9. Further evidence of this confusion is found in a survey report of nearly 2000 small to medium businesses commissioned by the Department of Employment and Workplace Relations (DEWR) in July 2002 from the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne. This report, published in October 2002, found that almost a third of businesses did not know whether they were covered by State or federal unfair dismissal laws[2].
10. Similarly, many employees will not know the jurisdiction in which they are eligible to lodge a claim.
11. Such complexity weakens efforts by government agencies and employer organisations to educate and inform businesses about how to handle and prevent unfair dismissal claims.
12. Some employees, perhaps the most vulnerable, confused by the complexity, may fail to seek redress or to lodge an application in time, with the result that injustices that the law has been established to rectify will go un-remedied. In addition, as the President of the Commission has pointed out, time in the courts and tribunals is taken up with jurisdictional questions, which imposes costs on both Government and on the individual litigants.
13. Confusion about coverage also complicates efforts by Government and other bodies to gather information about the operation of the laws. For instance, surveys on attitudes to unfair dismissal laws have difficulty distinguishing whether or not respondents are covered by federal laws and whether the views expressed relate to the operation of federal laws[3].
14. The uneven coverage of the Commonwealth laws limits the effectiveness of changes made by the federal Parliament to improve the operation of the laws.
Objective
15. The objective of the proposed legislation is to amend the WR Act so that coverage by a federal industrial instrument will no longer be a condition for employees working in a constitutional corporation to be able to bring an action in the federal system in respect of ‘harsh, unjust or unreasonable’ termination of their employment. At the same time, all employees covered by the expanded jurisdiction will be prevented from having the right to bring actions in State tribunals or courts on the grounds that the dismissal was unfair.
16. Alternate actions challenging a dismissal on any other ground, such as discrimination under another federal law or a law of a State or Territory, would not be proscribed by this change. However the WR Act would prevent dismissed employees from pursuing more than one remedy in respect of their termination of employment.
17. This amendment will provide businesses with greater certainty as to which unfair dismissal laws apply to them as most will be covered by the federal system only. It will also prevent employees from ‘forum shopping’.
18. This should result in a streamlining of business human resource management practice, including termination management, and allow businesses to reduce the amount of time, money and effort they put into these issues.
Option – maintaining the status quo
19. One option, which was not considered, would be to make no change. As discussed above, this would be to maintain the current inequitable and complex arrangements that have prompted the Government to propose this legislative reform.
Other options considered
20. Three other options were considered:
Alternate option 1: Expand the scope of the system, without affecting existing rights.
21. Under a minimalist approach, the corporations power could be used to extend the reach of federal unfair dismissal laws without affecting the existing provisions dealing with the interaction of the federal unfair dismissal provisions with other laws.
22. This would mean that employees currently covered by State systems, but who would be picked up by an expanded federal system, would still be able to choose to bring an action in the State unfair dismissal jurisdiction (and, if they did so, would be precluded from proceeding under the WR Act, as happens at present).
23. This option would exacerbate the present unsatisfactory situation, which creates confusion and unnecessary cost for all involved. It would also increase the scope for forum shopping.
Alternate Option 2: Specify which other actions employees may bring
24. The WR Act could be amended to specify which other alternative remedies an employee covered by the WR Act’s unfair dismissal provisions would be entitled to bring.
25. The risk with this approach is that something unforeseen could inadvertently be omitted as a broad range of legislation might potentially be relevant in dismissal cases.
Alternate Option 3: Prevent employees from access to any other remedies.
26. The broadest approach would be to amend the WR Act so that an employee eligible to bring an action under the WR Act for unfair dismissal is prevented from bringing an action under any other legislation in respect of that dismissal.
27. While this option would cover the field, it would also restrict access to a range of State and Territory remedies for anti-discrimination and would represent an unwarranted intrusion by the Commonwealth into an area of State and Territory activity beyond the workplace relations arena.
Policy development and consultation
28. The Government has undertaken formal and informal consultation with small businesses on problems caused by the unfair dismissal provisions, including formal roundtable meetings throughout Australia. Hearings and submissions into the Senate inquiry on the Workplace Relations Amendment (Fair Dismissal) Bill 2002 raised the issue addressed by this proposal to extend the coverage of the laws. In particular, the value of survey information on the operation of the laws and the efficacy of any Government efforts to fine tune them were questioned on the grounds of their limited and uneven coverage.
29. In 2000, as part of a broader process of exploring the use of the corporations power in the Australian Constitution to create a simpler national system of workplace relations regulation including unfair dismissal regulation, the then Minister, the Hon Peter Reith, issued a number of discussion papers and officers of the Department consulted with stakeholders in the preparation of these papers. The focus of the papers was on broad discussion and raising public awareness of the issues involved in moving towards a uniform set of workplace laws across the country. A summit was held in November 2000 by the Business Council of Australia at which ideas for a simpler system based on the corporations power were extensively discussed.
30. In May 2002, the Minister for Employment and Workplace Relations, in a speech to the Australian Food and Grocery Council, focused on the specific example of unfair dismissal laws as one relatively straightforward and practical example of how the corporations power could be used to create a uniform system of workplace relations regulation.
Impact analysis of the option
31. There are no current data available that can provide a precise estimate of the proportion of employees who are in the federal unfair dismissal jurisdiction. However, it is estimated that currently around 49 per cent[4] of Australian employees are covered by federal unfair dismissal legislation. Under the proposal, it is estimated that the coverage of federal unfair dismissal legislation would be increased to around 85 per cent of employees. The remaining 15 per cent of employees would continue to be covered by State unfair dismissal schemes or be excluded from either scheme due to their status, eg short term casual. In terms of employee numbers, those covered by federal unfair dismissal legislation would increase from approximately 3.9 million to around 6.8 million.
32. In terms of the impact of the legislation on the number of federal unfair dismissal claims, the Australian Industrial Registry (AIR) reported that 8 109 federal termination of employment applications were lodged during the 2000–2001 financial year[5]. If the assumption is made that the number of federal unfair dismissal applications is directly proportional to the number of employees who are covered by federal unfair dismissal legislation, it is estimated that under the proposed legislation the number of federal unfair dismissal applications would increase by around 73 per cent. It is estimated that this would represent an increase in the number of federal unfair dismissal claims of up to 6 000 claims per year resulting in an approximate number of federal unfair dismissal applications of up to 14 000 per year[6].
33. There would be a consequential reduction in State claims and, therefore, there is unlikely to be any net increase in cost to the national economy.
Implementation and review
34. The proposed reform measure is to be given effect by amendments to the WR Act. The Department of Employment and Workplace Relations will monitor the impact of the legislation.
35. The legislation will also be reviewed through formal mechanisms for consultation already in place. In particular, the National Labour Consultative Council will have an ongoing role in monitoring the legislation and any issues that may arise.
36. Consultation with interested parties and groups will also continue.
FURTHER LEGISLATIVE MEASURES TO IMPROVE THE
COMMONWEALTH UNFAIR DISMISSAL SCHEME
Current Situation
1. Since 1996, the Government has pursued
legislative amendments to the Commonwealth unfair dismissal scheme in an attempt
to create a better balance between the interests of employers and employees and
improve the operation of the scheme, particularly for small business.
2. Some legislative amendments to the operation of the Commonwealth
unfair dismissal scheme were accepted by the Parliament in August 2001. These
include:
(a) implementing a ‘default’ three-month qualifying
period of employment during which time an employee will be excluded from seeking
a remedy in respect of harsh, unjust or unreasonable (ie unfair) termination of
employment;
(b) limiting the right of demoted employees to seek a
remedy;
(c) tightening the tests for the granting of extensions of time
to make termination of employment applications;
(d) requiring the
Commission to deal with jurisdictional objections before referring a claim to
conciliation;
(e) giving the Commission power, following conciliation, to
dismiss unfair dismissal applications that do not have a reasonable prospect of
success;
(f) requiring the Commission to pay specific regard to the size
of the business (eg the absence of a dedicated human resources function) in
determining whether a dismissal was unfair;
(g) giving the Commission
express power to dismiss an application where an applicant fails to attend
proceedings;
(h) restricting the ability of a person to make a second
application in respect of the same termination;
(i) expanding the powers
of the Commission to order costs against parties who act unreasonably in
pursuing, managing or defending claims;
(j) requiring the Commission to
ask representatives of parties whether they have been engaged on a ‘no
win, no fee’ basis; and
(k) giving the Federal Court the power to
order penalties against lawyers and other advisers who encourage applicants to
make unfair dismissal claims where there is no reasonable prospect of success,
or who encourage respondents to defend applications where there is no reasonable
prospect of a successful defence.
3. The measures described above will
be enhanced by the amendments proposed in Schedule 2 of this Bill, outlined in
this regulation impact statement. These measures will have the two-fold effect
of relieving some of the concerns of the small business community by reducing
the number of unfair dismissal claims made against small businesses, and
reducing the impact of these claims on the time and financial resources of small
businesses and improving the balance between the interests of employers and
employees. The full exemption for small business remains a Government priority
to be pursued through the Workplace Relations Amendment (Fair Dismissal) Bill
2002.
Problem
Small business
issues
4. More Time for Business, the 1997 Government response
to the 1996 Small Business Deregulation Task Force, identified business and
community concerns that termination of employment provisions are an employment
disincentive for small business. The Government’s report found that these
provisions have a disproportionate and detrimental impact on small business in
terms of human resource administration procedures, representation at Commission
hearings and lost business opportunities while defending claims (p. 30).
5. A range of mainly attitudinal surveys of small business have since
been done by various organisations with the majority of surveys indicating that
small business employers would be more likely to employ new staff, and more
likely to employ staff on a permanent basis, if they were not concerned with the
prospect of unfair dismissal claims. This survey information was covered by the
Department of Employment and Workplace Relations (DEWR) in its submissions to
Senate Inquiries into bills seeking to exempt small business in 1998 and
2002[7]. Most recently, a new Yellow
Pages survey report commissioned by DEWR from the Melbourne Institute of Applied
Economic and Social Research, with results released in late October, has found
that State and federal unfair dismissal laws impose extra costs of $1.3 billion
a year on small and medium businesses and reduce employment for low paid workers
by 1 percent[8].
6. Many
business organisations representing a wide range of small business including the
Australian Chamber of Commerce and Industry and the Small Business Coalition
have argued that the laws should be changed to make them less onerous,
particularly for small business.
7. A major cause for concern is that
small businesses are generally less likely to have dedicated human resource
professionals within their management structures, let alone personnel
departments to handle recruitment and performance management processes needed to
help them defend unfair dismissal claims. They are less likely to engage
specialist outside assistance in dealing with human resource
matters[9]. In addition, small
business operate under much tighter cash flow constraints so that an award of
compensation will be a much greater burden than it would be in a larger
business.
8. Currently, a hearing is convened in all unfair dismissal
cases with the resulting imposition of cost and time to the businesses
concerned. Because of the lack of specialist human resource management in small
business, any time out to deal with such issues is time out from line activities
which go to the operation and survival of the business.
9. Even in cases
where the claim is obviously vexatious many businesses prefer to reach a
settlement rather than disrupt their core business activities by attending
hearings[10]. The threat of
incurring a high compensation payout makes such settlements all the more likely.
In addition, the type of inquiry undertaken by the Commission in determining
whether a dismissal was unfair requires the employer to have maintained a
certain standard in recruitment, training and performance management as well as
a certain level of documentation of these processes. As noted in More Time
For Business[11] ‘... lack
of time and resources for elaborate staff management processes means any
proceedings are likely to be disproportionately complex because of the
employer’s need to rely on oral evidence instead of documents’. In
the Melbourne Institute analysis, 44 per cent of businesses reported that unfair
dismissal laws made it more difficult to manage and supervise their workforce
with around 41 per cent saying it now takes longer to resolve issues associated
with poor
performance[12].
10. Aside
from the obvious cost to small business which these improvements to the
Commonwealth unfair dismissal scheme are intended to address, the Commission
itself must still set aside time and resources to hear claims even where they
are obviously frivolous or vexatious.
Balancing the interests of
employers and employees
11. When the WR Act was first introduced, the
Government made a commitment to review the legislation. Since that time, as
case law has developed, various anomalies have appeared in the application of
the law indicating a need to clarify the operation of the Commonwealth unfair
dismissal scheme. For instance, employers in genuine redundancy situations have
lost their case on the grounds of procedural unfairness even where the
Commission has acknowledged the validity of the operational grounds and the
redundancy selection process itself has not been found to be
unfair[13]. Also, cases where
employees have been sacked for endangering other workers have been lost because
the unfair dismissal scheme did not allow the Commission to give sufficient
weight to this kind of circumstance. Most of these reforms have been advocated
by employer groups and represent a necessary tightening of the current
scheme[14].
12. The further
legislative amendments to improve the Commonwealth unfair dismissal scheme are
an expression of the ‘fair go all round’ principle on which the
current unfair dismissal provisions are based. They are aimed at giving the
Commission stronger direction in cases to allow it to more effectively balance
the interests of all parties concerned.
Objective
13. The
objective of Schedules 2 and 3 of the Bill is to amend the unfair dismissal
provisions of the WR Act to:
(a) allow the Commission to dismiss unfair
dismissal applications against small business employers without a hearing where
‘on the papers’ it considers the claim to be without jurisdiction or
frivolous, vexatious or lacking in substance;
(b) refine the penalty
provisions for lawyers and agents encouraging unmeritorious claims. Where the
Commission has dismissed an application against a small business employer
without a hearing on the grounds that it is frivolous, vexatious or lacking in
substance, the Federal Court will be required to take this into account in
determining the penalty;
(c) simplify the criteria that the Commission
must consider in determining whether a dismissal is unfair in the case of a
small business;
(d) halve the applicable maximum amount of compensation
that can be awarded to applicants dismissed from a small
business;
(e) set a qualifying period of six months service with the
employer before a new employee of a small business can make a claim for unfair
dismissal;
(f) require the Commission, in determining the fairness of a
dismissal, to have regard to any conduct of the employee contributing to the
dismissal;
(g) exclude access to remedies for unfair dismissal where an
employer dismisses an employee on operational grounds, except in exceptional
circumstances;
(h) require the Commission, in determining the fairness
of a dismissal, to have regard to whether the safety or welfare of other
employees was factor in the decision to dismiss;
(i) require the
Commission to take the size of the business into account in determining an
appropriate remedy;
(j) require the Commission, in making an order for
back-pay in conjunction with a reinstatement order, to take into account any
income earned from other employment in the period since the dismissal;
and
(k) emphasise reinstatement as the remedy of first
resort.
Option – maintaining the status quo
14. One
option, which was not considered, would be to make no change. As discussed
above, this would leave small business disproportionately affected by the
Commonwealth unfair dismissal scheme and the scheme will continue to be
ill-equipped to find an appropriate balance between the interests of all
parties.
Other option considered - exempt small business from unfair
dismissal laws
15. Businesses with less than 20 employees could be
exempted from all unfair dismissal claims. This is being pursued through a
separate legislative amendment in the Workplace Relations Amendment (Fair
Dismissal) Bill 2002.
16. Many of the legislative measures to improve the Commonwealth unfair
dismissal scheme were initially suggested by representative employer
organisations, such as the Australian Chamber of Commerce and Industry (ACCI)
and the Australian Industry Group, most recently in Senate proceedings to
consider the amendments to the federal termination of employment laws.
17. The Australian Labor Party and the Australian Democrats have called
for amendments to improve the efficiency and effectiveness of the unfair
dismissal process. They have suggested that it is necessary to assist small
business through quicker resolutions, greater certainty of outcomes and reduced
legal costs.
18. In addition, employers and employer organisations
including ACCI, the Victorian Employers’ Chamber of Commerce and Industry,
and the Small Business Coalition have called for further legislative amendments
to provide for a better balance between the interests of employers and
employees.
Impact analysis (costs and benefits) of the
option
Small business measures
19. The measures to
benefit small business contained in Schedule 2 of the Bill would have the effect
of reducing financial costs, increasing certainty of outcomes and resolving
claims more quickly.
20. There will be a reduction in the financial
costs currently incurred by small businesses. The ability of the Commission to
dismiss applications without a hearing ‘on the papers’ will mean
that small businesses will no longer have the time and monetary cost of
attending hearings for frivolous or vexatious claims. Such claims may also be
discouraged through the refinement of penalty provisions for lawyers and agents
that encourage such claims. Employees have the benefit of having their claim
resolved quickly under this arrangement. While their opportunity to be heard
before the Commission is more limited, both parties will be given the
opportunity to provide further information before an order to dismiss is
made.
21. Financial costs will be reduced for small businesses through
both the halving of the maximum amount of compensation payable to employees
dismissed from small business and in the requirement for the Commission to take
into account the size of an employer’s business when determining
compensation. Small business employees may be disadvantaged by these measures
compared to those dismissed from larger enterprises.
22. By simplifying
the criteria that the Commission must consider in determining whether a
dismissal is unfair, small business employers and employees benefit through
increased certainty in the matters to be considered and through a reduction in
time associated with hearings. Small business employees may be disadvantaged
when compared to those dismissed from larger businesses, however, as the range
of matters the Commission can consider is more limited.
23. A range of
survey evidence, including evidence presented to the Senate in 1998 and 2002,
suggests that potential unfair dismissal claims discourage a significant
proportion of small businesses from recruiting additional staff. In the recent
Melbourne Institute report on the effect of unfair dismissal laws on small to
medium businesses, almost 40 per cent of respondents reported that the unfair
dismissal laws meant that they were now less likely to hire unemployed job
applicants or people who had changed their jobs
frequently[15].
24. To the
extent that potential unfair dismissal claims discourage recruitment in small
businesses, measures such as extending the qualifying period for all new
employees to six months before an unfair dismissal claim can be made could
encourage increased small business activity and employment by addressing small
business employers’ concerns about the legislation. The Melbourne
Institute report found that one effect of unfair dismissal laws on small and
medium enterprises was that employees would be more likely to be dismissed in
their probationary period[16].
Extending the period of probation will give business a longer period of time in
which to assess the capability of a new employee and provide new employees with
a better opportunity to demonstrate their ability to do the
job.
Measures to balance the interests of employers and
employees
25. The measures to create a better balance between the
interests of employers and employees contained in the Bill will have the effect
of increasing certainty of outcomes, claims being resolved more quickly and the
interests of all parties being taken into consideration.
26. The
legislative amendment includes a provision to exclude access to remedies for
unfair dismissal where an employer dismisses an employee on operational grounds,
other than in exceptional circumstances. This will provide more certainty for
employers where they no longer have ongoing work for an employee.
27. The
amendments will allow the Commission to take into account any contributory
conduct by an employee when determining compensation and also to consider
whether the safety and welfare of other employees was a factor in the dismissal.
These amendments will benefit employers in the decision making process
associated with dismissing an employee and reduce financial costs by limiting
compensation payable in these circumstances.
28. By emphasising
reinstatement as the remedy of first resort, employees benefit by returning to
their previous position and having the matter resolved quickly. The employer
benefits by not having additional recruitment costs. However, reinstatement may
not be appropriate and may not be desired in some circumstances. The proposed
requirement that, when determining compensation, the Commission is to take into
account any income earned, will benefit the employer by reducing the
compensation payable. There is a possible, but unlikely, effect that an
employee will wait until a settlement has been reached before seeking new
employment.
Implementation and review
29. The proposed
reform measures are to be given effect by amendments to the WR Act. The
Department of Employment and Workplace Relations will monitor the impact of the
legislation.
30. The legislation will also be reviewed through formal
mechanisms for consultation already in place. In particular, the National
Labour Consultative Council will have an ongoing role in monitoring the
legislation and any issues that may arise.
31. Consultation with
interested parties and groups will also continue.
NOTES ON CLAUSES
Clause 1 – Short
title
This is a formal provision specifying the short title of the
Act.
Clause 2 - Commencement
This clause specifies when the
various provisions of the Act commence.
Subject to exceptions for which
specific provision is made, the provisions of schedules 1, 2 and 3 of the Act
commence on Proclamation. However, if any Schedule has not commenced within 6
months of Royal Assent, subclause 2(3) has the effect that the Schedule
commences on the first day following that six month period.
Specific
provision is made for the commencement of items that interact with each other or
with the provisions of other Bills before the Parliament, to ensure that they
commence in the correct order.
Clause 3 –
Schedule(s)
Clause 3 provides that each Act specified in a Schedule
to this Act is amended or repealed as set out in the Schedule, and that any
other item operates according to its terms.
SCHEDULE 1 – COVERING THE FIELD OF HARSH, UNJUST OR UNREASONABLE
TERMINATION
1.2 The amendments will expand the federal jurisdiction dealing with harsh,
unjust or unreasonable dismissals (the federal unfair dismissal jurisdiction) so
that it covers all employees of constitutional corporations, in addition to
employees currently covered under other constitutional heads of power.
Part 1 – Amendments
Workplace Relations Act 1996
Item 1 – at
the end of section 5
1.3 This item inserts a new subsection 5(9) to
ensure that subsections 5(6) and 5(8) operate subject to new section 170HA
(which provides that the expanded federal unfair dismissal jurisdiction operates
to override unfair dismissal rights and remedies provided for by some State laws
– see notes on item 7 below).
1.4 Section 5 provides for the
additional operation of the Workplace Relations Act 1996 (the WR Act).
• Subsection 5(6) of the WR Act allows complementary legislation
to be enacted for the coal mining industry in New South Wales and Queensland.
• Subsection 5(8) of the WR Act allows a State to legislate to
give federal award employees, who are not otherwise covered by it, access to the
federal unfair dismissal jurisdiction.
Item 2 – at the end of
section 152
1.5 Section 152 deals with the relationship between
federal awards, and State awards and employment agreements. The section
establishes rules of priority for the operation of these awards and agreements.
1.6 This item makes it clear that the relationships established by
section 152 are subject to section 170HA (which provides that the expanded
federal unfair dismissal jurisdiction operates to override unfair dismissal
rights and remedies provided for by some State laws, awards or employment
agreements).
Item 3 – paragraph 170CB(1)(c)
1.7 This
item will extend the constitutional base of the federal unfair dismissal
jurisdiction by placing greater reliance on the corporations power.
1.8 Presently, the jurisdiction relies on a number of constitutional
heads of power including, amongst others, the corporations power. However, the
corporations power is not used to its full extent.
1.9 Currently, under
paragraph 170CB(1)(c), an employee wishing to access the jurisdiction must be
employed by a constitutional corporation and be a Federal award employee
(as defined in section 170CD).
1.10 This item removes this limitation by
replacing the reference to ‘a Federal award employee’ with ‘an
employee’.
Item 4 – Subsection
170CBA(4)
1.11 This item is consequential upon the proposed extension
of the federal jurisdiction.
1.12 The WR Act provides that regulations
may be made excluding from access to a remedy employees not employed under award
or agreement conditions whose remuneration is above a certain level (currently
$81,500 per annum).
1.13 This item ensures that the phrase
‘employed under award conditions’ (insofar as it relates to the
exclusion of certain employees) extends to instruments under State as well as
federal law, reflecting the greater reach of the federal system.
1.14 The current exclusion is cast in terms of employees covered by a
federal award or agreement (reflecting the limited application of the
current provisions).
1.15 This amendment would ensure that, in extending
the application of the unfair dismissal provisions, a significant group of
employees being brought within the federal system – those covered by State
awards or agreements – are not excluded from access to a
remedy.
1.16 This item is contingent upon an amendment to the WR Act
proposed by the Workplace Relations Amendment (Fair Termination) Bill 2002,
currently before the Parliament. That Bill would move the provisions setting
out exclusions from a remedy from the Workplace Relations Regulations
1996 to the WR Act. Item 4 would amend the provision being inserted into
the Act as a result of this move.
Item 5 – Subsection
170CD(3)
1.17 Item 5 is also related to the extension of the federal
system.
1.18 This item would amend the definition of ‘employed
under award conditions’ that applies generally throughout the termination
of employment provisions to ensure it extends to instruments under State as well
as federal law. It also corrects a technical defect to ensure that the
definition covers federal agreements made under the former Industrial
Relations Act 1988.
Item 6 – Subdivision F of Division 3 of
Part VIA (heading)
1.19 This item changes the heading to Subdivision
F of Division 3 of Part VIA of the WR Act from ‘Other rights relating to
termination of employment’ to ‘Limitations on rights relating to
termination of employment’. This change reflects the changes proposed by
items 7-9, which deal with the interaction of the federal system with other laws
(see the discussion of items 7, 8 and 9 below).
1.20 Subdivision
F contains sections 170HA, 170HB, 170HBA and 170HC. These provisions outline
the way the federal unfair dismissal jurisdiction interacts with other relevant
laws.
1.21 Presently, the federal unfair dismissal jurisdiction operates
in conjunction with other remedies available under other State, Territory and
Commonwealth laws. For example, in addition to State unfair dismissal
legislation, remedies may exist in a particular case under anti-discrimination
legislation.
1.22 The WR Act currently deals with potential overlap by
ensuring that, where an employee may have a cause of action under both the
unfair dismissal provisions of the WR Act and another law in respect of an
alleged unfair dismissal, the employee may not proceed under the WR Act if he or
she has initiated proceedings under another law, unless that claim is
discontinued by the applicant or fails for lack of
jurisdiction.
1.23 However, the Government intends to change the way the
federal unfair dismissal laws interact with these other laws to make it clear
that an employee covered by the federal unfair dismissal system no longer has
access to comparable State jurisdictions.
Item 7 – Section
170HA
1.24 This item repeals current section 170HA (which provides
for the continuing operation of other laws) and substitutes a new section
170HA.
1.26 New section 170HA provides that the unfair dismissal
provisions in the WR Act apply to the exclusion of State or Territory
legislation:
• the main purpose of which is to regulate workplace
relations, employee relations or industrial relations; and
• which
provide rights or remedies in respect of unfair dismissal (however described).
1.27 Equivalent provision is made in relation to State awards and
agreements (subsection (2)).
1.28 This exclusion will extend to employees
who are covered by the federal jurisdiction (for example because they are
employed by a constitutional corporation), but who are excluded from bringing an
action for unfair dismissal by the WR Act (for example, because they are a
short-term casual employee) (subsection (3)).
1.29 Regulations may be
made identifying relevant provisions of a State or Territory law, or a State
award or agreement, as provisions which meet the criteria outlined above
(subsections (4) and (5)).
Item 8 – Section
170HB
1.30 Item 8 repeals existing section 170HB and substitutes a
new section 170HB. The new section does much of the same work as the old
section. However it has been drafted to make it easier to read, and it no
longer deals with the interaction of the federal unfair dismissal legislation
with State and Territory unfair dismissal legislation (new section 170HA
provides that federal law operates to the exclusion of State or Territory law in
such cases).
1.31 In general terms, section 170HB is intended to stop
‘double-dipping’ in cases where an employee may be able to bring
proceedings in respect of an alleged unfair dismissal under the federal unfair
dismissal provisions and another law (other than a State or Territory unfair
dismissal law), including another provision of the WR Act.
1.32 The new
section 170HB provides that an action may not be commenced under another law,
where proceedings have been initiated in the federal unfair dismissal
jurisdiction, unless the proceeding has been discontinued by the applicant or
has been dismissed for lack of jurisdiction.
1.33 Similar provision is
made in relation to cases where proceedings have been initiated other than in
the federal unfair dismissal jurisdiction.
Item 9 – Section
170HC
1.34 This item would repeal section 170HC and substitute a new
section. This new section essentially does the same work as the old one.
However, the section has been redrafted to make it easier to read, and addresses
a technical deficiency in the existing provision (this is explained
below).
1.35 As with existing section 170HC, the new provision would
limit ‘double dipping’.
1.36 Subsection (1) would limit
access to remedies relating to a termination of employment available under other
laws (including other provisions of the WR Act) where the applicant has
previously sought relief under section 170CK (which prohibits dismissal on
certain discriminatory grounds), and that application has not been discontinued
or failed for lack of jurisdiction.
1.37 Subsection (2) deals with the
situation where an application is made other than under section 170CK. In such
cases, an application may not also be made under section 170CK unless the
application has been discontinued or failed for lack of jurisdiction.
1.38 Consistent with the approach taken in proposed new section 170HA
(to provide for the exclusive operation of federal unfair dismissal laws), the
definition of other termination proceeding in subsection (3) has
been drafted to ensure that it is not possible to initiate proceedings alleging
unlawful dismissal (ie dismissal for a discriminatory ground, such as sex or
race) in the federal system and unfair dismissal proceedings under State or
Territory workplace relations law.
1.39 The definition of other
termination proceedings would also address a potential anomaly in the
existing provision.
1.40 The definition will ensure that an application
alleging unlawful termination may not be lodged under a State or Territory law
where the application is based on the same, or a substantially similar,
ground as an application lodged under the federal legislation.
1.41 Under the current legislation, no provision is made in respect of
applications under State or Territory law on ‘substantially similar’
grounds to those in section 170CK - ie for the section to operate to ensure that
parallel applications are not made, the grounds under the two laws must be the
same. However, as very few ‘other’ laws are in identical terms to
subsection 170CK(2), the existing provision may enable an applicant to pursue
remedies under laws that were substantially similar, yet not identical, to
subsection 170CK(2). New section 170HC would address this
deficiency.
Item 10 – At the end of subsection
170LZ(3)
1.42 This item adds a note after subsection 170LZ(3) to make
it clear that it operates subject to new section 170HA.
1.43 Section
170LZ deals with the interaction between certified agreements, and State laws,
awards and employment agreements.
1.44 Subsection 170LZ(3) makes it
clear that a certified agreement does not override a State law dealing with
unfair dismissal so far as the provisions can operate concurrently with the
certified agreement. However, the note added by this item makes it clear that
subsection 170LZ(3) is subject to section 170HA.
Item 11 – At
the end of subsection 170VR(3)
1.45 This item adds a note after
subsection 170VR(3).
1.46 Section 170VR deals with the interaction
between Australian Workplace Agreements (AWA) and State laws and is similar in
operation to section 170LZ.
1.47 Subsection 170VR(3) makes it clear that
an AWA does not override a State law on unfair dismissal providing that two can
operate concurrently. However, the note added by this item makes it clear that
subsection 170VR(3) is subject to section 170HA.
Part 2 – Application provisions
Item 12 – Application of items 1, 2, 3, 5, 6, 7, 8, 9, 10 and
11
Item 13 – Application of item 4
1.48 Items 12 and
13 provide that the amendments made by this Schedule will apply only in relation
to terminations of employment that occur after the commencements of the items,
regardless of whether the employment started before or after the commencement of
the items.
1.49 Item 12 provides for the application of the majority of
the items of the Schedule.
1.50 Item 13 provides for the application of
item 4. A separate application provision is required for this item because of
the separate commencement provision applicable to the item – see item 3 of
the table in subclause 2(1).
SCHEDULE 2 – TERMINATION APPLICATIONS AFFECTING SMALL
BUSINESS
2.1 This Schedule amends the termination of employment
provisions of the WR Act, to ease the burden of unfair dismissal laws on small
business.
2.2 In particular, the items in this Schedule
will:
• extend the qualifying period from three to six months for
small business employees;
• permit the dismissal, without a
hearing, of applications made against a small business;
• refine
the penalty provisions for lawyers and agents who encourage unmeritorious claims
against small business;
• streamline the criteria for determining
whether a termination by a small business employer was unfair;
and
• halve the maximum compensation payable to employees of small
businesses to 3 months remuneration.
Part 1 – Amendments
Workplace Relations Act 1996
Item 1 –
Subsection 170CD(1)
Item 2 – Subsection
170CD(1)
2.3 These items would insert new definitions of
‘relevant time’ and ‘small business employer’ in
subsection 170CD(1) of the WR Act.
2.4 A ‘small business
employer’ is defined as an employer who employs less than 20 employees,
including:
• casual employees who have been engaged on a regular
and systematic basis for a period or sequence of periods of at least 12 months
(but not other casual employees); and
• the employee whose
employment was terminated.
2.5 The ‘relevant time’ in
relation to a termination of employment is defined as the earlier of:
• the time the employer gave notice of termination to the
employee;
• the time when the employer terminated the employment
of the employee.
2.6 The definition of ‘relevant time’ is
necessary to enable the Commission to determine whether a business falls within
the category of a small business employer at the time of the termination and, as
such, the relevant exemptions apply.
Item 3 – Paragraph
170CE(5B)(a)
2.7 This item amends the WR Act to extend the qualifying
period for employees of small business for eligibility to bring an unfair
dismissal application. Currently all employees must serve a qualifying period
of 3 months.
2.8 This item provides for the qualifying period for small
business employees to be extended to 6 months.
Item 4 – Before
section 170CF
Item 15 – At the end of section
170JD
Item 16 – At the end of section 170JF
2.9 Item
4 inserts a new section 170CEC.
2.10 Currently, under section 170CEA an
employer may, at any time, ask the Commission to dismiss an application on the
grounds that it is outside the Commission’s jurisdiction.
2.11 New section 170CEC would allow the Commission to dismiss some
claims made against small businesses ‘on the papers’, ie without
holding a hearing. New section 170CEC would also establish the process by which
the Commission is to deal with such matters.
2.12 The Commission must
dismiss an application against a small business employer if it believes it is
beyond its jurisdiction (subsection (2)) or the application is frivolous,
vexatious or lacking in substance (subsection (3)).
2.13 Subsection (4)
provides that, in dismissing such an application, the Commission is not required
to hold a hearing. In deciding whether a hearing is appropriate, the Commission
is required to have regard to the cost to the employer’s business of
attending at a hearing.
2.14 Before the Commission makes an order
dismissing an application, both parties must be given the opportunity to provide
further information, and if further information is provided, must take that into
account (subsection (5)).
2.15 Items 15 and 16 are intended to
prevent procedural devices being used to undermine the simplified ‘on the
papers’ process outlined above.
2.16 Currently, section 170JD of
the WR Act provides that the Commission may vary or revoke orders made in regard
to termination of employment.
2.17 Item 15 introduces a new subsection
170JD(4), excluding from the power to vary or revoke, an order dismissing an
application ‘on the papers’ against a small business employer under
new section 170CEC.
2.18 Item 16 excludes such orders from being appealed
to a Full Bench.
Item 5 – After subsection
170CG(3)
2.19 This item would insert a new subsection 170CG(3A),
setting out streamlined criteria for assessing whether a dismissal by a small
business employer was harsh, unjust or unreasonable.
2.20 Subsection
170CG(3) sets out the criteria to be considered by the Commission in assessing
whether a dismissal was harsh, unjust or unreasonable. These criteria
currently apply to all business regardless of their size. The criteria
are:
• whether there was a valid reason for the termination related
to the capacity or conduct of the employee or to the operational requirements of
the employer's undertaking, establishment or service;
• whether
the employee was notified of that reason;
• whether the employee
was given an opportunity to respond to any reason related to the capacity or
conduct of the employee;
• if the termination related to
unsatisfactory performance by the employee—whether the employee had been
warned about that unsatisfactory performance before the termination;
• the degree to which the size of the employer’s
undertaking, establishment or service would be likely to impact on the
procedures followed in effecting the termination; and
• the degree
to which the absence of dedicated human resource management specialists or
expertise in the undertaking, establishment or service would be likely to impact
on the procedures followed in effecting the termination; and
• any
other matters that the Commission considers relevant.
2.21 New subsection
(3A) would provide streamlined criteria for small business.
2.22 The
requirement that the Commission consider whether an employee was warned about
unsatisfactory performance before being terminated is removed.
2.23 The
ability of the Commission to consider ‘any other matter’ is also
removed. This will assist small business by ensuring that the legislation sets
out in clear terms all of the factors which a small business employer
must address to ensure that a dismissal is fair.
2.24 Items 5-8 of
Schedule 3 propose amendments to this new provision (see the discussion of these
items, below).
Item 6 – After paragraph
170CH(2)(a)
Item 7 – After paragraph
170CH(7)(a)
2.25 These paragraphs require the Commission to have
regard to the size of the employer’s undertaking, establishment or service
when considering:
• whether a remedy in respect of a dismissal is
appropriate (paragraph 170CH(2)(a));
• the appropriate calculation
of damages in lieu of reinstatement (paragraph 170CH(7)(a)).
2.26 The
size of the employer’s undertaking, establishment or service is already a
relevant factor in assessing whether a dismissal was harsh unjust or
unreasonable. These items extend this principle to assessment of an appropriate
remedy.
Item 8 – Paragraph 170CH(8)(a)
Item 9 –
After subsection 170CH(8)
Item 10 – Subsection
170CH(9)
Item 11 – Paragraph 170CH(9)(b)
Item 12
– After paragraph 170CH(9)(b)
Item 13 – Subsection
170CH(9)
2.27 Subsections 170CH(8) and (9) of the WR Act set out the
maximum compensation that may be awarded to an employee whose dismissal is found
to have been harsh, unjust or unreasonable in cases where the Commission
considers that reinstatement would not be appropriate.
2.28 In the case
of an employee covered by a federal award or agreement, the maximum compensation
available is capped at the total remuneration that the employee received, or was
entitled to receive, during the six-month period preceding the dismissal
(subsection 170CH(8)).
2.29 As a result of amendments proposed by
Schedule 1 of this Bill, this cap would also apply to employees covered by State
awards or agreements.
2.30 The cap for employees not covered by an award
or agreement is set by reference to a formula (set out in the Regulations) that
draws upon average weekly full time earnings. The cap is adjusted each
financial year – it is currently $40,800.
2.31 New items 8-13 halve
the maximum compensation cap for employees of small businesses to 3 months
remuneration for award and agreement-covered employees, and half the applicable
indexed amount for employees not covered by an award or
agreement.
Item 14 – At the end of section 170HH
2.32 Section 170HE of the WR Act prohibits lawyers or other advisers
from encouraging a claim or defence that has no reasonable prospect of
success.
2.33 Section 170HF allows the Federal Court to impose fines on
advisers who encourage such a claim or defence.
2.34 This item amends the
WR Act to require the Federal Court to consider, in imposing a fine on a lawyer
or adviser, whether an application against a small business was dismissed
without a hearing by the Commission because it was frivolous, vexatious or
lacking in substance.
Part 2 – Application provisions
Item 17 – Application of items 3, 8, 9, 10, 11, 12 and
13
Item 18 – Application of items 4, 5, 6, 7, 14, 15 and
16
2.35 These items provide for the application of the amendments
made by Schedule 2.
2.36 Item 17 provides that the amendments made by
items 3, 8, 9, 10, 11, 12 and 13 apply only in cases where the relevant
employment commenced after the commencement of the items.
2.37 Item 18
provides that the amendments made by items 4, 5, 6, 7, 14, 15 and 16 apply where
the termination of employment occurred after the commencement of the items.
SCHEDULE 3 – OTHER AMENDMENTS RELATING TO TERMINATION OF
EMPLOYMENT
3.1 Schedule 3 makes several improvements to the operation
of the unfair dismissal jurisdiction. These amendments will:
• require the Commission to have regard to conduct by an employee which contributed to their dismissal;
• limit dismissal claims where dismissal is for operational reasons;
• require the Commission to have regard to the safety and welfare of other employees in assessing whether a dismissal was harsh, unjust or unreasonable;
• require the Commission to consider the size of an employer’s business in determining an appropriate remedy;
• require the Commission to take account of any income an employee who is to be reinstated may have earned since their dismissal, when making an order for back pay; and
• emphasise that reinstatement is the primary remedy available under the WR Act.
Part 1 – Amendments
Workplace Relations Act 1996
Item 1 –
Subsection 170CG(3)
Item 4 – Paragraph
170CG(3)(a)
Item 5 – Subsection 170CG(3A)
Item 7
– Paragraph 170CG3A)(a)
Item 8 – At the end of section
170CG
3.2 Items 1, 4, 5 and 7 are consequential upon the amendment
proposed by item 8 (to insert a new subsection 170CG(4)).
3.3 Items 1
and 5 amend subsections 170CG(3) and 170CG(3A) respectively so that the criteria
in those subsections would not apply if subsection 170CG(4)
applies.
3.4 Items 4 and 7 amend subsections 170CG(3) and 170CG(3A)
respectively to remove references to dismissal due to operational
requirements.
3.5 Item 8 would insert a new subsection 170CG(4), and
provides that where a termination of employment occurs because of operational
requirements, the termination will not be harsh, unjust or unreasonable unless
the circumstances are exceptional.
3.6 The new provision inserted by item
8 does not seek to define the situations which might be considered by the
Commission to constitute exceptional circumstances.
3.7 However, an
example of such circumstances might be where an employer, faced with the need to
reduce employee numbers for operational reasons, adopts an unfair process for
selecting the employees whose employment is to be terminated.
Item 2
– Subsection 170CG(3)
3.8 Subsection 170CG(3) sets out the
criteria to be considered by the Commission in assessing whether a dismissal was
harsh, unjust or unreasonable.
3.9 Item 2 is consequential upon the
amendment proposed by item 5 of Schedule 2 – to insert specific criteria
that the Commission must consider in assessing whether termination of employment
by a small business employer was unfair.
3.10 The amendment is included
in this schedule because of its interaction with item 1.
3.11 The effect
of item 2 is to ensure that the Commission considers the factors in subsection
170CG(3) only where the specific factors in subsection 170CG(3A) do not apply.
(Item 1 makes similar provision in relation to proposed new subsection
170CG(4).)
Item 3 – Paragraph 170CG(3)(a)
Item 6
– Paragraph 170CG(3A)(a)
3.12 Items 3 and 6 amend subsections
170CG(3) and 170CG(3A) respectively to make clear that, in assessing whether an
employee’s dismissal was harsh, unjust or unreasonable, the Commission is
to have regard to any conduct of the employee that may have put at risk that the
safety or welfare of other workers.
3.13 This requirement applies in the
case of small business employers and non-small business
employers.
Item 9 – After subsection
170CH(2)
3.14 Item 9 would insert a new subsection
170CH(2A).
3.15 This new provision emphasises that reinstatement is the
primary remedy under the WR Act for harsh, unjust or unreasonable terminations.
3.16 The provision makes express the requirement that the Commission
first consider whether reinstatement is appropriate. Only after the Commission
has determined that reinstatement is not appropriate may it consider an
alternate remedy (an order for payment in lieu of reinstatement).
Item
10 – Paragraph 170CH(4)(b)
Item 11 – After subsection
170CH(4)
3.17 Subsection 170CH(4)(b) requires the Commission, in
making an order for lost remuneration when an employee is to be reinstated, to
have regard to the matters set out in subsection 170CH(5).
3.18 Subsection 170CH(5) is designed to insure against windfall gains.
3.19 Item 11 will amend the WR Act to further insure against windfall
gains, by requiring the Commission to have regard to additional matters in
making an order for lost remuneration. The additional matters are set out in
new subsection 170CH(4A); specifically:
• income earned by the
employee from employment or other work during the period between dismissal and
reinstatement; and
• the amount of any income reasonably likely to be
earned by the employee during the period between the making of an order for
reinstatement and the actual reinstatement.
3.20 Item 10 is a
consequential amendment to include in paragraph 170CH(4)(b) a cross reference to
new subsection 170CH(4A).
Item 12 – Subsection
170CH(7)
Item 13 – After subsection
170CH(7)
3.21 Subsection 170CH(7) requires the Commission to have
regard to all the circumstances of the case in assessing an appropriate amount
of compensation in lieu of reinstatement (ie, in cases where the Commission
determines that reinstatement is not appropriate).
3.22 The subsection
sets out an inclusive list of factors to be considered, including the effect of
any order on the employer’s viability, the amount of remuneration the
employee would have earned but for the termination, and any efforts made by the
employee to mitigate the loss suffered as a result of the termination of their
employment.
3.23 Item 13 inserts a new subsection 170CH(7A). This new
provision would require the Commission to reduce the amount of compensation
awarded to an employee who is unfairly dismissed, where the employee’s
misconduct contributed to the dismissal.
3.24 The Commission will be
required to reduce the compensation by an appropriate proportion to reflect the
contribution of the employee to the dismissal.
3.25 Item 12 is a
consequential amendment, inserting a cross reference to new subsection 170CH(7A)
in subsection 170CH(7).
Part 2 – Application provisions
Item 14 – Application of items 1, 3, 4 and 8 to
13
Item 15 – Application of items 2, 5, 6 and
7
3.26 Items 14 and 15 provide that the amendments made by this
Schedule of the Bill will only apply in relation to terminations of employment
that occur after the commencements of the items, regardless of whether the
employment started before or after the commencement of the
items.
3.27 Item 14 provides for the application of the majority of the
items of the Schedule.
3.28 Item 15 provides for the application of items
2, 5, 6 and 7. A separate application provision is required for these items
because of the separate commencement provision applicable to the items - items 8
and 10 of the table in subclause 2(1) refer.
[1] Address to Australian Workers
Union Conference, 19 April 2002, paragraph
12.
[2] ‘The Effect of Unfair
Dismissal Laws on Small and Medium Sized Businesses’, Melbourne Institute
of Applied Economic and Social Research, 29 October 2002, p.
9.
[3] This limitation on most of
the surveys was accepted by the majority of the Senate Committee in their May
2002 Report on the Provision of Bills to Amend the Workplace Relations Act 1996,
at p. 17.
[4] ‘Breaking
the Gridlock: Towards a Simpler National Workplace Relations System –
Discussion Paper 1, the Case for Change’, Discussion paper issued by the
Hon Peter Reith MP, Federal Minister for Employment, Workplace Relations and
Small Business, October 2000, p.
64.
[5] Data collected at the time
termination of employment applications are lodged with the Australia Industrial
Registry do not identify whether the applications are in relation to unfair
dismissal or unlawful termination. However, it is understood that the vast
majority of such applications are unfair dismissal
applications.
[6] This assumes that
all employees seeking to challenge a dismissal decision on the grounds of
unfairness who are currently eligible to apply under the federal system do so in
the federal system. To the extent that ‘leakage’ to the State
systems occurs under the present arrangements, the number of applications could
potentially increase by more than 6000. Also, the 8109 figure may contain a
number of applications from employees eligible for a State remedy but not for a
federal remedy. Some of these applications, which are presently disqualified
after a jurisdictional hearing, may proceed to further conciliation and/or
arbitration hearings under the proposed
change.
[7] Submissions to
Senate Employment, Workplace Relations, Small Business and Education Legislation
Committee – Inquiry into Workplace Relations Amendment (Unfair Dismissals)
Bill 1998, vol. 3, submissions 13-21, January 1999, pp. 80-84; Submission by the
Department of Employment and Workplace Relations to Senate Employment, Workplace
Relations, Small Business and Education Legislation Committee Inquiry to Bill to
Amend the Workplace Relations Act 1996, 18 April 2002, pp.
15-18.
[8] ‘The Effect of
Unfair Dismissal Laws on Small and Medium Sized Businesses’, Melbourne
Institute of Applied Economic and Social Research, 29 October 2002, p.
17.
[9] For instance the March
2002 CPA Australia Small Business Survey program found that only 21 per cent of
small business engaged the help of outside consultants for
recruitment.
[10] Mr Grant
Poulton from Australian Business Limited, a major employer organisation, in
evidence before the 1999 Senate Employment, Workplace Relations, Small Business
and Education Legislation Committee, estimated that at least three-quarters of
the cases his organisation dealt with in 1998 were settled without regard to
merit or relative strength of the applicant’s case. The employers
concerned estimated that the cost of settlement would be less than the cost of
fighting the case.
[11] Page
31
[12] ‘The Effect of
Unfair Dismissal Laws on Small and Medium Sized Businesses’, Melbourne
Institute of Applied Economic and Social Research, 29 October 2002, p.
17.
[13] Examples are Ly Kung
Lao v Australian Tie Company (2002) [Print PR919424] Holmes C.; J.G. Adam
and ors v Mount Thorley Operations Pty Ltd (2002) [Prints PR909053 and
PR914896] Leary C.
[14] For
instance, the Small Business Coalition, representing around 40 industry
organisations with an interest in small business across all sectors of the
economy, and ACCI, representing a large cross-section of business in their
recent
submissions to the Senate inquiry into the 5 bills to amend the WR
Act advocated many of the measures here proposed.
[15] ‘The Effect of
Unfair Dismissal Laws on Small and Medium Sized Businesses’, Melbourne
Institute of Applied Economic and Social Research, 29 October 2002, Table
14.
[16] ‘The Effect of
Unfair Dismissal Laws on Small and Medium Sized Businesses’, Melbourne
Institute of Applied Economic and Social Research, 29 October 2002, page
16.