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The Fair Work Act 2009 (Cth) (‘the Act’) implements significant changes to unfair dismissal laws and the way in which claims will be made and processed. The relevant parts of the Act entered into force on 1 July 2009 as part of the Federal Government’s objective to straighten out the controversial restrictions to unfair dismissal set by the previous Government through WorkChoices, and to create a more efficient and accessible dispute resolution mechanism for employees and employers.

All unfair dismissal claims will be managed by Fair Work Australia (‘FWA’), the new and independent workplace relations tribunal created under the Act, as part of its assumed responsibility for all industrial relations matters and dispute resolution. The Australian Industrial Relations Commission will therefore stop operating on 31 December 2009, once FWA is established and old claims have been resolved.

The Act applies to all employees in Victoria, ACT and the Northern Territory. It has a restricted application in other states, where it only affects those employees who are;

Accordingly, employees in NSW who do not fit within the above categories will continue to be governed by NSW State legislation and workplace awards.

Unfair Dismissal

The Act is consistent with previous legislation in its recognition of unfair dismissal as the termination of an employment contract in circumstances which are ‘harsh, unjust or unreasonable’. Such circumstances take into account whether there was a valid reason for the dismissal and whether the employee was given notice of, and an opportunity to respond to, the same.

Implications for Small Businesses

Small business employers may now find it more difficult to terminate employment contracts. Under the previous unfair dismissal provisions of the Workplace Relations Act 1996, employers who employed less than one hundred employees were guarded from unfair dismissal claims as their employees were excluded from bringing an application. This is no longer the case, however eligibility requirements to make a claim are slightly different for employees of a small business, which is defined by the Act as an employer who employs fewer than fifteen employees at the time of the relevant dismissal.

A Small Business Fair Dismissal Code (‘the Code’) has been introduced under the Act and its Regulations to assist small business employers in managing the dismissal of employees and compliance with statutory requirements. If an employment contract is terminated in a manner inconsistent with the Code there may been grounds for an unfair dismissal claim.

Who can make an application?

Limitations on when an employee may make an application continue under the Act. An employee can only bring an unfair dismissal claim if they have been employed by the employer for the minimum employment period. This period remains at six months, except for employees of a small business who must have been employed for at least twelve months. Further, the employee must be covered either by an Award or by an enterprise agreement, or not earn above the high income threshold which is calculated in accordance with the Act and its Regulations and currently sits at $108,300.00.

Application Process and Available Remedies

Applications for an unfair dismissal remedy must be submitted to FWA within fourteen days of the dismissal. Telephone conciliation will be arranged between the parties to attempt to reach a fast and amicable solution. Where conciliation is ineffective and FWA determines the dismissal to be unfair, an employee may be reinstated to their position if it is reasonable to do so or awarded compensation in accordance with the legislative guidelines.

Genuine Redundancy

A dismissal will not be taken to be unfair if an employee is dismissed in a case of genuine redundancy. This narrows the previous ‘operational reasons’ exemption to unfair dismissal to allow employers to terminate employment contracts where there is no longer a job to be performed due to changes in the operational requirements of the employer’s business. The employer must show that there is no need for an employee in that role, and that redeployment of the dismissed employee was not reasonable.

Casual Employees

Long term casual employees now have the opportunity to bring an application for unfair dismissal where they were previously excluded from doing so. To qualify as a long term casual employee, a person must have been employed by the employer on a regular and systematic basis for the relevant minimum employment period of six or twelve months and have had a reasonable expectation of continuing employment with that employer.

Conclusion

The changes to unfair dismissal are still in the transitional stage and their impact remains to be seen. It is important for employees and employers alike to understand the amended requirements and protect their interests in relation to contract termination.

If you have any questions in relation to this article, please contact Berrigan Doube Lawyers.