Fury at Rudd Government’s shock change to new unfair dismissal code

The Federal Opposition says a small change to the Rudd Government’s checklist designed to protect small employers from unfair dismissal will force many small companies to pay “go away” money to terminated employees with a grievance.

Under the Government’s new Fair Work industrial relations regime, which is in effect from today, the level at which employers will be protected from unfair dismissal claims drops from 100 staff to just 15.

But even companies with 15 staff or less must follow the Small Business Fair Dismissal Code and Checklist (which you can access here) to be protected from claims.

The final version of the Code was released on 24 June. But in what Shadow Small Business Minister Steven Ciobo has described as a “sneaky, 11th hour change” to the Code, a small change is threatening to cause some big problems.

The wording in the code has changed from “a small business employer may be required to provide evidence of compliance” to now become “a small business employer will be required to provide evidence of compliance” with the code, where an employee makes a claim for unfair dismissal.

“This might seem like a small change, but it’s huge in terms of its effect on small business,” Ciobo says. “This is a retrograde step and puts the onus squarely back on small business to prove their case.

He is predicting an “epidemic of ‘go-away’ money”. Small business owners will simply throw money at an employee with a dismissal grievance, rather than go through the onerous and expensive process of dragging the matter through Fair Work Australia.

“At a time when small business is under cash flow stress, why is the Rudd Labor Government bringing ‘go-away money’ back in vogue?”

Jaye Radisich, CEO of the Council of Small Business of Australia, says she was “astounded” to learn of the change and has accused the Government of acting “with extreme dishonour in relation to small businesses”.

“All citizens, including small business owners and managers, deserve to have faith in their government and know that the legislative and regulatory framework of our society has transparency and integrity. On this occasion, that faith has been seriously undermined.”

Radisich says the change will increase the obligations of small business under these laws.

“The one word that has been covertly changed in the Code after months of consultation and negotiation, will cause a significant red-tape and procedural burden to small businesses – ultimately causing a real dollar cost.”

“Small business owners are fair and reasonable people. They are willing to work within whatever system they’re confronted with, but they will not react well to the wool being pulled over their eyes.”

Kathryn Dent, partner and workplace lawyer at Gadens, says Ciobo is right in the sense that the wording change does put the onus back on small business to prove their case.

But she has been advising small business clients to ensure they follow the Code and accompanying checklist as a matter of best practice.

“The Fair Dismissal Code makes good practice sense in terms of making sure that the termination is lawful and not discriminatory.”

“It’s not too prescriptive and sets out some basic steps that are good to follow.”

Peter Vitale, workplace lawyer with CCI Lawyers, says it is disappointing to see a change made without prior warning but says it is too early to say whether we are about to see a surge in ‘go away’ money.

“At the end of the day, regardless of the wording change, how effective this Code will be in eliminating go away money will ultimately depend on how it’s interpreted by Fair Work Australia.”

If you want to learn more about the new IR changes, then don’t miss our free webinar called The Fair Work Act: Implications for your business on the new workplace relations changes on 9 July at 2pm .Our editor James Thomson will be joined by workplace lawyer Kathryn Dent from Gadens Lawyers to discuss the changes and answer your questions. Don’t miss it.