ACTU INDUSTRIAL OFFICERS CONFERENCE 2006: TERMINATION OF EMPLOYMENT
TERMINATION OF EMPLOYMENT
Paper for the 2nd ACTU Industrial Officers Conference
Sydney, 25-26 July 2006
Susie Allison & Antonia Parkes
National Union of Workers
TERMINATION OF EMPLOYMENT
1. OVERVIEW 3
2. UNFAIR DISMISSAL 4
2.1 WHAT IS UNFAIR DISMISSAL? 4
2.2 WHO CAN MAKE AN UNFAIR DISMISSAL APPLICATION? 4
4
2.2.1 EXEMPTIONS (S.643) 4
2.2.2 TRADITIONAL EXCLUSIONS (S.638) 4
2.2.3 NEW EXCLUSION 5
2.2.4 OTHER EXCLUSIONS 5
Termination at the initiative of the employer and constructive dismissal 5
2.3 100 OR FEWER EMPLOYEES (s.643(10)-(12)) 5
2.3.1 WHO AND WHEN 5
2.3.2 RELATED BODIES CORPORATE 6
2.3.3 EVIDENCE REGARDING 100 EMPLOYEES AND RELATED BODIES CORPORATE 6
2.3.4 SHAM ARRANGEMENTS/ JOINT EMPLOYMENT 7
Example: Baldacchino & others v Triangle Cables PR972581 (24 May 2006) 7
2.4 EXTENSION OF QUALIFYING PERIOD (s.643(6)-(7)) 8
Example: NUW model clause 8
2.5 GENUINE OPERATIONAL REASONS (s.643(8)-(9)) 9
2.5.1 WHAT IS MEANT BY ‘GENUINE OPERATIONAL REASONS’? 9
2.5.2 IS IT A GENUINE OPERATIONAL REASON FOR TERMINATION? 9
2.5.3 REDUNDANCY PAY 10
Example: Cowra abattoir 10
Example: Perry v Savills (Vic) Pty Ltd PR973103 (20 June 2006) 10
Example: Azwar Koya v Port Phillip City Council. PR973045 (13 June 2006) 11
2.6 PROCESSES IN THE COMMISSION 12
2.6.1 TIME LIMITS FOR DISMISSAL APPLICATIONS 12
2.6.2 DISMISSAL OF APPLICATION FOR WANT OF JURISDICTION OR WHERE APPLICATION IS FRIVOLOUS OR VEXATIOUS 12
‘On the Papers’ 12
No right of appeal to Full Bench 12
2.6.3 CONCILIATION (s.650) 13
‘What a pimple to have created such a fuss’: Paul Munro 13
2.6.4 ELECTING TO PROCEED FURTHER (s.651) 13
2.6.5 ARBITRATION: UNFAIR DISMISSAL (s.652) 13
2.6.6 REMEDIES: UNFAIR DISMISSAL (s.654) 14
2.6.7 COSTS (s.658) 14
3. UNLAWFUL TERMINATION 15
3.1 GROUNDS FOR UNLAWFUL TERMINATION 15
3.1.1 Prohibited Grounds for Termination (s.659) 15
3.1.2 Other Unlawful Termination Grounds 16
3.2 CONSIDERATIONS IN RUNNING AN UNLAWFUL TERMINATION 16
3.2.1 Cost of Running an Unlawful Termination 16
3.2.2 IOs RUNNING UNLAWFUL TERMINATION CASE 17
3.2.3 UTAS 17
3.2.4 Time 17
3.3 ONUS OF PROOF 18
3.4 REMEDIES: UNLAWFUL TERMINATION (s.665) 18
3.5 STEP BY STEP GUIDE TO COMMENCING AN UNLAWFUL TERMINATION 19
4. ALTERNATIVE AVENUES 20
4.1 DISCRIMINATION 20
4.2 BREACH OF CONTRACT 20
4.3 ACTION FOR TRADE PRACTICES BREACHES 20
5. BARGAINING FOR FAIR DISMISSAL PROVISIONS 20
5.1 UNION COLLECTIVE AGREEMENTS 20
5.2 MOUS AND DEEDS 21
1. OVERVIEW
This paper attempts to provide you with a comprehensive guide to the ins and outs of running an unfair dismissal or unlawful termination under the Workplace Relations Act 1996 (Cth) (“WR Act”).
The changes to the WR Act have significantly cut the right of many workers to access the federal unfair dismissal jurisdiction. While some workers will still have the option of pursuing an unlawful termination claim in the Federal Court, unlawful termination has to date been approached cautiously by Unions because of concerns about expense and delayed process.
This paper will consider:
· The key changes to unfair dismissal, in particular the ‘100 employee’ and ‘operational reasons’ exemptions to accessing the unfair dismissal jurisdiction.
· The option of pursuing unlawful termination in the Federal Court, including tips to reduce costs and consideration of time factors.
· Alternative avenues to unfair or unlawful dismissal claims.
· Using bargaining to negotiate fair dismissal provisions.
2. UNFAIR DISMISSAL
2.1 WHAT IS UNFAIR DISMISSAL?
Unfair dismissal is where the termination was “harsh, unjust or unreasonable”: s.643(1)(a).
2.2 WHO CAN MAKE AN UNFAIR DISMISSAL APPLICATION?
Rather than define who can make an unfair dismissal application, the WR Act specifically excludes a significant number of employees from making applications. These exclusions fall into the following categories:
2.2.1 EXEMPTIONS (S.643)
All employees covered by the federal system (employees of constitutional corporations, Territory employees, Victorian employees etc.) can make an unfair dismissal application except the following:
· An employee employed by an employer with 100 or fewer employees: s.643(10); (considered below at 2.3)
· An employee dismissed during their qualifying period (now defined as the first six months of employment (previously three months) or within a longer or shorter qualifying period agreed in writing in advance of the commencement of employment): s.643(6)-(7); (considered below at 2.4)
· An employee dismissed for ‘genuine operational reasons’: s.643(8). (considered below at 2.5).
2.2.2 TRADITIONAL EXCLUSIONS (S.638)
The kinds of employees excluded from accessing the federal unfair dismissal jurisdiction are:
· An employee engaged under a contract of employment for a specified period or for a specified task;
· An employee serving a probationary period determined in advance (NB: If the probationary period is more than 3 months, it needs to be reasonable having regard to the circumstances of the employment);
· A casual employee engaged for a short period (less than 12 months but see s.638(5) where a casual is engaged for a sequence of periods of employment);
· A trainee employed for a specified period;
· A non-award or non- workplace agreement employee whose remuneration was in excess of specified rate (current specified rate is $94,400).
2.2.3 NEW EXCLUSION
· A seasonal employee (NB: complex definition of seasonal in s.638(9) – employment for a seasonal period is expressly excluded even where the end of the season is not know at the commencement of employment).
2.2.4 OTHER EXCLUSIONS
· An employee continuing other related termination proceedings eg. under discrimination legislation:s.672;
· An employee whose employment is not terminated at the initiative of the employer : s.643(1).
Termination at the initiative of the employer and constructive dismissal
Where an employee alleges they were constructively dismissed, the onus of proof has been reversed so that the employee must now establish that he or she did not voluntarily resign but that the employer’s actions left them with no other option other than to leave.
‘The resignation of an employee is taken to constitute the termination of the employment of the employee at the initiative of the employer if the employer can prove, on the balance of probabilities, that the employee did not resign voluntarily but was forced to do so because of conduct, or a course of conduct, engaged in by the employer’: s.642(4).
2.3 100 OR FEWER EMPLOYEES (s.643(10)-(12))
Employees of businesses who employ 100 employees or fewer, are not able to access the federal unfair dismissal jurisdiction i.e. businesses with 101 employees or more are subject to the unfair dismissal regime.
2.3.1 WHO AND WHEN
In determining the number of employees the following are taken into account:
· permanent full time and part time employees
· The terminated employees
· regular casual employees (employed on a regular and systematic basis for at least 12 months)
· employees of “related bodies corporate” (considered below at 2.3.2)
· “an employee within the ordinary meaning of the expression” (636(b))
· managerial and administrative staff
The following are NOT included in the count:
· casuals employed by labour hire agency
· casuals not employed on a regular and systematic basis for at least 12 months
· contractors
The number of employees is counted at the time the employer gave notice of termination or at the time dismissal takes place, whichever happens first.
2.3.2 RELATED BODIES CORPORATE
There is limited protection against corporate restructuring to avoid the 101 employee threshold head count in that related bodies corporate (within the meaning of s.50 of the Corporations Act 2001 (Cth) (“Corps Act”)) are taken to be one entity for the purpose of calculating the number of employees engaged by an employer. Section 50 of the Corps Act provides as follows:
“50 Related bodies corporate
Where a body corporate is
a. a holding company of another body corporate;
b. a subsidiary of another body corporate; or
c. a subsidiary of a holding company of another body corporate;
the first- mentioned body and the other body are related to each other:”
A ‘holding company’ means a body corporate which has a subsidiary (see section 9 of the Corps Act ).
A company is a subsidiary of another company if the other company:
a. controls the composition of its board; or
b. can cast more than one-half of the maximum number of votes at a general meeting or
c. holds more than one-half of its issued share capital.
The relevant section of the Corps Act can be found at Appendix A to this paper.
Overseas companies may be related bodies corporate: Baldacchino & Others v Triangle Cables PR972581 where it was found Companies in Singapore and NZ each constituted a related body corporate
2.3.3 EVIDENCE REGARDING 100 EMPLOYEES AND RELATED BODIES CORPORATE
In cases where it is not clear whether an employer employs over 100 employees, evidence becomes the primary issue. It can be difficult to obtain evidence on how many employees are employed by a company, if there are any related body corporate and how many employees are employed by related body corporate.
Tips
· internet search Company name
· Search Australian Securities and Investment Commission (ASIC) for financial statements and reports (www.asic.gov.au )
· ASIC search for related body corporate
· Summons to produce payroll register
· Summons to produce communications with related companies
2.3.4 SHAM ARRANGEMENTS/ JOINT EMPLOYMENT
There is nothing in the legislation that expressly prohibits restructuring to avoid unfair dismissal. However, it may be possible to argue that restructuring primarily for the purpose of avoiding unfair dismissal is a sham arrangement and should not exclude an employer for unfair dismissal (See Baldacchino & Others v Triangle Cables PR972581). It may also be possible to make a joint employment argument – i.e. if an employee is employed through a contractor, but for all intense and purposes is controlled by the employer, the employee should be counted as part of the 100.
Useful evidence:
· Evidence on who controls workers,
· Any documents to do with the set up of the Agency or Contractor (eg contract between the Employer and the Agency; Articles of association)
Example: Baldacchino & others v Triangle Cables PR972581 (24 May 2006)
Nine factory workers at manufacturer Triangle Cables were dismissed via letter on 28 March 2006, one day after the new legislation took effect. The employees were dismissed without a reason and were only told that their services were no longer required. The employees were not given any redundancy pay. The employees filed an unfair and unlawful dismissal application.
The employer filed a Notion of Motion to dismiss the employee’s unfair dismissal application for want of jurisdiction on that basis that the employer employed less than 101 employees.
The Commission heard evidence in relation to the arrangements of related companies and also heard that the employer had utilised workers from three labour hire companies. The applicants argued that the company restructured its corporate arrangements in 2005 and used the labour hire companies to keep under the 101 employee head count. The employer argued that none of the labour hire companies were a related body corporate.
The Applicants further argued that a number of overseas companies were “related body corporate” and their employees should be included in the count.
Smith C found that the labour hire companies were not related bodies corporate. Smith C was prepared to find that some of the overseas companies were related bodies corporate and that their employees should be counted. Ultimately Smith C found that the company employed 97 employees and struck out the unfair dismissal part of the application.
Smith C raised the possibility that employees in a similar situation might be able to argue that the corporate structures using labour hire companies were a “sham”.
Conciliation took place in relation to the unlawful dismissal claims with the employees arguing that they were unlawfully discriminated against because of their union membership or union activity and/or workcover claims. Conciliation failed and the Commission issued certificates stating that the employees’ claims had merit.
The unlawful dismissal applications are now before the Federal Court.
Other cases concerning the 100 or fewer employees exemption:
Gillard v My Chemist Health and Beauty PR972832 (31 May 2006)
Berryman v Residential Truss Systems Pty Ltd PR973025 (8 June 2006)
Wallace v Unistak Transport Services PR973662 (14 June 2006)
2.4 EXTENSION OF QUALIFYING PERIOD (s.643(6)-(7))
The qualifying period is a separate concept under the WR Act from the probationary period.
An employee must not make an unfair dismissal application unless the employee has completed the qualifying period of employment with the employer at the time the employer gave notice of termination or at the time dismissal takes place, whichever happens first.
The default qualifying period is now six months. Thus, most employees who have been employed for less than six months will not be able to access the federal unfair dismissal jurisdiction.
However, there is capacity to reduce or extend the qualifying period provided that there is written agreement as to the length of the qualifying period prior to the commencement of employment. One possibility is to negotiate a reduced qualifying period into a Workplace Agreement or Deed/MOU. The Agreement clause needs to require that the employer inform new employees of the reduced qualifying period in writing prior to engagement.
Example: NUW model clause
Probationary Period and Qualifying Period of Employment
(Insert lesser period if applicable)
The employer may initially engage a full-time or part-time employee for a maximum probationary period of three months for the purpose of determining the employee’s suitability for ongoing employment. The probationary period shall also constitute the maximum qualifying period of employment. The employee must be advised in writing in advance that the employment is probationary, the duration of the probationary period, and that the probationary period also constitutes the qualifying period of employment. Probationary employment forms part of an employee’s period of continuous service.
2.5 GENUINE OPERATIONAL REASONS (s.643(8)-(9))
Under the WR Act, no claim for unfair dismissal can be successfully made against an employer, irrespective of the size of their workplace, if the employee was dismissed for ‘genuine operational reasons’, or for reasons that include genuine operational reasons.