Productivity Commission should have gone further in attempt to reform unfair dismissal laws: business groups
Date
December 22, 2015
Canberra Times
Business groups say the Productivity Commission attempts to reform Australia's unfair dismissal system are not good enough, because the system has swung too far in favour of workers.
They say small businesses with fewer than 20 employees should not have to spend valuable time and money fighting unfair dismissal claims.
The long-awaited final report on Australia's workplace relations system was released on Monday, by the Productivity Commission.
It suggested reforms to the unfair dismissal system to prevent "spurious cases" from going to settlement.
The report referred a number of cases where employees had clearly underperformed or behaved inappropriately, but had still been awarded compensation.
In one case, Sheng He v Peacock Brothers & Wilson Lac v Peacock Brothers [2013], two employees were dismissed after punching one another in the head in an argument, but they were paid compensation after management failed, when sacking them, to follow procedural fairness – such as seeking corroboration from witnesses and offering translation services.
It said because existing arrangements in the unfair dismissal system mean an employee who should be dismissed may still receive compensation due to faults in the termination process, it "opens the door to possible hunting by dismissed employees (or their agents) for technical reasons for compensation, and may provide leverage for 'go away' money."
To discourage disingenuous claims, the Commission has recommended charging a non-refundable fee to lodge an unfair dismissal claim, and charging a second non-refundable fee for any case that makes it to arbitration.
It recommends making it impossible for procedural errors by an employer to result in reinstatement or compensation for a former employee.
It says the federal government should give the Fair Work Commission clearer powers to deal with unfair dismissal applications before conducting a conference or hearing, and that there ought to be a two-stage test introduced for considering whether a person has been unfairly dismissed.
Overall, the report found unfair dismissal laws are not playing a "major role" in hiring and firing decisions in Australia – so they are working reasonably well – but incremental changes should make the system better.
The Victorian Chamber of Commerce and Industry has welcomed some of the recommendations for putting an emphasis on "substance rather than process" in unfair dismissal claims.
It has also welcomed the return of "upfront assessments" of unfair dismissal claims which will limit the time and effort spent by employers in defending unmeritorious claims.
But it complains the Commission has missed an opportunity to restrict access further to unfair dismissal claims.
"Despite urging the PC to remove the burden of unfair dismissal for businesses with under 20 employees, this recommendation was not part of the final report, meaning small business will continue to spend time and money defending claims rather than running their businesses," Mark Stone, VCCI chief executive, said.
The Australian Chamber of Commerce and Industry says it is disappointing small businesses will still have to contend with unfair dismissal laws.
But Ged Kearney, Australian Council of Trade Unions president, says the Commission's recommendations for reform are not based on "any real issue" with unfair dismissal laws.
"By making it more expensive, and changing the procedural processes to make it more difficult, simply means that more people will be unfairly dismissed without any recourse," Ms Kearney told Fairfax Media.
"We'll certainly be letting people know that this is the view of the Productivity Commission is, and we'd like to know what the government's position is."
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