Abbott’s unfair dismissal test

The Federal Government’s tweaks to unfair dismissal processes are entirely sensible, even if they have left employer groups predictably underwhelmed.

Workplace Minister Bill Shorten’s response to the biannual review of Labor’s Fair Work Act adopted just a third of the review’s 51 recommendations, focusing on changes that can best be described as procedural.

For example, the name of Fair Work Australia will be changed to the Fair Work Commission; there will be a process for making complaints against Fair Work members; and both the Fair Work Ombudsman and Fair Work Australia will be instructed to build expertise in productivity issues.

But for SMEs, the key changes to be introduced this year are around unfair dismissal and adverse action. Again, the changes are mainly procedural, but they are important.

Under legislative changes to be introduced this year, the time period under which an unfair dismissal claim and an adverse action claim can be lodged will be standardised at 21 days. Previously, adverse action claims could be made 60 days after the incident in question, while unfair dismissal claimants had 14 days.

Fair Work Australia will also now be able to award costs against an unfair dismissal claimant who has unreasonably failed to end an unfair dismissal proceeding or accept a settlement. This is a measure that will hopefully reduce unmeritorious claims that employers say are an unfortunate part of the Fair Work regime.

Fair Work Australia will also be able to ask unfair dismissal claimants for more information about the circumstances of their dismissal when a claim is first made, another move designed to weed out frivolous claims.

These are all sensible and welcome moves. While the Australian Industry Group and the Australian Chamber of Commerce and Industry are underwhelmed, these changes should improve the way the system works and help prevent try-on claims against employers who have done the right thing.

What the changes won’t do, of course, is change the key feature of unfair dismissal under the Fair Work regime – the number of employers who are subject to unfair dismissal claims.

The days of WorkChoices, where businesses with less than 100 employees were immune from unfair dismissal claims are long gone, with all businesses now open to claims – there is a carve out for businesses with fewer than 15 staff if they follow the Small Business Unfair Dismissal Checklist, but that of course doesn’t prevent these businesses facing claims.

Employer groups would love some movement on this. In its submission to the review, the Australian Chamber of Commerce and Industry said the government should look at a full exemption from unfair dismissal laws somewhere between the WorkChoices mark of 100 employees and the Fair Work mark of 15 employees.

Labor’s shown with these changes that it won’t be budging on the core issue of unfair dismissal coverage. Which leaves employers looking to the Coalition and Tony Abbott, who has so far been very, very reticent to give any specifics on the industrial relations policy the Coalition might take to the next election.

Providing full exemptions from unfair dismissal claims for small business would be an immediate SME vote winner for the Liberals, who had pushed for the Fair Work Act’s dismissal carve out to be set at 25 employees.

Of course, going to the 2013 election with a policy of giving unfair dismissal exemptions to hundreds of thousands of businesses will open Abbott to claims he is heading back towards WorkChoices.

Abbott’s unfair dismissal dilemma is of course just part of the wider conundrum he faces on setting his IR policy. Which way he and the Coalition decide to jump will have a big say in determining the outcome of the election.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.