The Workplace Relations Amendment (Termination of Employment) Act commenced on 30 August 2001. Some of the key reforms to the Federal unfair dismissal laws include:
Qualifying period
Employees are prevented from making an unfair dismissal claim unless they have first completed a qualifying period of employment. The qualifying period is three months or some other period (including no period) agreed in writing between the employer and employee before the commencement of employment. If the agreed period is greater than 3 months, it must be reasonable having regard to the nature and circumstances of the employment.
Additional considerations in determining claims
When determining whether a termination was harsh, unjust or unreasonable the AIRC must now also consider the degree to which the size of the employer's business and the absence of human resources specialists would be likely to impact on the procedures followed when terminating an employee's employment.
Demotions
In the past, demoted employees have been able to argue that their demotion was a termination of their employment. The Act provides that a demotion will not be a termination of employment where:
- it does not involve a significant reduction in the remuneration or duties of the demoted employee; and
- the demoted employee remains employed by the employer who effected the demotion.
Implications for employers
The reforms reduce the procedural burdens that federal unfair dismissal laws have placed on employers. While smaller employers should welcome the reforms, there is the potential for larger employers, or those with dedicated human resources specialists, to be required to satisfy higher procedural standards. As a result, different procedural standards will apply for different employers.
The reforms also discourage the making of unmeritorious claims and provide several further potential benefits for employers including preventing more employees from being able to commence or pursue unfair dismissal claims. Employers should review both their employment contracts and their procedures for termination of employment to ensure that they encompass the reforms.
Costs orders
The Act alters the circumstances under which costs may be ordered against parties to unfair dismissal claims. Costs may be ordered where:
- it should have been reasonably apparent to the applicant that the applicant's claim had no reasonable prospect of success; or
- a party has acted unreasonably in failing to discontinue an unfair dismissal claim or to agree to terms of settlement, or where one party causes another to incur costs by an unreasonable act or omission in connection with the conduct of an unfair dismissal claim.
Dismissing claims
An unfair dismissal claim will now be dismissed by the AIRC where a certificate of conciliation states that the claim has no reasonable prospects of success at arbitration. In addition, where an applicant fails to attend proceedings, the AIRC may, after giving the applicant reasonable notice and a reasonable opportunity to be heard, dismiss the applicant's unfair dismissal claim.
Extensions of time
The Act alters the circumstances under which the AIRC may grant an extension of time to bring a claim outside the 21-day time limit. Previously, the AIRC could grant an extension of time to bring a claim where it was 'unfair not to do so'. That test meant that fairness towards the applicant was central to the exercise of the discretion. Now, it appears that the principles referred to in (1995) 67 IR 298 (a decision under former legislation) may be relevant to the exercise of this discretion, at least in certain respects. These principles include, among other things, whether there is an acceptable explanation for the delay and whether allowing an application would prejudice the respondent.
Contingency arrangements
The Act requires the AIRC to now ask legal practitioners and other representatives appearing on behalf of a party in unfair dismissal claims whether all, or a substantial portion, of the legal practitioner's or other representative's costs are contingent on the outcome of the matter. In addition, the Act requires that legal practitioners or other representatives retained on this basis disclose that fact to the AIRC.
Advisers
Finally, the Act introduces penalties against advisers to parties – such as advocates or lawyers engaged for a fee or reward and employees etc of unions – who encourage the making or defence of claims without reasonable prospects of success. Penalties are up to $10,000 for a body corporate, and up to $2,000 for others.
October, 2001
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