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Introduction of the Fair Work Legislation

The Labour Federal Government has been true to its word in taking steps to overturn the Work Choices regime introduced by the Howard Government.

The Fair Work Act 2009 (Cth) is to replace the Workplace Relations Act 1996 (Cth) in its entirety although some aspects of it have been retained in the new legislation. Whilst there has been some transitional legislation which has already been introduced and implemented by the Federal Government, the Fair Work Act is to be implemented in stages with the first major commencement date being 1 July 2009 and with all of the legislation in effect by 1 July 2010.

The main features of the Fair Work Act are:

1. Changes to unfair dismissal laws;
2. The introduction of National Employment Standards (“NES”);
3. Award modernisation for industry based awards;
4. Changes to laws relating to industrial action, union right of entry and freedom of association;
5. New collective and enterprise bargaining procedures; and
6. The establishment of a body called “Fair Work Australia” to administer the workplace system.

Fair Work Australia

Fair Work Australia will replace such bodies as the Australian Industrial Relations Commission and the Australian Fair Pay Commission. Fair Work Australia will deal with unfair dismissal claims, modernization and adjustments of awards, settling of disputes, assisting in collective bargaining and approving enterprise agreements. The Fair Work Ombudsman will replace the Workplace Ombudsman whose task will be educate and ensure compliance with the Act including caring out investigations into breaches, issuing compliance notices and court proceedings for any breaches.

In this first newsletter the Unfair Dismissal laws are reviewed and the implications for employers and employees considered.

Unfair Dismissal  -  What does this mean for you?

The changes which relate to Unfair Dismissal laws commence from 1 July 2009.

To recap, one of the principal changes introduced by the Work Choices legislation was to severely restrict an employee's right to make a claim for unfair dismissal. To do this WorkChoices removed altogether the ability of a dismissed employee to make a claim for unfair dismissal where the employer had a workplace with less than 100 employees. It also completely prevented all employees, regardless of the size of the workplace, from making a claim for unfair dismissal where the dismissal was for genuine operational reasons or for reasons which included genuine operational reasons. This therefore had the effect of covering a termination where the genuine operational requirements were only one of the factors in making the decision to terminate and as such it was far wider in its coverage.

What will happen under the Fair Work Act

Under the Fair Wok Act unfair dismissal will again be available for most employees.

Who cannot make an Unfair Dismissal claim under the Fair Work Act?

Those employees not covered by the new unfair dismissal laws include those employees whose income exceeds $100,000.00 indexed as at November 2007 (although they will continue to have rights to apply to the Courts for wrongful termination of employment and breach of contract), casual employees who are not engaged on a regular and systematic basis and who do not have a reasonable expectation that their employment will continue and employees on fixed task or fixed term employment at the end of which their continuing employment is not required.

Summary Dismissal

It will still be fair to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee has engaged in serious or wilful misconduct. Serious misconduct is defined in the Act to include theft, fraud, violence and serious breaches of occupational health and safety.

Key aspects of the new Unfair Dismissal regime

Employees must serve a qualifying period before they can make a claim

Unfair dismissal claims can only be made by an employee who has served the qualifying period. In the case of an employer with fewer than 15 employees this qualifying period is 12 months and in the case of an employer with 15 or more employees this qualifying period is 6 months. Note: before the expiration of the qualifying period the employee cannot bring an unfair dismissal claim.

What must the employee establish to succeed in an Unfair Dismissal claim

To succeed in an unfair dismissal claim the employee must show that the dismissal was harsh, unjust and unreasonable. The definition of dismissal includes a forced resignation or constructive dismissal as well as a demotion where this is a significant reduction in pay or duties.

There are 8 factors which must be taken into account when determining whether a dismissal was harsh, unjust or unreasonable. These are set out in section 387 of the Act and include whether there was a valid reason, whether the employee was notified of the reason, whether the employee was given a chance to respond and whether there were any warnings given as to unsatisfactory performance. It also requires that the employer allow the employee to have a support person in attendance at any dismissal discussions.

What must an employer do to defeat an Unfair Dismissal claim

The Employer must show it terminated the employee fairly i.e that it had a valid reason for the dismissal of the employee and that it dismissed the employee after undertaking a fair and due process.

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