With the Fair Work Bill receiving Royal Assent on 7 April 2009, the Federal Government has followed through on its election promise to do away with “WorkChoices”.

The Fair Work Act 2009 (Cth) (the Act), including the unfair dismissal provisions, will come into operation on 1 July 2009. The provisions dealing with Modern Awards and the commencement of the National Employment Standards will come into effect on 1 January 2010.

The Act makes significant changes to the ways in which claims for unfair dismissal will be made. This article will discuss some of the most significant changes to the ways in which unfair dismissal claims will be made.

When must proceedings be commenced?

From 1 July 2009, an employee who makes a claim for unfair dismissal must do so within 14 days of the date of dismissal. According to the Government, the shortened time period for making a claim is designed to resolve issues between employees and employers quickly with a view to maintaining the employment relationship.

Who can make a claim?

To be protected from unfair dismissal, the Act provides that an employee must:

  1. be employed for the minimum employment period (6 months or, for small businesses, 12 months), and
  2. either:

(a) be covered by a Modern Award, or

(b) be covered by a Collective Agreement, or

(c) earn less than the high income threshold.

The Act retains exclusions for employees who are employed for a specified period or task, employed under a training arrangement, or demoted without significant reduction in duties or remuneration.

Who will hear applications?

Fair Work Australia (FWA) will be the new industrial umpire.

Until the Australian Industrial Relations Commission (the AIRC) is completely phased out at the end of 2009, the AIRC and FWA will operate in tandem. It is envisaged that any claims made before 1 July 2009 will remain with the AIRC and all claims lodged after 1 July 2009 will be heard by FWA. Appeals from AIRC decisions will be heard by FWA.

Exemptions

The Act now defines a small business as one that employs less than 15 employees. The transitional arrangements for the Act provide that, until 1 January 2011, the small business cut-off will be determined as 15 full time equivalent employees. A straight head count will be used after that.

The Act also does away with the distinction between probationary periods and qualifying periods. The Act provides that an employee must have been employed for at least 6 months (the minimum period of employment) to be entitled to make a claim for unfair dismissal. The minimum period of employment is extended to 12 months for a small business employee.

Considering claims of unfair dismissal

The Act will require FWA to consider four preliminary matters before making a determination on the merits of the claim. They are:

  1. whether the application was brought in time
  2. whether the employee was protected from unfair dismissal
  3. if the employee was a small business employee, whether the dismissal was consistent with the Small Business Fair Dismissal Code, and
  4. whether the dismissal was the result of a genuine redundancy.

The Substantive Application

The Act gives FWA the discretion to hold a conference in relation to an unfair dismissal claim or refer it to a hearing.

Importantly, the Act provides that FWA is not required to hold a hearing to exercise its powers. This means that FWA may make orders about a claim from a conference. This is a significant change.

The Act also gives FWA the discretion to hold hearings on only certain parts of a matter – the matter may be heard in conference except for a single issue, for example, whether or not an employee was properly informed of a policy that was breached.

The Regulations to be made under the Act are yet to be released and it is expected that either the Regulations or the rules of FWA will provide more clarity on the procedure for conferences and hearings.

Genuine Operational Reasons v Genuine Redundancy

The Act provides that a dismissal will not have been unfair if the dismissal was a case of genuine redundancy. The Act extends employer obligations in this regard when compared to the Workplace Relations Act 1996 (Cth).

The decision must have been made that an employer no longer required the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise and the employer must have complied with any consultation obligations set out in a Modern Award or Enterprise Agreement.

This is narrower than the current exemption (introduced as part of WorkChoices) which refers to a “genuine operational reason or a reason that includes a genuine operational reason”. Further, a dismissal will not have been a case of genuine redundancy if it would have been reasonable in all the circumstances to:

  1. redeploy the employee within the employer’s enterprise, or
  2. redeploy the employee within an enterprise of an associated entity of the employer.

This is significant as employers conducting a redundancy process will now have a positive obligation to consider options for redeployment.

Remedies

The Act retains the notion that the primary remedy in any claim will be reinstatement. Compensation will only be ordered where reinstatement is inappropriate.

Failure to comply with an order made by FWA will be a breach of the Act and a remedy can be sought under the Act’s civil remedy provision.

What do the changes mean for government departments and agencies?

The biggest issue will be the shortened time frame for unfair dismissal applications. It is also likely that departments and agencies could find themselves before FWA in a conference quite quickly.

Given the fact that the process may now be faster, HR managers should either obtain advice before terminating an employee in contentious circumstances, or undertake a “health check” of the process before the decision to terminate is made.

Also, given that decisions may now be made in conference, we recommend that departments and agencies seek advice on the employee’s claim prior to attending conferences.