Unfair Dismissal Laws – the Fair Work Act 2009

“Fair rights if employees are unfairly dismissed “was one of the key themes of the Government’s IR policy position.  This commitment has led to some important changes to the unfair dismissal laws in its new Fair Work legislation.

This Fact Sheet provides an overview of the new laws. Further details can be obtained by attending one of VECCI’s free Member Briefings on the new Fair Work laws. VECCI’s Helpline can also provide advice and information. Our IR/HR consultants can help you put in place policies and procedures around discipline and termination. They can also help to deal with an unfair dismissal claim in your workplace.

What’s Intended?

The changes to the unfair dismissal laws are significant. In summary:

• They remove the exemption that has been in place since March, 2006 for businesses with 100 employees or less,
• They introduce some changes to assist businesses with less than 15 employees cope with the new laws. This includes a small business Fair Dismissal Code,
• They make changes to the process of dealing with claims,
• They amend the definition of what is a “genuine redundancy.”

When?

1st July, 2009 is the key date. The new framework will be in place and operating from then.

Who’s Covered?

Access has been restored for the overwhelming majority of Australian employees.
Removal of the “100 employees or less” exemption means there is no longer any limitation based on number of employees employed. An employee who has been dismissed will now be able to pursue an unfair dismissal claim if –

• They are covered by an award or enterprise agreement (AWA, ITEA or collective agreement) OR
• They are “award free” but earn less than what is described as the “high income threshold”. That amount is now set at $106,400 but will be indexed each year.
• There are also two separate “minimum employment periods” or qualifying periods that apply before a dismissed employee can elect to pursue a claim.
• If the business has 15 or more EFT (equivalent full time employees) an employee must have been employed for at least 6 months prior to termination before a claim can be made.
• In a business with less than 15 EFT employees that period is 12 months.

(N.B. whilst the method of calculating employee numbers is now based on EFT from 1st January, 2011 it will revert to a calculation based upon a simple head count.)

Further Assistance for Small Business

In addition to the extended qualifying period that applies to a small (less than 15 employees) business the Government has also developed a Fair Dismissal Code to assist those businesses.  It sets out a series of steps to be followed in order to establish that a fair dismissal process has been followed. The key steps are –

• A valid reason for termination exists,
• A warning indicating the possibility of termination has been provided, and
• A reasonable chance has been provided for the employee to rectify the problem.

It may also be necessary to provide things like a checklist, copies of warnings, or signed statements to prove that these steps have been followed.

(Further details about the small business Fair Dismissal Code are contained in a separate VECCI Fact Sheet.)

The Process

The process of dealing with claims intends to try and get to the heart of the matter quickly and with less formality and legal involvement. Claims will continue to be dealt with on the basis of whether a “fair go all around” been provided.

Exceptions

It is not intended that claims can be brought by –

• An employee engaged for a specified period of time or particular task,
• An employee involved in a training arrangement,
• A person who has been demoted providing it does not involve a significant reduction in remuneration or duties, or
• A “genuine redundancy” situation. (See below).

“Genuine Redundancy”

Genuine Redundancy remains a defence to an unfair dismissal claim but changes have been made to what constitutes “genuine redundancy.” To rely on the defence an employer will need to be able to demonstrate –

• Changed operational requirement mean the employer no longer requires the job to be performed by anyone,
• The employer has complied with any obligations in an award or agreement to consult, and
• It was not reasonable for the person to be redeployed in the business or in a related business.

What’s Unfair?

When Fair Work Australia gets involved in dealing with an unfair dismissal claim it is required to take these considerations into account –

• Was there a valid reason for the dismissal related to the person’s capacity or conduct (including the effect on the safety and welfare of other employees?
• Was the person notified of that reason?
• Were they given an opportunity to respond?
• Were they allowed to have a support person present during any discussions about the dismissal?
• Had they been warned prior to the dismissal?
• The extent to which the size of the businesses or the absence of any HR expertise might impact on the procedures followed.
• Any other matters it considers relevant.