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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


The new IR laws will need careful attention

In the past four years Australia has seen more change in Industrial relations than in 100 years previous to it. As employers started to manage ‘Work Choices’ with a degree of confidence, the Australian Industrial Relations framework has been changed again.

The change from ‘Work Choices’ to ‘Fair work’ (the new system) will be in two stages. The first stage is scheduled to begin on July 1, 2009, which includes the reintroduction of strong unfair dismissal laws, including the abolition of exemptions for small and medium businesses that have less than 100 employees.

Small businesses will also be made to adhere to a ‘Fair Dismissal Code’, which includes a delicately worded checklist. This also sees the introduction of ‘Good Faith Bargaining’ which is a potential significant risk to all business whether they have one or one hundred employees who are members of a trade union.

The first stage also sees the abolition of Australian Industrial Relations Commission, Australian Fair Pay Commission, Workplace Authority and Workplace Ombudsman among several others. They are to be replaced with a one-stop-shop with the aim of performing all these functions as a super-body.

The second wave of change is scheduled to commence on January 1, 2010 and includes:

• New ‘National Employment Standards’ (NES), which includes the statutory right to redundancy pay for all employees (although there may be some exemptions)

• A statutory right to ‘family friendly provisions’, including two years unpaid maternity leave, unless it is proved to be unreasonable, and

• ‘Modern Awards’ which will impact virtually every employment contract and agreement that employers and employees have agreed to.

Unfair dismissal

Unfair dismissal is back across the board. ‘Work Choices’ exemptions are gone, including the exemption to small and medium businesses with fewer than 100 employees. Businesses with 14 employees or less (inclusive of casual employees) will have a twelve month qualifying period in which they can dismiss employees free from unfair dismissal, while those with 15 and above have 6 months.

Of key concern to businesses with 15 or more employees (inclusive of casual employees) is that they are bundled in the same class as multi-national corporations who have an army of IR experts on hand to advise managers.

 Small businesses will have to adhere to the ‘Fair Dismissal Code’. This is a checklist which employers will be required to tick all the boxes in order for the dismissal to be deemed fair should it fall outside of the qualifying period. The form includes delicate language like “employer believes reasonable grounds”, “employees conduct is sufficiently serious” and “valid reason”. Whether or not the employer’s belief is reasonable or their reason is valid, or that an employee’s conduct is sufficiently serious, rather than merely serious, can and will be tested by the new super-body.

If employers act in good faith yet in ignorance of changes and/or technical definitions, they will be subject to a range of penalties, including reinstating the employee and paying damages. Employers should consider using independent workplace investigators as an independent party as a buffer in the process to increase the likelihood of providing the decision to dismiss as correct beyond the balance of probabilities.

For example, take a case where an employee abuses a work mobile phone privilege for one thousand dollars and does not want to pay the money back. You will need to consider:

• Does the employee have a valid contract of employment?

• If so, is there any clause relating to phone use/abuse, and do you contractually bind your employees to abide by policies and other obligations?

• What policies do you have regarding telephone use/abuse?

• To what extent do your policies absolutely and unambigously define telephone use/abuse and consequences the employer may deem acceptable?

• In light of the massive damages awarded in the 2006 cause of ‘Nikolich v Goldman Sachs JB Were (which in part related to the interplay between contracts and policies), and deliver them to your employee at different times?

• What performance management and warning structure do you have, and is it clear and unambiguous to all employees?

• Have there been any past warnings, and if so, are they legally valid and worded correctly and within a valid time frame?

• To what extent would Fair Work Australia, in assessing your contracts, policies and workplace custom, find ambiguity in these, on the part of the employer?

If you cannot confidently assert the acceptable answers to these questions, then it would be likely a decision to dismiss would be ‘unfair’, thus to avoid this happening to your business you should give serious consideration to developing or improving employment contracts and policies. Policies can no longer be ‘motherhood’ statements or a general nicety.

Policies need to be developed as a watertight legal platform from which you can manage the process of unfair dismissal claims. With over 150,000 people set to become unemployed over the next year or two, it would be reasonable to expect many former employees to test the system to see if they could receive damages (cash benefits) in the face of financial uncertainty. Businesses could be closed unless they have watertight contracts and policies in place, together with adherence to the ‘Fair Dismissal Code’.

The practical implications of this increased risk means businesses will have to strategise with an Industrial Relations/Employment Law specialist in conjunction with their accountant on assessing their workforce prior to May 2009. Of concern is the fact that businesses with 15 employees or more (including casual employees) will be regarded in law as the same as a multi-billion dollar conglomerate with an army of IR and employment law professionals.   

David Chapman
My Business, February 2009


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