Chapter 8 - Schedule 7 - Termination of employment
This chapter deals with Schedule 7 of the Bill
which proposes changes to Division 3 of Part VIA of the Act – Termination of
Employment. The changes are broadly aimed at minimising legal costs, and to
discourage vexatious or unmeritorious claims in line with the Government’s
policy statement, More Jobs Better Pay.
Outline of proposed amendments
The changes: broaden the scope of the
termination of employment provisions; prevent persons from choosing whether to
lodge a claim under federal or state legislation if they are entitled to a
federal remedy; limit the discretion of the Commission and the Federal Court of
Australia to accept applications ‘out of time’; limit access to a remedy in
respect of termination of employment for employees who have resigned
(constructive dismissal), except in exceptional circumstances; confer new
powers on the Commission for dismissing an application; impose additional
criteria on the Commission when deciding unfair dismissal claims; introduce new
provisions relating to the awarding of costs; prevent multiple applications for
the same termination; and prohibit advisers from encouraging the pursuance of
This chapter reports on those aspects of the
amendments which were most contentious, in that they generated the most comment
in submissions and in oral evidence. Where specific amendments are not
discussed explicitly it can be taken that the view of the majority of the
Committee is that they be enacted as described in the Bill.
The current operation of the Workplace Relations
Act allows an employee who has been forced to resign to initiate an application
for an unfair dismissal. Item 8 of the Bill qualifies the scope of the
expression ‘termination of employment at the initiative of the employer’ in
relation to cases of resignation. The amendment would limit access to a remedy
for an employee who has resigned to circumstances where the employee is able to
establish that the employer has indicated, directly or indirectly, that the
employee would be dismissed if he or she didn’t resign, or has engaged in
conduct that the employer considered would cause the employee to resign. Where
a prima facie case is established the onus is on the employer to prove their
conduct did not involve the intent of forcing the employee to resign.
The Shop Distributive and Allied Employees’
Association (SDA) argue in their submission that these new provisions are
unnecessary: that section 170CDA will add a significant layer of complexity to
an issue which is already able to be dealt with properly by the Commission and
Courts, through the application of well established case law.
The Department suggests that some recent
decisions have expanded the notion of what constitutes constructive dismissal
beyond those that occur at the initiative of the employer. These amendments
will ensure that the provisions operate as they were intended, that is, to
allow employees to apply for unfair dismissal where the employer intends his or
her actions to result in the resignation of the employee or directly indicated
that the employee should resign or be sacked. They also note that the
tightening of the provisions will act as a disincentive to make and pursue
claims that have little prospect of success.
A majority of the Committee recommends
that these amendments be enacted.
Out of time Applications
The Act allows the Commission to accept
applications after the 21-day lodgement period where the Commission considers
that ‘it would be unfair not to do so’. The Bill requires the Commission to
consider whether ‘it would be equitable to accept the application’. New
subsection 170CE(8A) requires that the Commission be guided by a set of
criteria to reach a decision.
According to the ACTU these conditions will
remove the Commission’s discretion to consider all the factors leading to the
lodgement of a late application.
Similar concerns were raised by the SDA and the ALHMWU.
The Victorian Automobile Chamber of Commerce
(VACC) told the Committee that they no longer bother to argue on jurisdictional
grounds that an application is out time because their experience with the
Commission is that they will accept it anyway.
The VACC give an example of an application that was lodged 16 days out of time
while the applicant was on a skiing holiday for 10 days between the time of
termination and submitting the application.
These amendments remove the historical tendency
for the Commission to accept the vast proportion of late applications by
providing a new benchmark from which to make these assessments. The provisions
will allow late applications to be accepted when there are genuine reasons for
it being so.
A majority of the Committee recommends
that these amendments be enacted.
The Bill changes Commission functions for the
conciliation phase of an unfair dismissal application. The requirements placed
on the Commission are that if the Commission is satisfied that all reasonable
attempts to conciliate an application have been unsuccessful, or are likely to
be unsuccessful it must issue a certificate allowing the applicant to elect to
proceed to arbitration. The certificate must state the Commission’s assessment
of the merits of the application and the Commission has the discretion to make
recommendations to the parties at this stage, including that the applicant
discontinue his or her application.
The Bill introduces requirements for
conciliation which would vary according to whether the application indicates
grounds for unlawful or unfair dismissal or a mixture of both. In relation to
an unfair dismissal application, the Commission is required to state, on the
balance of probabilities, whether the application is likely to succeed at arbitration.
That is, the Commission must make a finding at the conciliation stage about the
merits of the application. If the Commission determines that the arbitration
of an application is unlikely to succeed, then the applicant would not be able
to proceed. The Department explained that this improves the effectiveness of
the conciliation process and reduces the number of unmeritorious cases that
proceed to arbitration.
These amendments were criticised by both unions
and legal practitioners. It was argued that there were a number of issues
associated with this that may: prevent the Commission from being able to make
an accurate finding; unfairly deny an applicant access to arbitration; and
substantially increase the costs and time associated with conciliations. There
were also concerns about conciliators who hear unfair and unlawful dismissal
cases but are not legally trained.
Redfern Legal Centre suggested that people often
do not seek representation until after the conciliation stage and are unlikely to
have sufficient evidence with them to substantiate their case. The BCA expressed doubt that
the Commission would have sufficient evidence to support a finding of 'likely
to succeed' in the conciliation stage where information provided was disputed
Many argued that conciliation would therefore need to become a mini-hearing
which would involve substantial increases in costs and time imposed on all
parties and that this would be a further imposition on small business.
The Committee is also aware that many employers,
particularly small business proprietors, choose to settle at the conciliation
stage because of both the financial costs, and costs associated with the time
needed to progress with the case to arbitration. The VACC told the Committee
...the majority of their
members will decide to resolve an unfair dismissal claim at either the first
conciliation conference or even prior to the conference in order to avoid
having to appear before the commission to argue the matter because of the
inconvenience and expense. Members will usually choose to settle on a sum that
covers their legal fees.
A majority of the Committee understands the difficulty of
protecting the rights of employees who are dismissed unfairly or unlawfully
while at the same time protecting employers from vexatious claims.
A majority of the Committee acknowledges the evidence raised in
submissions about the problems identified in this Schedule. It supports the use
of the Commission as a 'filtering agent' in cases involving unfair dismissal
and believes that the amendment is warranted.
A majority of the
Committee recommends that these amendments be enacted.
Amendments in relation to costs
Various items of Schedule 7 of the Bill will:
introduce new tests and broaden existing tests to increase the scope for
awarding costs in respect of frivolous or vexatious claims; allow the
Commission to require an applicant to provide security for costs that may be
awarded against them; require representatives from either side, to inform the
Commission whether they are engaged on a cost arrangement, or in the case of a
legal practitioner, a contingency fee arrangement; and allow the Commission to
award a penalty against an adviser for encouraging a party to proceedings in
relation to an unfair or unlawful termination to pursue an unmeritorious or
Awarding of costs
Objections to the amendments have been made on
grounds that costs of proceedings are more likely to be borne by employees than
Fitzroy Legal Services note that an applicant
who has a punitive or vexatious application for costs made against them cannot
make an application for the costs they incurred in defending the application.
It is suggested that this tactic may be pursued by some employers to deter
employees from making or pursuing a claim.
Increased scope for the awarding of costs is
aimed at deterring claims that have little chance of success. The Committee
notes that while the scope has been increased, the amendments are unlikely to
see a significant increase in the number of cases where costs are awarded
against applicants. It is highly unlikely that applicants who believe they
have a genuine claim and present a reasonable case but subsequently lose their
case will have costs awarded against them.
Cost arrangement disclosure
Legal practitioners were concerned about the
requirement on representatives to disclose cost arrangements to the Commission
and the ability of the Commission to award a penalty against advisers for encouraging
an unmeritorious claim. The Law Council of Australia claimed that revealing
‘contingency fees’ is an unwarranted intrusion upon the solicitor/client
The Department suggested that the engagement of
legal practitioners on a ‘no-win, no-pay’ arrangement can be a motivating
factor for the pursuit of speculative claims as claimants have nothing to lose,
and encourage advisers to advocate the lodgement and continuation of claims. The Law Council, however,
submitted that contingency fee arrangements serve the purpose of providing
access to justice given increasing restrictions on Legal Aid funding.
A majority of the Committee believes that the disclosure of such arrangements will
equip the Commission with more information in determining the merits of an
unfair dismissal application.
Penalties against advisers
The Bill prohibits an adviser from encouraging
an employee to make or pursue an application for unfair dismissal if the
adviser should have been aware that the application had no reasonable prospect
of success. Where it is believed that an adviser has contravened this section,
an application may be made to the Federal Court for an order imposing a penalty
on that adviser.
The proposal to penalise advisers was criticised
by legal groups. Maurice Blackburn Cashman
and the Victorian Bar Association
expressed concerns about several technical matters. It is the view of the
majority of the Committee that any technical matters will be resolved in the
normal course of implementation of the legislation.
A majority of the Committee supports the
amendments contained in Schedule 7 of the Bill relating to costs. The
amendments will help to ensure that unmeritorious or speculative claims are
actively discouraged while maintaining a fair and equitable system of
protection for people who have their employment terminated unfairly or
A majority of the Committee recommends
that the amendments to the Commission’s power in awarding costs and requiring
the disclosure of cost arrangements as well as introducing penalties for
advisers that encourage speculative claims be enacted.
Navigation: Previous Page | Contents | Next Page