Observation (CEACR) - adopted 2009, published 99th ILC session (2010)

Termination of Employment Convention, 1982 (No. 158) - Australia (Ratification: 1993)

The Committee notes the Government’s detailed report received in September 2009, including information provided by the states and territories, and their replies to the matters raised in its previous observation. The Committee also notes the comments received from the Australian Council of Trade Unions (ACTU) and the Government’s response to these comments. In its report, the Government indicates that the Fair Work Act which came into force on 1 July 2009, and which repeals and replaces the Workplace Relations Act, contains provisions relevant to the application of the Convention. The Committee also notes the creation of Fair Work Australia, the national workplace relations tribunal.

The Committee recalls its 2007 observation noting that the Workplace Relations Amendment (Work Choices) Act 2005, exempted businesses employing 100 or less employees from the remedies for unfair dismissal and was therefore inconsistent with the Convention. The Committee notes with interest that the 100 employee exemption has been removed under the Fair Work Act. The Committee also notes that the ACTU has welcomed the Fair Work Act’s restoration of unfair dismissal rights to most workers in the federal system. Furthermore, the Government indicates that, due to the relatively short time since the coming into force of the Fair Work Act, it is not yet possible to provide an accurate assessment of law and practice associated with it. The Committee notes with satisfaction the information provided by the Government and invites the Government to provide updated information on the application of the Convention in practice and examples of court rulings concerning questions of principle relating to the Convention.

Article 2, paragraph 2(b), of the Convention. Workers serving a qualifying period of employment. The Government indicates that in order to lodge an unfair dismissal application under the Fair Work Act, employees must have served a minimum period of employment. In businesses with 15 or more employees, the minimum employment period required is six months, whereas in small businesses, defined in the Act as employing fewer than 15 employees, the minimum employment period is 12 months. The ACTU indicates that this 12‑month qualifying period for workers in small businesses will exclude some small business employees from claiming unfair dismissal and will mostly affect young persons. In response to the concerns raised by the ACTU, the Government indicates that the Fair Work Act provisions balance the need for strong protections against unfair dismissals, while recognizing the special circumstances of small businesses. The Government further indicates that while employees in small businesses are subject to a longer qualifying period, they are nevertheless covered by the unfair dismissal protections from the Fair Work Act. The Committee invites the Government to provide information concerning the effects of these legislative changes on small businesses with regard to unfair dismissal claims.

Article 4. Valid reasons for dismissal. The Committee recalls that under the Workplace Relations Act, a claim could be made by an employee of a business with more than 100 employees. However, if the dismissal took place due to “genuine operational reasons”, the dismissal was not deemed to be unfair. Under the Fair Work Act, “genuine operational reasons” is no longer a defence from an unfair dismissal claim. Nevertheless, section 385(d) of the Fair Work Act provides that employers can dismiss employees in cases of genuine redundancy. The Government indicates that, in order to satisfy the requirements of genuine redundancy, the Fair Work Act obliges employers to attempt to redeploy an employee and comply with any relevant consultation obligations under an industrial instrument. The ACTU indicates that the Fair Work Act does not require Fair Work Australia to be satisfied that the individuals selected for redundancy are fairly chosen. The ACTU also indicates that there is a risk that employers will be able to unfairly select individuals for redundancy. In response to the concerns raised by the ACTU, the Government indicates that employees who are genuinely made redundant may not make an unfair dismissal claim but a general protections claim in case the reason for which they were considered as being redundant contravenes the general protections. These reasons include prohibited reasons for termination, including the choice to join or not join a union, or to participate in industrial actions. The Committee asks the Government to provide information concerning this provision of the Convention, including information on current cases of terminations of employment which satisfy the requirements for genuine redundancy.

Article 7. Procedure prior to or at the time of termination. The Committee notes that the Small Business Fair Dismissal Code, which came into operation on 1 July 2009, is also relevant to the application of the Convention. The Code contains the basic principles that a small business employer with less than 15 full-time equivalent employees needs to follow in order to ensure that Fair Work Australia considers a dismissal to be fair. These principles include providing the employee with a warning and an opportunity to rectify their behaviour, and guidance on when summary dismissal for serious misconduct is warranted. If a small business employer can prove to Fair Work Australia that they complied with the Code, a dismissal will be found to be fair. The ACTU is concerned that the Code does not ensure that employees in small businesses are treated fairly. For example, the Code suggests that an employer may summarily dismiss an employee if they believe that the employee has engaged in a single act of theft, fraud, or violence. The Government indicates that the Small Business Fair Dismissal Code does not take away unfair dismissal protection – its purpose is to facilitate a fair dismissal process. The Committee invites the Government to provide information on the application of the Small Business Fair Dismissal Code with regard to workers’ opportunity to defend themselves against the allegations made prior to termination.

Articles 8 and 9. Procedure of appeal against termination. Under the Fair Work Act, if a dismissed employee believes the dismissal was harsh, unjust or unreasonable, they may submit an unfair dismissal application for remedy to Fair Work Australia. With regard to summary dismissals in small businesses, the ACTU indicates that it is unclear whether Fair Work Australia will be able to inquire into the reasonableness of the employer’s opinion in cases concerning possible theft, fraud, or violence. In response to these concerns, the Government indicates that when an employee in a small business submits an unfair dismissal claim, Fair Work Australia will first determine compliance with the Code. The Code requires that in cases of summary dismissal for serious misconduct, it is sufficient that the employer has reported the misconduct to the police. However, the Code requires that the employer must have reasonable grounds for reporting the misconduct to the police. The Committee asks the Government to provide information on the effect given to these provisions of the Convention, more specifically, with regard to workers in small businesses.

[The Government is asked to reply in detail to the present comments in 2011.]