Get ready now to avoid unfair dismissal claims

Companies should review the performance of existing staff and determine whether disciplinary action needs to be taken before the changes to unfair dismissal laws come into affect on 1 July.

On Friday Kevin Rudd finally fulfilled his election pledge to scrap WorkChoices and introduce a new IR regime that will include increased union workplace entry rights and provide for a centralised umpire, Fair Work Australia, to hear unfair dismissal claims and settle industrial disputes.

Labor negotiated with Senator Steve Fielding to keep its definition of a small business, for the purposes of unfair dismissal concessions, as having fewer than 15 employers. In return Labor agreed to impose an 18 month phase-in period during which a 15 full-time equivalent worker definition will apply.

Peter Vitale, principal at CCI and SmartCompany IR commentator, says one of the biggest changes for small business under the new regime is that from 1 July, companies that employ less than 100 staff no longer have blanket exemption from unfair dismissal.

“Those who employ less than 15 full-time equivalents will have 12 months to access the suitability of the employee. They can dismiss through that time. If they can demonstrate they have complied with the fair dismissal code, which is a simple process, then the dismissal can be deemed fair.”

For those with more than 15 employers, there will be a six month qualifying period.

Vitale says he expects a return to the level of unfair dismissal claims that existed pre-WorkChoices. “There will be significantly more than there are now. The cases will be a mixture of employers not having followed the right processes legally and having made poor decisions, and employees making claims without merit.”

He says some business owners will find it a rude shock, as for three years they have not had to consider procedures around dismissal.

Vitale warns that although the Government says they have created processes where there will be a lot of upfront assessment of claims and quick determination of cases, he still expects an increase in “go away money” paid by employers to dispose of claims quickly.

He says business owners and managers should ensure they review procedures and policies to make sure their organisation and management that have responsibility for issues are aware of legal requirements and have valid reasons for termination.

Related articles:

• Labor’s employment standards explained
• The new IR world