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Fair go, Prime Minister

Soon after the last federal election a banner was draped, briefly, from Sydney Harbour Bridge. It proclaimed: ‘Australians have voted to live in an economy, not in a society.’ Within days, the Howard Government announced it would introduce industrial relations changes in Parliament once it had obtained the majority in the Senate. One of these changes would be to exempt from unfair dismissal laws companies with fewer than 20 employees, a number that was later extended to 100. It is just one of many changes the Government intends to make, but the detail of the new legislation is yet to be seen.

The Government says removing unfair dismissal laws will lead to greater workplace flexibility, and has won praise for its plans from the International Monetary Fund. Of course, the downside of such flexibility is that it will remove protection against unfair dismissal for up to 95 per cent of Australian employees. Although the Government’s plans directly affect only those employees covered by federal legislation, it is to be assumed the new laws will override state legislation.

In the main, the existing system provides a relatively speedy, cost-effective and simple process for resolving disputes between employers and employees. Those employees covered by the federal Workplace Relations Act 1996 come under the jurisdiction of the Australian Industrial Relations Commission.

Employees not covered by federal legislation are covered by state legislation, and each state has its own Industrial Relations Commission. Once a claim for unfair dismissal has been lodged in the commission, the matter is listed for a conciliation conference that explores whether it can be resolved by negotiation. If not, the applicant can proceed to arbitration. The commission’s 2003-04 annual report says 75 per cent of cases are resolved at the conciliation stage. Of the remaining cases, 16 per cent are settled post-conciliation, six per cent are abandoned and just three per cent actually proceed to arbitration.

In a nutshell, most unfair dismissal cases concern two main questions: whether the employer has a valid reason for terminating the employee’s employment; and whether the employee was accorded procedural fairness in all the circumstances of the case. Where the employer can demonstrate there has been ‘serious misconduct’ (such as theft, fraud, assault, or being intoxicated at work), there is no need to show that the employee has been warned or counselled; such conduct, if established, warrants summary dismissal. Section 170 CA (2) of the Act provides the principal object is ‘to ensure that, in consideration of an application in respect of termination of employment, a “fair go all round” is accorded to both the employer and employee concerned’.

The Government says one reason for changing the system is the cost. Prime Minister John Howard and the Minister for Workplace Relations, Kevin Andrews, say they have received anecdotal evidence from employers complaining about the expense of having to defend against spurious unfair dismissal claims that proceed to arbitration. It should be noted that the number of unfair dismissal applications filed with the commission dropped from 8109 in 2000-01 to 7044 in 2003-04. In spite of these figures, the Government argues businesses should not have to bear the economic costs involved in defending against unfair dismissal claims at all, so the laws should be scrapped. It is clear the Government has listened closely to the concerns and opinions of employers and business groups; it is also apparent they have not listened to, nor taken account of, the concerns and opinions of the vast majority of Australian workers whose legal rights will be diminished by the changes.

Proponents of the proposed industrial relations changes will no doubt insist that employees will still have rights, both at common law and under state and federal anti-discrimination laws, to challenge their termination in circumstances where they allege the termination was unlawful, discriminatory, and/or they were not provided with reasonable notice. Scrapping unfair dismissal laws is certain to lead to an increase in litigation under the state and federal anti-discrimination laws and common law, but the scope of protection afforded to all employees under the current laws will be significantly reduced. Not all employees who have been unfairly dismissed under existing arrangements can bring proceedings under common law, or state or federal anti-discrimination laws.

By way of example, to proceed with a common-law claim for reasonable notice an employee will have to show the notice provided on termination was not reasonable in all the circumstances, taking into account such factors as the length of employment, seniority or pay level. Employees claiming discrimination will have to demonstrate they are being sacked because of their age, impairment, parental status or status as a carer. It will be much harder for the majority of Australian workers to seek legal redress. I would also argue that the litigation process through the respective courts and tribunals will be far more time-consuming, costly and protracted.

Howard insists that ending unfair dismissal will not cause ‘the skies to fall in’ or ‘the walls to come crashing down’; that it will have a fairly minimal effect on ordinary Australian workers, but will benefit Australian employers and employees by promoting greater workplace flexibility and employment opportunities. Whether that actually happens is yet to be seen. What is clear is that the changes will remove a central plank of protection for ordinary Australian workers. For them workplace flexibility will mean job insecurity.

The key benefit of the existing laws is that they protect workers from being dismissed in a ‘harsh, unjust or unreasonable’ way. Employers who act in this way are held accountable before the law, affording workers a modicum of protection from an unscrupulous employer. Simply by their existence, the laws protect the vast majority of employees: employers know that if they act capriciously they could face a claim for unfair dismissal. This gives the vast majority of Australian workers much needed protection and a certain measure of job security.

The clear winners under the Government’s proposed changes will be employers who run businesses with fewer than 100 employees, although even they may well find they were better off under the existing laws, which in the main provided a relatively speedy, cost effective and efficient way of resolving claims.

The clear losers will be the 95 per cent of Australian workers protected by the existing laws, particularly those who will not have any legal avenues of redress either at common law or under state or federal anti-discrimination laws. In the main they will be relatively unskilled or low-paid workers who have limited tenure with their current employer. Unscrupulous employers will be able to hire, for example, unskilled younger or older workers or recently arrived refugees, pay them the minimum wage, and get rid of them when they like without providing a reason.

Howard says the effect of the new laws will not be felt immediately. He is probably right. The most vulnerable workers may well find that, over time, their position will become more precarious; and that under the new ‘flexibility’, being repeatedly hired and laid off makes it extremely difficult for them to obtain the necessary finance to buy a house. That would widen the divide in our society between the relatively well off and the marginalised. The impact this will have on social cohesion is difficult to predict but one would imagine it could only make things worse.

The costs of the Howard Government’s new legislation to scrap unfair dismissal laws will take some time to become apparent. As the current Act says, its principal object is to ensure that all parties, employers and employees, are given ‘a fair go all round’. The new laws will extinguish the fair go for employees seeking legal redress. Where this leads our society, no one can say.

One can say, however, given the way successive Australian governments have consistently denied outsiders such as asylum seekers and refugees a ‘fair go all round’, it was only a matter of time before the Howard Government decided it could treat insiders the same way.  

Nicholas Dunstan is a lawyer specialising in employment law at Galbally & O’Bryan in Melbourne. He worked as a legal officer for the Jesuit Refugee Service in Sydney (1992), Bangkok (1997), and Phnom Penh (2000).


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