Bills Digest No. 95 2001-02
Workplace Relations Amendment (Fair Termination) Bill
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
Contact Officer & Copyright Details
Workplace Relations Amendment (Fair Termination)
Date Introduced: 20 February 2002
House: House of Representatives
Portfolio: Employment and Workplace Relations
Commencement: Substantive provisions are to
come into effect on a date or dates to be set by proclamation but
in the case of each schedule of substantive amendments, no later
than 6 months after the date of Assent.
The Bill amends
the Workplace Relations Act 1996 (the Principal Act)
- Deny short-term casual employees access to federal unfair
- Repeal regulations denying defined types of employee (including
probationary employees and persons employed for specified periods)
access to federal unfair termination laws and to re-enact, with
minor changes, those exclusions in the Principal Act
- Retrospectively validate the operation of federal termination
of employment regulations held by the Federal Court to be beyond
the regulation making powers available under the Principal Act,
- Include in the Principal Act a provision requiring applicants
for relief under federal unfair termination laws to lodge a $50.00
filing fee. Such a fee is imposed presently by way of regulation.
The new filing fee will be adjusted according to movements in the
Consumer Price Index.
This is the second of two Bills introduced in
the new Parliament to restrict access to federal unfair termination
The other Bill, the Workplace Relations
Amendment (Fair Dismissal) Bill 2002, exempts businesses with fewer
than 20 employees from the unfair dismissal provisions of the
Principal Act. The general legislative background to those
proposals and the related changes provided for under the present
Bill are discussed elsewhere and are not repeated here.
Prior to March 1994 there was no Commonwealth
legislation dealing with the termination of employment except in
respect of certain types of public sector employment.
The Keating Government s Industrial
Relations Reform Act 1993 (the 1993 Act) introduced a near
universal regime regulating wrongful dismissal in the federal
jurisdiction and provided the means for sacked workers covered by
State laws to gain access to the federal system where no adequate
(State) alternative remedy existed.
These laws proved contentious and have been the
subject of much public debate and almost continuous legislative
activity over the past 8 years.
A pivotal feature of the 1993 Act was that
relief was available to sacked workers where the termination of the
contract of employment by the employer was either (a) harsh, unjust
or unreasonable or (b) attributable to some prohibited ground such
as age, race or gender. The former is known as unfair dismissal and
the latter, unlawful dismissal .(2) As is the case with
the present exclusions effected by way of Regulation 30B of the
Workplace Relations Regulations, the proposed exclusions restrict
access to both unfair and unlawful dismissal remedies.
Since 1994, either by amending the Principal Act
or by regulation, Governments have sought to wind back the scope of
federal unfair termination laws.
Broadly stated, the following classes of worker
are unable to access the federal law:
- The majority of private sector workers employed in all States
except Victoria and who are not covered by a federal award and
concurrently employed by a corporation.
- Most employees of State Governments and instrumentalities
- Independent contractors.
- Employees who have not on or after 30 August 2001 completed a
qualifying period of employment with an employer (usually 3 months
but this term may be varied by agreement although if longer than 3
months must only be for a reasonable period).
- Employees who are not employed under a federal award or
agreement and whose annual remuneration exceeds a prescribed sum
(currently $72 500 per annum).
- Employees engaged under a contract of employment for a
specified period of time or for a specified task (unless the main
purpose of such engagement was to avoid the employer s obligations
under the termination provisions of the Principal Act.)
- Casual employees, ie those who they have been working for a
particular employer for less than 12 months.
- Trainees engaged under a National Training Wage Traineeship or
an approved traineeship (as defined in section 170X) which is for a
specified period, or is, for any other reason, limited to the
duration of the agreement.
The Australian Bureau of Statistics defines
casual employees in its Employee Earnings, Benefits and Trade
Union Membership Survey(3) as comprising those
employees who are not entitled to either paid holiday nor sick
leave in their main job.(4)
ABS data show a strong growth in casual
employment over the past fifteen to twenty years. Figures cited in
a recent Federal Court decision showed that casual employment more
than doubled from 848 300 in 1984 to 1 931 700 in 1999, an increase
of 117 percent. In the same period permanent employment grew from 4
509 900 to 5 372 500, an increase of barely 19 percent.
As at August 2000, there were about 2 097 300
casual workers in Australia, representing about 27 percent of
Casual employment is slightly more common
amongst women (32.30 percent of all female employees) and younger
workers (65.8 percent of all employees aged 15 to 19
Many persons treated by the ABS as casual
employees / employees without leave entitlements do not come within
the scope of the federal unfair termination laws because of the
general exclusions relating to unfair termination claims
incorporated in the Principal Act since 1994.
The scope of the proposed exclusion is thus
dependent both on the precise wording of the casual employee
exclusion provision and on the reach of other existing generic
exclusions. The latter are quite significant bearing in mind that
the coverage of federal remedies is limited largely to persons
employed by the Commonwealth, in the Territories or by a
corporation subject to a federal industrial award.
As is the case with the proposed small business
exemption provided for in the Workplace Relations Amendment (Fair
Dismissal) Bill 2002, no precise figure exists for the number of
employees likely to be affected by the proposed casual employee
exclusion or the existing exclusion made by way of regulation. The
Minister gives no guidance in his Second Reading
Speech(6) and no further assistance is to be found in
the Explanatory Memorandum.
Who is a casual
Unlike the ABS definition discussed above, the
definition of casual employee adopted for the purposes of the
Workplace Relations Act 1996 makes an employee s length of
service the main determinative factor. Any definition that relies
on a subjective measure of an employee s attachment to an
enterprise necessarily creates a degree of uncertainty because it
leaves open the possibility that an employee s status may change
over time. So, for instance, when does a person hired as a short
term worker become so integrated into an employer s business over
time that their status ought properly be regarded as permanent
rather than casual? Moreover, what particular rights should short
term workers acquire by dint of ongoing service and what rights can
only be acquired by virtue of the explicit renegotiation of the
contract of employment?
The answer given by the Industrial Relations
Reform Act 1993 adopted the approach in article 2 of
International Labour Organisation Convention No. 158 (Termination
of Employment at the Initiative of the Employer). Section 170CC(1)
although amended in 1994 and 1996 largely continued that
approach,(7) ultimately providing that regulations could
be made excluding employees from the unfair termination provisions
of the Principal Act where:
- The worker had been engaged for a specified task
- The worker was serving a period of probation or a qualifying
period, determined in advance and of reasonable duration, and
- The worker was engaged on a casual basis for a short
Regulation 30B as made on 30 March
1994(8) purported to give a more precise meaning to the
expression a casual employee engaged for a short term period in
section 170CC of the Principal Act. Regulation 30B(3) provided that
those employees working on a short term basis (and therefore denied
access to relief under the Act) did not include persons:
- engaged by a particular employer on a regular and systematic
basis for a sequence of periods of employment during a period of at
least 6 months, and
- with a reasonable expectation of continuing employment with
their present employer.
Regulation 30B(2) sought to limit the scope for
intentional avoidance of the unfair termination provisions by
rendering ineffective artificial arrangements specifically entered
into for that purpose.
Since the changes made by the Workplace
Relations and Other Legislation Amendment Act 1996 section
170CC(1) has been unaffected by subsequent changes to the Principal
Act. However, regulation 30B(3) was amended in 1996 to increase
from 6 to 12 months the period of engagement required for
applicants (who would otherwise be deemed casual employees) to be
granted access to the Principal Act s termination of employment
remedies.(9) An attempt to disallow this change was
defeated in the Senate.(10)
Uncertainty as to the scope and validity of the
termination of employment regulations continued as to the precise
status of casual employees. In 1999 the Minister for Employment,
Workplace Relations and Small Business, Hon Peter Reith, released a
discussion/implementation paper that foreshadowed the Government s
intention to determine the status of casuals by reference to the
position at the time of first engagement and in
The denial of casuals access to unfair
termination laws finally came to a head with the Full Federal Court
s decision in Hamzy v Tricon International Restraunts trading
as KFC handed down on 16 November 2001.(12)
Hamzy concerned a challenge to the
purported dismissal of a 16 year old who had been engaged by KFC
for a period of less than 12 months and paid as a casual employee
under the KFC National Enterprise Agreement.
On the face of it Mr Hamzy could not seek relief
under the Principal Act by virtue of section 170CC and regulation
Mr Hamzy, however, succeeded in his action by
successfully challenging the validity of Regulations 30B(1)(d) and
30B(3) on the basis that their making was not authorised by section
170CC of the Principal Act. The Court held that an employee's
employment status on the basis of the present wording of the
Regulations ought to be determined at the date of
termination.(13) It then went on to find that the use of
the term casual employee in Regulation 30B(1) could potentially
cover persons beyond the class of employees referred to in section
170CC of the Principal Act and was therefore
invalid.(14) Regulation 30B(1)(d) was also held
The instant effect of the Full Court s decision
was that casual employees were able to bring unfair dismissal
claims in the Australian Industrial Relations Commission unless
they were subject to some other exclusion under the Act, such as
the 3 month qualifying period.
The Government, however, moved quickly to
overcome the Federal Court s decision.
On 6 December 2001 regulations were made which
had the immediate effect of restoring the statutory exclusion of
short-period casual employees. To quote the Minister for Employment
and Workplace Relations Media Release of 7 December
From today, casual employees are excluded from
the Workplace Relations Act termination of employment remedies if
they have been working for a particular employer for less than 12
More specifically, the new regulation 30B(3)
(3) For the purposes of (1)(d), a casual
employee is engaged by a particular employer for a short period if
the occasions on which the employee works for that employer under
that engagement occur within a period of less than 12 months.
Regulation 30B(1)(d) was also remade under the
Like all regulations, these new provisions are
subject to disallowance by either House of Parliament. Until either
disallowed or repealed by primary legislation they remain in
Pros and Cons
Generic arguments concerning the exclusion of
particular classes of employee from the unfair termination regime
have been recently canvassed elsewhere and are only referred to
here in passing.(17)
Supporters of this proposal
would argue that the proposed exemption covering casual
- Restores to business the level of protection from dismissal
claims that existed prior to the Hamzy decision and
provides greater certainty by transferring the relevant provisions
from subordinate to primary legislation.
- Notwithstanding other legislated safeguards protecting employer
s interests, rejection of this Bill would send a poor signal to
- Allowing casual employees to access unfair termination remedies
would act as a significant brake on employers willingness to take
on additional staff and would therefore harm many of those seeking
- In validating (18) the operation of the regulations
held invalid in Hamzy, the legislation is restoring the
law as everyone understood it at the time.
- Other related changes proposed here to the unfair termination
laws are merely included to keep the legislation up to date.
- Government has a mandate for the proposed measures.
On the other hand those wanting to criticise or
oppose the Bill might argue:
- Regulations made on 6 December 2001 restricting access of
casual employees to unfair termination remedies are an adequate
response to Hamzy.(19)
- If further legislative action is appropriate, it would be
fairer to return to the casual employee exemption that existed
prior to 1996, ie the 1994 version of regulation 30B(3). The latter
exemption denied casuals who had been with the same employer for
less than 6 (rather than 12) months access to federal unfair
- The Parliament should not agree to the legislation until it has
a more precise idea of the number of employees likely to be
- As was accepted by the Federal Court in Hamzy, the
alleged link between unfair termination laws and employment
inhibition is unproven. As the Court said, ¼ even if unfair
dismissal laws do have a general effect of inhibiting employment
growth, this is not an effect that flows from the particular
conditions of casual employees employment. The inhibition would
apply equally to permanent employment. (20)
- More generally, and this is a criticism that might be made of
both the present proposal and the Keating Government s approach, it
is inappropriate to exclude any casual workers from the
unlawful dismissal component of federal unfair termination
laws. The latter refer to those grounds of termination specifically
enumerated at section 170CK(2) of the Principal Act. Excluding
employees from the protection against unlawful dismissal denies,
for example, a casual employee who is dismissed because their
employer discovers they are/are not a member of a union, or a
homosexual or a member of particular racial group, relief available
to other workers under the Principal Act.(21) In short,
even if there is an argument for denying casual workers access to
federal unfair dismissal laws, the basic standards of
fairness and decency established by the unlawful dismissal
requirements in section 170CK of the Principal Act ought to apply
to all employment relations.
From 31 December 1996, applicants seeking relief
from the Australian Industrial Relations Commission under federal
unfair termination laws have been liable for a $50.00 filing fee
which may be waived by the Commission in cases of
This measure was foreshadowed as part of the
Workplace Relations Reform Package of 1996(23) and was
introduced by way of regulation for the express purpose of
discouraging malicious or frivolous claims.(24) Before
the passage of the Workplace Relations Reform Package, however, the
Government and the Australian Democrats reached a compromise
- After 12 months of operation the filing fee would be subject to
a review, and
- A sunset clause (initially) of 18 months would operate in
relation to the fee.(25)
To date the promised review has not eventuated
although the fee has been examined on several occasions in the
context of wider consideration of the Principal Act by the
The sunset clause was extended on several
occasions but prior to the last election the Senate declined to
grant a further extension past 31 December 2003.
The Government has previously attempted to
increase the fee but the Senate blocked this move by disallowing
the relevant instrument.(28)
On 27 June 2001 the Senate voted to disallow
Workplace Relations Amendment Regulations 2000
(No.3)(29) which would have extended operation of the
filing fee indefinitely by removing the sunset clause from
With effect from 30 August 2001, further and
more extensive protection from unmeritorious claims was provided by
the enactment of the Workplace Relations (Termination of
Employment) Act 2001 which expands the availability of costs
orders available against parties who act unreasonably in pursuing,
managing or defending unfair dismissal claims.(31)
The Government now proposes primary legislation
providing for a filing fee indexed to the Consumer Price Index.
Minister for Employment and Workplace Relations,
Tony Abbott, summarised the Government s position in the following
terms in his Second Reading Speech:
The filing fee will discourage frivolous and
vexatious claims while ensuring that genuine dismissal applications
can be dealt with efficiently.
In fairness to low-income earners, the act will
continue to provide that the fee can be waived where it would cause
financial hardship. In addition, the fee will be refunded where an
application is discontinued at least two days before being dealt
with by the commission.
The Senate has repeatedly endorsed regulations
containing the filing fee. However, there has been disagreement
over whether the fee should be made permanent or continue to be
subject to parliamentary review. With this in mind, the government
included in its election platform a commitment to making the fee
permanent and now has a mandate to implement it.(32)
Failure to index or otherwise increase the
filing fee since 1997 has meant that its real value has been eroded
over the past 5 years and will continue to decline until the
present sunset clause comes in to effect at the end of 2003.
Initial opposition to the filing fee was based
on the proposition that it was an unreasonable impost on persons
who had just lost their job.(33) To this argument may
now be added the observation that the erosion of the real value of
the fee does not appear to have led a marked upsurge in either
genuine or unmeritorious claims over the past 5 years. Similarly,
it might also be argued that the measures contained in the
Workplace Relations Amendment (Termination of Employment) Act
2001 constitute a sufficient deterrent to malicious or
vexatious litigants and their advisers.
The substantive provisions of the Bill appear in
Schedule 1 deals with the
question of unfair termination and, as previously noted, amends the
Principal Act to restore the exclusion dealing with the unfair
termination of casual employees to the pre Hamzy position.
In doing so, the Bill also transposes the essence of what is
presently Regulation 30B of the Workplace Relations Regulations
into the Principal Act. The Bill relocates not only the provisions
dealing with casual employees but also those dealing with employees
engaged for a specified time or for a specific task and
probationary employees into the Principal Act (proposed
The pre Hamzy position is encapsulated
in proposed section 170CBA(3) and provides that
for the purposes of the Principal Act a casual worker is subject to
the exclusion unless:
- The employee has worked for the same employer on a regular
basis during a period of at least 12 months , and
- Up until the moment he or she was dismissed, the employee had
reasonable grounds for believing that they would enjoy continuing
employment with that employer.
Proposed section 170CBA(7)
excludes certain classes of worker, principally short-term casuals
, from mandatory notification provisions contained in sections
170CL and 170CM of the Principal Act. The former requires an
employer to advise Centrelink if they decide to make redundant 15
or more employees. The latter, section 170CM, requires employers to
give all employees a minimum period of notice before terminating
their employment. The duration of the notice period is dependent on
the individual employee s length of service.
Item 4 proposes a new
section 170CCA to validate the operation of the
Regulations declared invalid by the Full Federal Court in
The Explanatory Memorandum to the Bill states
Proposed section 170CCA does not deem the
invalid regulations to have been valid. Rather, it declares that
the rights and liabilities of employers and employees are to be
taken to have been as if the regulations had been validly made.
This provision is designed to ensure that everyone is and was in
the same position that they would be in, or would have been in, had
the invalid regulations been validly made. However, this section
would not affect the rights of parties to proceedings which have
been finally determined by a court or by the Commission before the
commencement of this item, so far as the rights and liabilities
that were the subject of the determination directly relate to the
The rationale provided for this measure by the
Minister in his Second Reading Speech is that ¼ in order to
provide certainty for business that made employment decisions based
on the law as everyone understood it at the time, this bill
validates the operation of the invalid regulations.
The main effect of this provision would be to
deny the rights of some short-term casual employees who may have
been unfairly or unlawfully dismissed after the decision in
Hamzy but who have yet to institute or complete legal
proceedings in respect of such a dismissal.
This measure might to some appear overly
draconian in that the Government made Regulations on 6 December
2001, ie less than 3 weeks after Hamzy, which erected a
fairly substantial barrier to many unfair termination actions that
might conceivably be brought by casual employees.
As the proposed measure is also retrospective
and will prejudice legal rights and interests in existence prior to
the measure itself becoming law, it may well attract the adverse
comment from the Senate Standing Committee on the Scrutiny of
For those in search of debating points, the
justifications for this measure provided by the Minister in his
Second Reading Speech and in the Explanatory Memorandum could also
First, it has been suggested that retrospective
validation is appropriate because the proposed law merely
re-establishes the position as everyone understood it at time
.(37) There is no evidence advanced to date by the
proponents of the Bill to suggest that this assertion is correct.
For a start, the contention that everyone saw the law a particular
way would seem at odds with the definitive and unanimous view
expressed by the three members of the Federal Court of Australia
who said that the law was beyond power in Hamzy. As a
general principle, a suggestion that legislation especially that
which has a retrospective effect is justified on the basis of
everyone got it right except the court will attract a degree of
Second, the Explanatory Memorandum suggests that
what is proposed here merely puts everyone back in the position
that they would have been in if the pre Hamzy regulations
had been validly made. The problem with this argument is that,
according to the Federal Court, regulations prescribing the
particular requirements spelled out previously could not have been
validly made. They were beyond the rule-making powers conferred on
the Executive by the Parliament when it enacted the Principal Act.
As is implicit in the very existence of present Bill, we now know
after Hamzy that what the regulations sought to achieve
can only be brought about by primary legislation and not by the
making of further regulations. New regulations might be made to
place certain restrictions on the rights of casual employees to
pursue unfair termination claims, but the specific restrictions on
such claims sought by the Government here can only be supported by
the passage of primary legislation and not by a subordinate
Whether the fate of the Bill should turn on what
some might see as largely semantic issues, is, of course, another
Schedule 2 provides for the
payment of a filing fee with the lodgement of unfair termination
applications under new section 170CEAA of the
Principal Act. The filing fee is to be set at $50.00
[proposed section 170CEAA(2)].
As with current Regulation 30BD that the new
provision replaces, the proposed measure provides an exemption from
the fee where the Industrial Registrar is satisfied that the
applicant will suffer serious hardship if the applicant is required
to pay the fee [proposed section 170CEAA(7)]. Hardship is not defined.
Now that this issue is to be dealt with by primary and not
subordinate legislation, the Parliament may want to consider
whether some guidance to the Commission on the hardship question
might appropriately be included in the Principal Act.
- Bills Digest No. 79 2001 2002. http://www.aph.gov.au/library/pubs/bd/2001-02/02bd079.pdf
- The term unfair termination is in the context of this
legislative proposal used here to refer to both unfair and unlawful
- ABS Catalogue No. 6310.0.
- Since August 2000, the term casual employee has been replaced
in the ABS series by the expression employee without leave
entitlements . This, however, is a change in terminology only and
there is no corresponding break in the relevant statistical series.
- ABS, op cit, p. 33.
- House of Representatives, Debates, 20 February 2002,
pp. 351 352.
- Refer Industrial Relations Amendment Act (No. 2) 1994
and Workplace Relations and Other Legislation Amendment Act
- Statutory Rule No. 79 of 1994.
- Statutory Rule No. 307 of 1996.
- Senate, Debates, 26 March 1997, pp. 2573 2580.
- Refer The Continuing Reform of Workplace Relations:
Implementation of More Jobs, Better Pay, May 1999 at para 116.
-  FCA 1589.
- Ibid, p. 12.
- Ibid, p. 13.
- Ibid, p. 18.
- Statutory Rule No. 323 of 2001.
- Note the Explanatory Memorandum to the Bill suggests (at page
4) that proposed section 170CC does not actually deem the
regulations held invalid in Hamzy to be valid.
- Workplace Relations Amendment Regulations 2001 (No. 2),
Statutory Rule No. 323 of 2001.
- Hamzy, op cit, para 71. The Court also rejected the
contention that unfair dismissal laws have a general employment
- A similar argument could be raised in respect of employees
engaged for a specific task or for a specific period of time.
- Refer section 170CE of the Principal Act and Regulation 30BD of
the Workplace Relations Regulations.
- Senate Economics References Committee, Report on
Consideration of the Workplace Relations and Other Legislation
Amendment Bill 1996, August 1996, pp. 123 124.
- Hon Peter Reith, House of Representatives, Debates, 26
June 1997, p. 6469.
- Letter from the Minister for Industrial Relations, Hon Peter
Reith, to Senator Andrew Murray (Australian Democrats) tabled in
the Senate on 26 March 1997. Refer Senate, Debates, 26
March 1997, p. 2578.
- Senate, Debates, 27 June 2001, pp. 25241 25242.
- See, for example, Workplace Relations Amendment Regulations
2000 (No.2) which deferred the operation of the sunset clause in
Regulation 30BD to 31 December 2003.
- Workplace Relations Amendment Regulations 1998 (No. 3),
Statutory Rule No. 353 of 1998, which would have doubled
the filing fee to $100.00 was disallowed by the Senate on 16
- Statutory Rule No. 328 of 2000.
- Ibid, pp. 25241 25243.
- Refer section 170CJ of the Principal Act.
- House of Representatives, Debates, 20 February 2002,
pp. 351 352.
- Senate Economics References Committee, Report on
Consideration of the Workplace Relations and Other Legislation
Amendment Bill 1996, August 1996, op cit, pp. 123 124.
- Explanatory Memorandum, Workplace Relations Amendment
(Fair Termination) Bill 2002, pp. 4 5.
- House of Representatives, Debates, 20 February 2002,
- For a statement of the Committee s principles on retrospective
- House of Representatives, op cit., 20 February 2002, p.
12 March 2002
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to
Senators and Members of the Australian Parliament. While great care
is taken to ensure that the paper is accurate and balanced, the
paper is written using information publicly available at the time
of production. The views expressed are those of the author and
should not be attributed to the Information and Research Services
(IRS). Advice on legislation or legal policy issues contained in
this paper is provided for use in parliamentary debate and for
related parliamentary purposes. This paper is not professional
legal opinion. Readers are reminded that the paper is not an
official parliamentary or Australian government document.
IRS staff are available to discuss the paper's
contents with Senators and Members and their staff but not with
members of the public.
© Commonwealth of Australia 2002
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by Members
of the Australian Parliament in the course of their official
Published by the Department of the Parliamentary Library,
Back to top