Bills Digest No. 116   1997-98 Workplace Relations Amendment Bill 1997 [No. 2]


Numerical Index | Alphabetical Index

Note: This is a slightly revised version of the Digest issued on 28 November 1997.

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Contents

Passage History

Workplace Relations Amendment Bill 1997 [No.2]

Date Introduced: 26 November 1997
House: House of Representatives
Portfolio: Industrial Relations (Workplace Relations and Small Business)
Commencement: Royal Assent

Re-Introduction

This is the same Bill as that introduced by the Government on 26 June 1997 and defeated in the Senate on 21 October 1997.

Section 57 of the Australian Constitution provides, in part, that:

If the House of Representatives passes any proposed law, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, and if after an interval of three months the House of Representatives in the same or the next session, again passes the proposed law with or without any amendments which have been made, suggested, or agreed to by the Senate, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, the Governor-General may dissolve the Senate and the House of Representatives simultaneously. But such dissolution shall not take place within six months before the date of the expiry of the House of Representatives by effluxion of time.

The italicised portions of the quote from section 57 lay down the basic conditions under which the Senate's rejection or 'failure to pass' the present Bill may lead to a double dissolution. For present purposes, relevant pre-conditions for calling a section 57 election are that:

  • the Bill must be passed by the House of Representatives in its present form, that is a form identical to that of the Bill negatived by the Senate on 21 October 1997,
  • the Bill must passed by the House no earlier than 3 months after the previous Bill was rejected by the Senate, that is, passed no sooner than 21 January 1998, and
  • there must be a (subsequent) rejection or 'failure to pass' by the Senate.

The Government may chose not to advise the Governor-General to dissolve both Houses, or it may delay its request for a double dissolution based on the rejection of the Bill a second time. (Readers may refer to the 'Conclusions' section of this Digest for further commentary on section 57).

The present Digest is a revised version of Bills Digest No. 17 of 1997.

Purpose

The Bill amends the Workplace Relations Act 1996 (the Principal Act) to exempt businesses employing no more than 15 workers from the unfair dismissal provisions of that Act.

Only those employees hired after the commencement of the Bill are affected and the proposed law does not affect employee's rights in relation to 'unlawful dismissal'.

'Unfair dismissal' refers to those situations where the employer's conduct in bringing the employment relationship to an end can be characterised as 'harsh, unjust or unreasonable'. Actions for unfair dismissal are instituted in the Australian Industrial Relations Commission (AIRC) which under the present law must give weight to the interests of the employer and the dismissed worker in determining both the merits of the case and any remedy granted.

'Unlawful' (as opposed to 'unfair') dismissal includes dismissal for discriminatory reasons such as sexual preference, age, union membership and family responsibilities. It is also unlawful to dismiss a worker because they engaged in protected (lawful) industrial action in negotiating a new certified agreement or Australian Workplace Agreement. Allegations of unlawful dismissal are initiated in the AIRC. The Commission must seek to resolve a claim by conciliation before determining whether to refer it to the Federal Court of Australia.(1)

Background

History of Exclusions and Exemptions

The proposed amendments would add to what is a growing list of exclusions and exemptions from federal unfair dismissal laws.

The Keating Government passed the first significant piece of federal legislation dealing with the termination of employment. That law, the Industrial Relations Reform Act 1993 (the 1993 Reform Act), came into effect on 30 March 1994. [The 1993 Reform Act amended but did not rename the Industrial Relations Act 1988 (the IR Act 1988 ). The IR Act was later to be heavily amended and renamed by legislation introduced by the Howard Government and is now titled the Workplace Relations Act 1996 (referred to herein as either the Workplace Relations Act or the Principal Act)].

Prior to March 1994, workers covered by State awards had enjoyed access to statutory and award based remedies for some years but the approximately 40 percent of Australian workers in the federal system did not have access to similar remedies. Workers in the federal industrial stream could not access State tribunals and their rights were constrained by constitutional limits on the jurisdiction of federal courts and industrial tribunals. Some avenues of redress, including the AIRC's willingness to exercise a de facto jurisdiction, were available but even these were frequently cumbersome and relatively costly.

In a jurisdictional sense, the 1993 Reform Act went from one extreme to the other, extending minimum protections to all workers and also effectively establishing federal primacy over the pre-existing State-based systems in relation to termination of employment.

The other major feature of the 1993 Reform Act was that it created a rights based regime, rather than one entirely dependent on the discretionary standards and remedies.

Thus, as first enacted, the federal legislative scheme dominated the field, was both rights-based and comprehensive.

Regulations made on 29 March 1994 excluded some fixed term, casual and probationary employees.(2) These exemptions were extended and clarified by further regulations made on 9 November 1994(3) thus denying protection to: (a) persons employed for a fixed term of less than 6 months, (b) employees engaged to perform a specific task, probationary employees whose period of probation was determined prior to hiring and to instances where the probationary period was reasonable in the circumstances, (d) some casual, including daily hire, employees, (e) specified classes of trainees, and (f) persons engaged under the Australian Federal Police Act 1979.

In the interim, the IR Act 1988 was amended by the Industrial Relations Amendment Act (No.2) 1994 (with effect from June 1994) to address employer concerns regarding access to the new federal remedies. Specifically, the June 1994 amendments restricted access to termination provisions and set upper limits on the level of compensation that could be awarded.

From 30 June 1994, the Industrial Court's unfair dismissal jurisdiction did not extend to workers who earned in excess of $60 000 per annum (indexed) who were not covered by a Federal or State award.

A second major amendment 'capped' the amount of compensation payable to employees dismissed in contravention of the 1993 Reform Act. (After the passage of the 1993 reforms, monetary compensation was available where reinstatement was judged impracticable.) Following the 1994 amendments, the Industrial Relations Court could only award up to six months' salary as compensation in the case of employees covered by awards and not more than $30 000 or six months' remuneration (whichever is the lower) for non award employees as compensation for unfair dismissal. This amount was also indexed.

A third modification to the 1993 provisions confined the onus of proof imposed on employers to those matters concerning the giving of valid reasons for dismissal and for proving that none of the legislatively prohibited grounds for dismissal formed the (real) reason for the dismissal. In all other respects, the onus of proof rested with the employee. This evidentiary requirement also operated to discourage some workers from seeking remedial relief under the system.

In the face of continuing employer opposition, the Keating Government further amended the law (with effect from 15 January 1996) providing that:

  • the termination of employment provisions of the Act would not apply where there was an alternative available under another law that satisfied the requirements of ILO Convention No.158 relating to termination of employment, and
  • the Court must consider all the circumstances of the case in deciding what remedy (if any) should be granted.(4)

The latter change was designed to lessen employer concerns that the legislation placed too much weight on procedural fairness and not enough on the substantive merits of individual cases.

The Howard Government was elected in March 1996 with a clear policy commitment to further reforming the federal termination laws to ensure that they provided a 'fair go all round'. The Coalition's policy manifesto, Better Pay for Better Work, described the existing law as 'far too detailed, too prescriptive and too legalistic and hence a disincentive to employment.'(5)

The Workplace Relations and Other Legislation Amendment Bill 1996 (WROLA) was introduced on 23 May 1996 and was enacted into law (substantially) on 31 December 1996.

The significant changes made by the WROLA include:

  • The jurisdiction of the federal tribunal to hear unfair dismissal claims has been reduced. The system is more comprehensive than that which applied prior to 1994 but does give dominance over all areas to the federal tribunal.
  • The definition of 'fairness' has been changed. Before awarding a remedy (if any) to the employee, account must be taken of the ongoing interests of all the parties. This is encapsulated in the slogan 'a fair go all round'. Allied with this, there has been a rebalancing of the statutory test to ensure that procedural fairness is only one factor in determining whether a dismissal is unfair.
  • Separate streams exist for handling unfair and unlawful dismissals.
  • The power of the AIRC to award costs against employees has been dramatically increased and has been coupled to a compulsory conciliation stage.
  • A $50.00 filing fee has been introduced.
  • Whilst the Workplace Relations Bill was still before the Parliament, the High Court held that the prohibition in the IR Act 1988 on 'harsh, unjust, or unreasonable' (ie 'unfair') dismissals set out in subsection 170DE(2) of the former Act was invalid. The provision had sought to rely on the external affairs power. However, the High Court held that there was not a sufficient connection between the relevant provisions of the IR Act and the relevant international instruments.(6)
  • The new Act retains the expression 'harsh, unjust and unreasonable' in relation to unfair dismissals but confines the operation of the federal statute to a narrower field, ie Commonwealth employees, federal award employees employed by foreign, financial and trading corporations, Territory employees, some employees engaged in interstate and overseas trade, and (latterly) Victorian workers. Hence some federal award employees are not covered by the federal law and the five remaining State systems are not subject to the overriding operation of the federal law as was previously the case.
  • As to 'unlawful dismissal', Subdivision C of Division 3 of Part VIA of the Principal Act provides for grounds of relief where a termination breaches the minimum notice requirement (section 170CM) or is for a prohibited reason such as age, race, union membership or non membership etc (section 170CK). WROLA extends the IR Act's list of prohibited grounds by making it unlawful to dismiss an employee for refusing to negotiate in connection with, make, sign, extend, vary or terminate an Australian Workplace Agreement [section 170CK(2)]. Proceedings for unlawful dismissal are to be taken in the Federal Court of Australia, or in the case of notice requirement, in a court of competent jurisdiction. The remedies for unlawful dismissal are broadly similar to those available under the old Act.

Regulations were made on 11 December 1996 imposing additional restrictions on the classes of employee protected from unfair dismissal.(7) On 26 March 1997, the Senate debated the disallowance of the 11 December 1996 regulations, questioning the policy of excluding such wide classes of employee from the Act by regulation. Contrasting the effect of the regulations with exclusions made under the previous law critics, including Senator Jacinta Collins, noted that:

  • from November 1994, only employees hired for a specified period which did not exceed six months were excluded from the protection offered by the federal unfair dismissal law. It was asserted that the 11 December 1996 regulations reverted to the pre-November 1994 position and excluded all employees hired for a 'specified period',
  • the new regulations deny protection to casual employees until they have been engaged as such for a continuous period of 12 months. Under the previous law, casuals with 6 months service or longer with an employer were protected,
  • under the pre 1996 regulations the maximum length of a probationary period of employment was not defined. However, such a period could not be 'unreasonable'. (Hence the Industrial Relations Court had been prepared to find that in some cases a reasonable period of probation would not extend beyond a week or two depending on the task being performed.) The 11 December 1996 regulations deem any period of probation up to 3 months to be reasonable,
  • the restriction on terminating employees defined as 'temporarily absent' from work due to illness or injury is also eroded. Employees are now subject to lawful dismissal where they are absent from work for a continuous period of 3 months (or for more than 3 months in a period of 12 months) except where they are in receipt of paid sick leave, and
  • the new regulations introduced the foreshadowed filing fee of $50.00 (a measure contemplated by the 1996 amendments and fully debated by the Parliament and agreed by the Parliament, ie contentious but not a surprise).

The essence of these criticisms was that the regulations not only derogate from the rights of some workers but also do not fully conform with the terms of the relevant international treaty in that they may make it simpler for employers to structure their employment relations so as to avoid their responsibilities under the law.(8)

The Opposition failed in its attempt to disallow the 11 December 1996 regulations.(9)

On 24 March 1997, Prime Minister Howard issued a Statement entitled More Time for Business which responded to the report of the Small Business Deregulation Task Force chaired by Mr Charlie Bell, the Managing Director of 'McDonalds'. The Statement promised new regulations to exclude from the protection of federal unfair dismissal laws, employees who have less than a year's continuous service, and who work for a small business with no more than 15 employees.(10)

Regulations were made on 30 April 1997 to give effect to the Prime Minister's undertaking and were to commence on 1 July 1997.(11)

The present Bill was introduced on 26 June 1997, with Minister Reith noting in his Second Reading Speech that:

a regulation has already been made under the Workplace Relations Act 1996, to give effect to the exemption, with effect from 1 July 1997. But that regulation is subject to motion of disallowance in the Senate - which must be dealt with this week. If that motion is withdrawn or defeated, then this Bill will be withdrawn from the notice paper. But if that motion is carried, then this Bill will proceed.

On 26 June 1997, the Senate disallowed the regulations.(12)

The disallowance motion was moved by Australian Democrat spokesperson, Senator Andrew Murray, who amongst other things, claimed that the regulations breached the Government's election commitments(13) and were also contrary to the agreement made between the Government and the Australian Democrats which had allowed the passage of WROLA.(14)

The disallowance motion was also supported by the ALP, Senator Harradine and Senator Margetts.

Senator Harradine also indicated his opposition to the Bill.(15)

In mid July 1997, it was reported that the Prime Minister would be prepared to seek a double dissolution if the Senate were to fail to pass the present Bill.(16)

The Public Service Bill 1997, introduced in the House of Representatives on 26 June 1997, provides that Departmental Secretaries, Agency Heads and members of the Senior Executive Service may not seek relief under the termination of employment provisions (Division 3 of Part VIA) of the Workplace Relations Act 1996. This excludes senior Commonwealth officials from the protections of unfair and unlawful dismissal provisions of the Workplace Relations Act. This provision of the Public Service Bill is also contentious.

The Workplace Relations Bill 1997 was first introduced into the House of Representatives on 26 June 1997 and was passed unamended the following day. The Bill was then introduced into the Senate on 1 September 1997, having been referred to the Senate Economics Legislation Committee on 28 August 1997.

The report of the Senate Economics Legislation Committee was tabled on 20 October 1997 with the Coalition majority on the Committee recommending passage of the Bill. Dissenting minority reports were prepared by the ALP and Australian Democrat members of the Committee.(17)

On 21 October 1997, the Bill was defeated at the Second Reading in the Senate.

Persons Affected

The Bill will principally affect businesses with no more than 15 permanent employees, whose workers are subject to federal awards. However, as the unfair dismissal law is principally confined to businesses which are 'constitutional corporations', not all businesses with federal award workers will be affected. ('Constitutional corporations' are 'foreign corporations' and those domestically formed companies which are regarded as carrying on financial or trading activities within the meaning of section 51(20) of the Australian Constitution.) In short, unincorporated bodies such as sole traders and partnerships are not presently subject to the federal unfair dismissal regime and will accordingly not need to rely on the proposed exemption. Similarly, corporations not bound by federal awards may also not need to rely on the proposed exemption as they may not be subject to federal unfair dismissal laws.

Persons who are engaged in defined types of interstate and overseas trade or who work within a Territory or in Victoria (18) will be affected. Commonwealth entities with fewer than 16 employees are also affected.

The Bill does not affect the rights of persons already employed by a small business but will affect persons who join a small business after the new law comes into operation.

Pros and Cons

Supporters of the Bill argue that the proposed changes:

  • are necessary to ensure the continuing growth in employment in small business,
  • are consistent with the Government's stated policy which was fully canvassed prior to the 1996 General Election,
  • reflect special burdens carried by small business in defending unfair dismissal claims (Larger businesses have greater expertise for establishing recruitment and termination procedures whilst small business can find that just defending unfair claims places intolerable strains on their resources.),
  • do not affect the rights of existing employees,
  • do not affect the rights of apprentices,
  • do not extend to cases of alleged unlawful dismissal,
  • are consistent with exemptions available under the International Labour Organization's Termination of Employment Convention 1982,
  • mirror the precedents (for the size of business excluded) established by the Wran Government's Employment Protection Act 1982 (NSW) and the decision of the then Australian Conciliation and Arbitration Commission in the 1984 Termination, Change and Redundancy Test Case, and
  • are supported by the findings of the Senate Economics Legislation Committee Report on the Bill and by surveys of small business.

In his Second Reading Speech re-introducing the Bill, Minister Reith referred to a number of surveys of business groups supporting the Bill. He also endorsed claims that the Bill's passage would spur job creation. For instance, he drew attention to a questionnaire on unfair dismissal in the latest Yellow Pages Small Business Index Survey conducted from 30 October 1997 to 12 November 1997, and noted:

This is the largest economic survey of small business in Australia, it focuses specifically on small business with 19 or fewer employees. Approximately 1,200 randomly selected proprietors of small business were covered by the survey.

In this survey, 79% of proprietors thought that business would be better off if they were exempted from unfair dismissal laws. 33% of small business reported that they would have been more likely to recruit new employees if they had been exempted from unfair dismissal laws in 1996 and 1997. And 38% of small businesses reported that they would be more likely to recruit new employees if they were exempted from the current unfair dismissal laws.(19)

Those opposing the Bill have three basic lines of attack. Those are that the changes are inequitable, unnecessary and at odds with Australia's obligations at international law.

Inequitable?

The principal argument going to the fairness of the changes is that they leave a significant section of the workforce without basic protections enjoyed by workers employed by medium to large businesses (including workers in comparable jobs).

Further, it may be that proposed changes to unfair dismissal laws will only have a marginal impact on the viability of most small businesses. Insufficient capital, poor management, general inexperience and predatory conduct by competitors are arguably more pressing problems for small business (and indeed for the job prospects of persons employed by small firms).

Critics may argue that all employers should take reasonable care in selecting staff and that workers should not be dismissed capriciously. Arguably, these are sound business principles which should apply to all firms irrespective of their size.

Similarly, the Bill readily accepts that an action for unfair dismissal may harm the employer, but does not acknowledge the likely effect on the worker of losing his or her job.

Excluding some businesses from the federal law a priori ousts the jurisdiction of third parties who may be able to resolve the matter by conciliation. This is not only likely to produce unfair results but is also bad industrial relations practice.

Size is not a universal proxy for profitability or capacity to pay. The Bill (in effect) says that in every instance where the employer is a small business, the business is less well placed to carry the costs of a breakdown in the employment relationship than the dismissed worker. Only in some instances will this be true.

It has been suggested the Bill may encourage some employers to create artificial business entities to avoid the law by reducing the nominal size of their workforce below the statutory threshold.

With continuing high levels of unemployment, the removal of access to unfair dismissal remedies further enhances the already considerable bargaining power of many employers. This, it may also be argued, undermines the basis for genuine/free collective agreement making.

To the extent that the provision does actually advantage small businesses, it gives them an unfair competitive edge over other businesses (including those which may employ as few as 16 workers).

Unnecessary?

It is arguable that the changes already enacted by the present and the previous government have sufficiently redressed any imbalance in the legislation against employers.

General changes to the termination of employment law since June 1994 have advantaged all employers, and small business has benefited as much as other businesses.

Spurious actions are now less of a problem for all businesses as there has been a marked decline in the number of claims in recent years.

Figures supplied by the Department of Workplace Relations and Small Business comparing the period January-August 1997 (under the Reith laws) with the January-August 1996 period (under the last version of the Keating law) show a national decline of over 20 percent in the number of unfair/unlawful dismissal applications lodged. Similarly, the number of applications in the federal jurisdiction has fallen from 9 864 in January-August 1996 to 4 492 in January-August 1997. Projections prepared by the Commonwealth suggest a continuation of this trend.(20)

Whilst the causes of these shifts may be argued, what seems clear is that the new laws have had a not insignificant impact on the number of allegations of unfair treatment being made against employers, particularly employers in the federal arena. Although no firm data is available, there appears no reason for believing that this decline in actions against employers has been confined to medium and large businesses.

Critics of the present proposals might also argue that changes to the general law have not only reduced levels of litigation, but have also lowered the risk to all employers of being subject to an adverse finding. Relevant factors include:

  • the 'fair go all round test' introduced (spelled out) under WROLA downplays the importance of procedural fairness and to some degree lessens the attendant requirements for excessive record keeping (etc) by employers in connection with the dismissal process,
  • remedies of reinstatement or (capped) compensation are no longer available to a dismissed worker as of right even where the termination is found to be harsh, unjust or unreasonable. The AIRC, in making an order of compensation, must have regard, among other things, to the effect that the order may have on the viability of the employer's business [section 170CH(7)],
  • as the present Government has claimed, introducing a filing fee and extending the Commission's capacity to award costs should further shield all employers from unreasonable claims, and
  • the extension of the former legislation's exclusions in respect of casual, fixed-term and probationary employees also works to the advantage of some employers (including, of course, small businesses).

Lastly, and on a slightly different tack, it is arguable that the alleged mischief created by the 1993 Reform Act (including that done to small business) was always overstated. It will be recalled that amongst the claims made by employers were that:

  • the legislation encouraged too many claims, many of which were 'try-ons' and simply unjustifiable, representing increased pressure in terms of legal costs and time on employers, and(21)
  • the law cost jobs (the Executive Director of the NSW Employers Federation, Garry Brack, was reported as suggesting that the anecdotal evidence indicated that the unfair dismissal laws may have dissuaded Australia's small business from creating an extra 100,000 to 200,000 jobs).(22)

Such claims, by their nature, are easily made but not so readily tested. Similarly, surveys of business attitudes to the law may say more about business perceptions and aspirations than they do about the actual effect of the legislation.

In its 1995-1996 Annual Report, the Industrial Relations Court of Australia, however, provided a detailed critique of many of the employer criticisms of the previous law. The Report provides the statistical support for the claims of Chief Justice Wilcox during the 1996 Election campaign that the then law was generally 'working well' and that the main problem was the bad conduct and sloppy human resource management practices of some employers. Comments in the Industrial Relations Court's 1995-96 Annual Report include the following:

  • the controversy was fuelled by a degree of deliberate misrepresentation,
  • the previous Government did not make a major effort to explain and justify the new laws, hence public perceptions were able to be unfairly swayed,
  • in 1994-95 only 928 (or 12%) of the finalised cases were resolved either at or after trial with the corresponding figures for 1995-96 being 1605 and 15.8% (ie most cases did not come to trial),
  • from late 1995 onwards, the total number of unfair dismissal applications represented only about 2% of total involuntary terminations,
  • employers had a good success rate under the old law,
  • contrary to some suggestions, people who bring unfair dismissal claims represent a fairly normal cross-section of the workforce,
  • although ABS figures show that 91.7% of employers have fewer than 20 employees, a survey of employers involved in unfair dismissals showed that only 33% of respondents were small businesses (had fewer than 20 employees), ie small business is under-represented in unfair dismissal actions, and
  • the median amount of compensation awarded was $6 000.00 and the average cost of defending a claim less than $5 000.00.(23)

Subject to the important qualification that employer concerns such as employee threats of legal action are not captured by the above data, what emerges from the Industrial Relations Court's findings is that the 'problems' caused by the 1993 legislation may have been overstated. The Court's identification of the apparent under-representation of small businesses in termination matters coming before the tribunals is particularly interesting in the context of the Bill.

In its Annual Report for 1996-97, the Industrial Relations Court of Australia highlighted major outcomes in the federal jurisdiction as follows:

  • 74% of unfair dismissal claims cases were settled by agreement,
  • 75% of cases were finalised within six months, 99% within 12 months,
  • 62% of trials were completed in one day, 84% within two days,
  • 58% of contested cases were decided in favour of the employee, 42% favouring the employer,
  • reinstatement of the employee was ordered in 7.5% of contested cases, and
  • the median amount of compensation awarded was around $6 000.(24)

The 1996-97 Report does not contain data relating the Court's caseload to the size of businesses appearing in proceedings before it.

International Obligations

Australia ratified the ILO Convention on the Termination of Employment, 1982 (Convention No.158) on 26 February 1993.

Having ratified such a Convention, the Commonwealth undertakes to ensure that Australian domestic law and practice remain in conformity with the terms of (what is in effect) the treaty and with the relevant international jurisprudence.

In the context of the present Bill, some doubts may be raised as to whether the proposed exemption for small business from the unfair dismissal laws is at odds with Convention No.158.

The relevant substantive provisions of Convention No.158 are articles 2(5) and 2(6).(25)

Article 2(5) provides:

In so far as necessary, measures may be taken by the competent authority or through the appropriate machinery in a country, after consultation with the organizations of employers and workers concerned, where such exist, to exclude from the application of this Convention or certain provisions thereof other limited categories of employed persons in respect of which special problems of a substantial nature arise in the light of the particular conditions of employment of the workers concerned or the size or the nature of the undertaking that employs them. (emphasis added)

It is open to question whether the broad exclusion contemplated by the Bill extends beyond '...limited categories of employed persons in respect of which special problems of a substantive nature exist...'. At face value, all persons employed by small business is simply not a very 'limited' or 'specialised' class of employee. An exclusion which exempted businesses in a particular/special industry engaging a handful of workers would arguably meet this test. The present proposal to exempt all small businesses in relation to new staff arguably punches too big a whole in article 2(1) of Convention No.158 which evinces the intention that the Convention starts from the proposition that it 'applies to all branches of economic activity and to all employed persons.'

Current practice within the ILO would, however, seem to run against such a restrictive view of article 2(5). The International Labour Conference Report of the 82nd Session (1995) instances a handful of countries where unfair dismissal laws have limited application to firms with relatively few employees. However, it may be noted that of these, two of the four countries mentioned have very limited exceptions. One applies to firms with 4 workers (Republic of Korea), the other to 6 workers (Germany). Austrian practice is tied to other legislation and Sri Lanka sets the bar at 15 workers.(26)

Article 2(6) provides that:

Each Member which ratifies this Convention shall list in the first report on the application of the Convention submitted under article 22 of the Constitution of the International Labour Organization any categories which may have been excluded in pursuance of paragraphs 4 and 5 of this Article, giving the reasons for such exclusion, and shall state in subsequent reports the position of its law and practice regarding the categories excluded, and the extent to which effect has been given or is proposed to be given to the Convention in respect of such categories.

It is suggested that article 2(6) does not allow for subsequent exclusions once the first article 22 report has been made.(27) Commenting on this very issue, a leading commentator on industrial law, Breen Creighton, has noted that:

Given that Australia submitted its first report on Convention No.158 in September 1995, this means that it would not now be permissible in terms of the Convention to adopt regulations under section 170CC(1)(d) or (e) to exclude categories of workers (for example those whose employers employed fewer than five employees) - even though it would have been quite in order to do so before the first report was submitted.(28)

Main Provisions

Schedule 1 provides for the small business exemption by amending section 170CE of the Principal Act.

The new provision exempts employers from the unfair dismissal provisions of the Principal Act in relation to any person engaged after the commencement of this Act where:

  • that person was not an apprentice, and
  • the business employs no more than 15 persons.

The relevant time for calculating the number of employees is either the time that notice is given by the employer to the dismissed worker or the time that the contract of employment ceases (whichever happens first).

In calculating the number of persons engaged by the employer at the time that notice is given or dismissal is effected, the dismissed worker is included. However, casual workers who are not engaged on 'a regular and systematic basis for a sequence of periods of employment of at least 12 months' do not form part of the count.

It may be noted that the Bill provides a wider exemption from the Principal Act than did the regulations disallowed on 26 June 1997. The regulations excluded only employees who had not been engaged by the (dismissing) employer for less than 12 months. The Bill excludes all workers who join a small business after the new provisions come into effect.

Concluding Comments

It is possible that the Government is prepared to use a second rejection or 'failure to pass' the present Bill to trigger for a double dissolution.

As noted above, section 57 of the Australian Constitution deals with deadlocks between the two houses.

As to the timing of a section 57 election, there must be a gap of three months between the first rejection or 'failure to pass' and the second passage of the proposed law through the House. A double dissolution cannot be granted by the Governor-General within 6 months before the date of the expiry of the House of Representatives by effluxion of time. The present House is due to expire on 30 April 1999, ie 3 years after its first meeting. The last possible date for granting of a dissolution under section 57 is 29 October 1998.(29) The subsequent election must be held within 68 days of the date of dissolution.(30)

As the Bill when first presented, was rejected outright by the Senate there is no question as to whether and when the Senate had 'failed to pass' the proposed law. It may be that if and when the Bill is represented in early 1998, that the Senate does not reject it outright but does not seek to deal with it within the Government's timeframe. This may or may not amount to a 'failure to pass' within the meaning of section 57 of the Constitution.

In very general terms, what amounts to a 'failure to pass' for the purposes of section 57 depends on the particular circumstances including the history and nature of the Bill and normal Senate practice and procedure at the time.(31) Sending the present Bill (again) to a Senate Committee for a further report may not (of itself) amount to a 'failure to pass', whereas keeping the Bill in the Committee without any intention of dealing with it probably would. The fact that the Bill has previously been considered by a Senate Committee would tend to suggest dilatoriness and would strengthen any claim that there had been a 'failure to pass'.

Endnotes

  1. It is generally acknowledged that relatively few actions will be brought for 'unlawful dismissal'. Refer Chief Justice Murray Wilcox, 'Dismissal: A Fair Go All Round', speech to Workplace Relations Acts Conference, Brisbane 14 March 1997:10.
  2. Statutory Rules 1994, No. 79.
  3. Statutory Rules 1994, No. 386.
  4. Industrial Relations and Other Legislation Amendment Act 1995.
  5. page 11.
  6. Victoria v Commonwealth (1996) 138 ALR 129.
  7. Statutory Rules 1996, No.307.
  8. Not withstanding sub-regulation 30B(2) which seeks to prevent conduct deliberately aimed at escaping the operation of the Act.
  9. Parliamentary Debates(Senate), 26 March 1997: 2573-2580.
  10. page 85.
  11. Statutory Rules 1997, No. 101.
  12. Parliamentary Debates, (Senate): 5287.
  13. Senator Murray has alleged that Mr Reith had given a commitment during the election campaign (SMH, 20 February 1996) that there would be no small business exemption from the unfair dismissal law. Parliamentary Debates, (Senate), 26 June 1997: 5278.
  14. ibid.
  15. Canberra Times, 25 August 1997.
  16. Sydney Morning Herald, 17 July 1997 and Canberra Times, 21 July 1997.
  17. Australian Senate, Consideration of the Legislation Referred to the Committee: Workplace Relations Amendment Bill 1997, October 1997.
  18. The combined effect of Workplace Relations and Other Legislation Amendment Act (No.2) 1996 (Cwth) and the Commonwealth Powers (Industrial Relations) Act 1996 (Vic).
  19. Parliamentary Debates (House of Representatives), 26 November 1997: 11009.
  20. Answers provided to Senator Andrew Murray by Department of Workplace relations and Small Business. See Australian Senate, Consideration of the Legislation Referred to the Committee: Workplace Relations Amendment Bill 1997, October 1997 Appendix 5.
  21. Bryan Noakes, President of the Australian Chamber of Commerce and Industry (ACCI), Sydney Morning Herald, 28 February 1996.
  22. Australian Financial Review, 11 April 1995.
  23. See Report, especially pages 5-6 and 41.
  24. Back cover of Annual Report.
  25. Pre-existing exemptions covering casual workers, probationary employees and fixed term employees come within Article 2 paragraph 2.
  26. ILO, Protection Against Unjustified Dismissal, Geneva, 1995: 27-29.
  27. ibid: 30.
  28. 'The Workplace Relations Act in International Perspective', Australian Journal of Labour Law, April 1997: 31-49, 42.
  29. Refer to Senate Brief No.7, 'Disagreement Between the Houses', February 1997 for a concise but slightly lengthier exposition of the workings of section 57.
  30. Australian Constitution, sections 12 and 32. Commonwealth Electoral Act 1918, sections 151, 155, 156 and 157.
  31. Victoria v Commonwealth (1975) 134 CLR 81.

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Bob Bennett
16 December 1997
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ISSN 1328-8091
Commonwealth of Australia 1997

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Last updated: 16 December 1997

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