WORKPLACE RELATIONS REGULATIONS (AMENDMENT) 1997 NO. 101

Commonwealth Numbered Regulations - Explanatory Statements

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WORKPLACE RELATIONS REGULATIONS (AMENDMENT) 1997 NO. 101

EXPLANATORY STATEMENT

Statutory Rules 1997 No. 101

Issued by the Authority of the Minister for Industrial Relations

Workplace Relations Act 1996

Workplace Relations Regulations (Amendment)

Section 359 of the Workplace Relations Act 1996 (the Act) provides that the Governor-General may make regulations for the purposes of the Act.

Regulation 4 commences on 1 July 1997. The remainder of the Regulations commenced on gazettal.

The regulations make a number of amendments to the Workplace Relations Regulations which relate to the termination of employment provisions, in Division 3 of Part VIA, of the Act. These provisions impose a number of requirements on employers in relation to termination of employment, and give employees access to certain remedies if employment is terminated in breach of those requirements or is otherwise harsh, unjust or unreasonable.

Regulation 4 will introduce a new class of employees who are excluded from the operation of the provisions on harsh, unjust or unreasonable dismissal, namely employees who are employed by a business which employs 15 or fewer employees. The purpose of the amendment is to recognise the substantial difficulties that small business employers face in dealing with unfair dismissal cases. The exemption is intended to give small business employers the confidence to hire new staff. The exclusion is limited to new employees of a small business, and will only operate for the first year of a new employee's employment with that employer. Small business employers will still be required to provide the statutory minimum period of notice on termination and to satisfy the provisions preventing the dismissal of employees on discriminatory grounds, such as pregnancy.

The Regulations also make a number of amendments to clarify and modify the operation of existing regulations. The amendments:

* assist employers and employees in identifying the type of situation where the use of a fixed term contract may exclude the application of the termination of employment provisions, by inserting a note which refers to a number of cases before the Industrial Relations Court of Australia which have addressed the expression 'employee engaged under a contract of employment for a specified period of time' (which is used in Regulation 30B of the existing regulations) (Regulation 3);

* strengthen the existing safeguard against using contracts for a specified period of time, or for a specified task to make it harder for employers to use such contracts for the purpose of avoiding obligations in respect of termination of employment (Regulation 3.1);

* provide for the refund of the lodgement fee for an application in respect of termination of employment where employees discontinue their claim for relief (Regulation 5. 1);

* provide a sunset clause on the operation of the provision which imposes the lodgement fee (Regulation 5. 1); and

* clarify the effect of a provision which affects the meaning of a 'temporary absence from work because of illness or injury' (which is a prescribed reason for termination of employment under section 170CK) to make it plain that an employee who does not come within the meaning of the expression may still be able to bring an unfair dismissal application in appropriate cases (Regulation 6).

Details of the Regulations are set out in the attachment.

ATTACHMENT

DETAILS OF WORKPLACE RELATIONS REGULATIONS (AMENDMENT)

Regulation 1: Commencement

Regulation 4 will commence on 1 July 1997. The remainder of the regulations commenced on gazettal.

Regulation 2: Amendment

This is a formal provision providing that the regulations amend the Workplace Relations Regulations (the existing regulations).

Regulation 3: Regulation 30B (Employees excluded from requirements for termination of employment)

Section 170CC of the Workplace Relations Act 1996 (the Act) provides that the regulations may exclude specified classes of employees from the operation of the termination of employment provisions in Division 3 of Part VIA of the Act.

Regulation 30B of the existing regulations excludes a number of specified classes of employees from the operation of the termination provisions. In particular, paragraph 30B(1)(a) of the existing regulations excludes 'an employee engaged under a contract of employment for a specified period of time' from Subdivisions B, C, D, E and F of Division 3 of Part VIA of the Act.

Regulation 3.1 assists in interpreting the expression 'an employee engaged under a contract of employment for a specified period of time' by inserting a note which refers to a number of cases before the Industrial Relations Court of Australia, which have addressed the expression.

In Cooper v Darwin Rugby League Inc (1994) 57 IR 238 the contract was for a specified period of time, but allowed for the termination on one month's notice by either party before the expiration of the specified time. In that case the employment was terminated by the unilateral act of the employer and not by the effluxion of the period of time set out in the contract. In these circumstances the Court held that the regulation did not exclude the employee from the termination of employment provisions.

Andersen v Umbakumba Community Council (1994) 126 ALR 121 establishes that a contract for a specified period of time requires some certainty, and must be one where the date of commencement and completion are unambiguously identified by a term of the contract. Where the cessation date merely records the outer Emit of the contract and there is an unqualified right for either party to terminate, the contract is not one for a specified period of time. A right to terminate that is conditioned by a breach of a term of the contract would not be an unqualified right to terminate.

Where a series of specified period contracts are entered into merely for administrative convenience then the Court has looked beyond the contract terms to the reality of the employment relationship. In D'Lima v Board of Management, Princess Margaret Hospital of Children (1995-96) 64 IR 19 for example, an employee was engaged on a series of short term contracts, each for a specified period of time. There was no break in the continuity of contracts except for a period of leave. A continuous employment relationship was found to exist, and the employee was not excluded on the basis of being an employee engaged under a contract of employment for a specified period of time.

Where a contract clearly sets out the specified period of the contract and the contract terminates when the specified period expires, the termination is not a termination at the initiative of the employer. In Fisher v Edith Cowan University (unreported decision of Madgwick J, 12 November 1996, No WI 1061 of 1996) a termination was held to be not at the initiative of the employer as the employment terminated as and when it did by reason of the agreement of the parties, made a year earlier, that it should so terminate.

In the Fisher case the employee was employed under three fixed term contracts. Prior to the expiration of the final contract the position was advertised. The applicant applied for the position but was not successful in obtaining it. The particular context of the employment was seen to be relevant in that it was not a case where the use of a fixed term contract had been unreal, unconscientious or oppressive as against an employee of special vulnerability. In reaching this conclusion it was relevant that the use of fixed term contracts was accepted and regulated in the award provisions covering the employment of the employee at the university.

Prior to these amendments, subregulation 30B(2) of the regulations provided that the exclusions relating to employees engaged under contracts for a specified period of time, or for a specified task, did not apply if the main purpose for using such a contract was to avoid employer obligations under the Act with respect to termination of employment

Regulation 3.2 strengthens the safeguard in subregulation 30B(2) by amending it so that the exclusions does not apply in cases where avoiding employer obligations was a substantial purpose for using the contract.

A note is also inserted after existing subregulation 30B(4). The note indicates that an employee who is excluded by Regulation 30B may still be eligible to apply for a remedy in relation to the termination of employment under a State law. The purpose of the note is to put employers on notice that an employee who is excluded under the federal system might still gain access to a State remedy in relation to the termination of the employment.

The application of Regulation 3.2 is affected by Regulation 7.

Regulation 4: New regulation 30BAA

Regulation 4.1 of the amending regulations will insert a new regulation, Regulation 30BAA, from 1 July 1997.

Small business employees excluded from requirements for termination of employment

Section 170CC of the Act provides that the regulations may exclude specified classes of employees from the operation of the termination of employment provisions in Division 3 of Part VIA of the Act. Subparagraph 170CC(1)(e)(ii) of the Act provides for the exclusion of employees where the application of the provisions would cause substantial problems because of the 'size or nature of the undertakings in which they are employed'.

New regulation 30BAA will apply to exclude an employee from making a claim that a termination was harsh, unjust or unreasonable where:

* there were 15 or fewer employees employed in the undertaking of the employer at the time when the employer initiates the termination (ie terminates the employment or gives notice of the termination); and

* the employee was first employed by that employer on or after the commencement of the excluding regulation (on 1 July 1997); and

the employee had not been engaged for a period of more than 12 months or had not been engaged for a sequence of periods of employment during a period of more than 12 months.

The effect of the amendment will be that this limited class of employees will not be able to seek remedies under the Act based on a claim that the termination was harsh, unjust or unreasonable. Safeguards will remain, as the exclusion is limited to bringing an application for relief under paragraph 170CE(1)(a) of the Act (or, to the extent relevant, paragraph 170CE(1)(c)), on the ground that the termination was harsh, unjust or unreasonable.

Excluded employees may still be able to bring applications claiming that a termination was unlawful due to an alleged contravention of sections 170CK, 170CL, 170CM or 170CN of the Act. This means small business employers will still be required to provide the statutory minimum period of notice on termination and to satisfy the provisions preventing the dismissal of employees on discriminatory grounds, such as pregnancy.

The purpose of subregulation 30BAA(2) is to clarify that casual employees who are not engaged on a regular and systematic basis are not to be taken into consideration, for the purpose of deciding whether or not a particular employer employs more than 15 employees at a particular time. An employee need not be a fulltime employee to be considered to be employed for the purpose of determining business size; part-time employees as well as casual employees engaged on a regular and systematic basis are employees for this purpose.

A note will also be included after new regulation 30BAA. The note will indicate that an employee who is excluded by new regulation 30BAA may still be eligible to apply for a remedy in relation to the termination of employment under a State law. The purpose of the note is to put employers on notice that an employee who is excluded under the federal system might still gain access to a State remedy in relation to the termination of the employment.

Regulation 5: Regulation 30BD (Fee for application to Commission to deal with termination)

Paragraph 359(2)(c) of the Act provides that the Governor-General may make regulations concerning 'the fees to be charged in relation to proceedings under this Act'.

Regulation 30BD requires a fee of $50 to be paid where an application is filed under subsection 170CE(1) of the Act.

Regulation 5.1 amends Regulation 30BD so as to provide for the refund of the application fee where employees discontinue their claim for relief in respect the termination of their employment.

To be eligible for a refund the application must be withdrawn:

* at least 2 days before the day on which the matter is first listed before the Australian Industrial Relations Commission (the Commission); and

* in accordance with any existing Commission rules for discontinuing applications.

The listing before the Commission would include any listing for a conciliation or conference before the Commission, not only a listing for hearing at the stage of arbitration.

The refund is available in relation to any discontinuance within the specified time that occurs after the regulations have commenced. It is not necessary for the application fee to have been paid after the regulation commenced for the refund to be available.

Regulation 5.1 also inserts a sunset clause on the operation of the provision which imposes the filing fee in relation to applications. Subregulations 30BD(1) and (2) will cease to have effect on 30 June 1998. The intention is that a review will be conducted of the operation of the filing fee before that date to determine whether its continuation (by further amending regulations) is justified.

Any fee paid before 30 June 1998 will be able to be refunded under subregulation 30BD(3) even if the discontinuance occurs after 30 June 1998.

Regulation 6 : Regulation 30C (Temporary absence because of illness or injury)

Subsection 170CK(2) of the Act provides that an employer must not terminate an employee's employment for any one (or more) of a number of reasons. The reasons include temporary absence from work because of illness or injury within the meaning of the regulations.

Prior to these amendments, regulation 30C provided that an illness was only to be taken to be 'temporary' for the purpose of paragraph 170CK(2)(a) where appropriate medical certification or other substantiation of the reason for the absence is provided, and the absence does not extend for more than three months (unless it is wholly on paid sick leave).

Regulation 6.1 inserts a note after subregulation 30C(3) which provides that a finding that an absence is not a temporary absence for the purpose of paragraph 170CK(2)(a) is without prejudice to the employee's right to apply to the Commission (or under a State law) for relief against an alleged harsh, unjust or unreasonable termination of employment. This makes plain that an employee who is excluded from relying on paragraph 170CK(2)(a) may still be able to bring an unfair dismissal application in appropriate cases.

Regulation 7: Application

Prior to these amendments, subregulation 30B(2) of the existing regulations provided that the exclusions relating to employees engaged under contracts for a specified period of time, or for a specified task, did not apply if the main purpose for using such a contract was to avoid employer obligations under the Act with respect to termination of employment. Regulation 3.2 strengthens this safeguard by providing that the exclusions do not apply in cases where avoiding employer obligations was a substantial purpose for using the contract.

Regulation 7.1 clarifies that the strengthened safeguard in subregulation 30B(2) applies to any termination occurring on or after the commencement of these Regulations, even if the contract referred to in that subregulation was entered into before that date.