Employee Relations - Term Paper Example

 «Employee Relations» Unfair Dismissal under the Fair Work Act of 2009: It’s Impact to the Workplace Introduction The Australian Labor Law has undergone several reforms. All of which were aimed to improve the system of labor. It was subjected to a major change when the Workplace Relations Act was enacted in 1996. This legislation allowed the making of non-union agreements between employers and employees, otherwise known as the Australian Workplace Agreements (AWAs) (“Labor Law Summary,” n.d). It facilitated more individual agreements rather than collective bargaining (“Workplace Relations,” 2010). This change has gained a favorable response from the employers and a vehement opposition from the trade unions (Wooden, 2006). To solve the conflicting claims, the federal government of Australia amended the law in 2005, entitled as the Workplace Relations Amendment (Work Choices) Act. However, the move was not able to change the status quo. Thus, the legislators introduced the Fair Work Act which took effect on the first day of July 2009 (“Fair Work Act,” n.d.). It was a whole new statute on workplace relation. Under it, small businesses were no longer exempted “from unfair dismissal claims” and the no disadvantage test was restored (“Timeline,” n.d.). This drastic change has not gained complete acceptance by the industrial sector. The law has substantially changed the employer and employee relationship. As such, it is fitting to critically assess the new unfair dismissal clause and its impact to the workplace. The Unfair Dismissal Clause Unfair Dismissal Primarily, for one to avail of the rights provided under the unfair dismissal provision, he or she must satisfy the following two requirements: (1) must be employed by “a national system or Victorian employer who has completed” the “minimum employment period (MEP),” for employers of small businesses-- MEP is twelve months and for other employers-- MEP is six months (2) must be covered by a modern award, “NAPSA, certified agreement, ITEA, AWA” or the employee’s annual income “must be less than the high income threshold” (“Unfair Dismissal,” n.d.). In determining whether one complies with the second requirement, the calculation of the annual earning “must include employee’s wages, salary sacrifice benefits and other payments which are guaranteed in advance” and must exclude compulsory “contributions, commissions and overtime payments” (“Unfair Dismissal,” n.d.). In the case of Adrian Read vs. Universal Store Pty Ltd T/A Universal Store, [2010] FWA 5772, the FWA commissioner concluded that by virtue of section 382 of the Act, the applicant was not “a person protected from unfair dismissal” (para. 30). At the time of Mr. Read’s dismissal, his wages were more than the high income threshold. As a general rule, under the Fair Work Act of 2009, unfair dismissal happens when an employee has been dismissed from his or her job but the dismissal was “harsh, unjust or unreasonable,” “not consistent with the Small Business Fair Dismissal Code” and “was not a case of genuine redundancy” (S.385). All these instances shall be determined by Fair Work Australia (FWA). The determination however shall depend on the facts and circumstances surrounding each case. The FWA is given the authority to evaluate to its satisfaction the respective allegations of the employer and employee with regard to the root cause of the dismissal. In such case, if the FWA is satisfied that the case is one of unfair dismissal, it will give due accord to the employee’s claim and if not, it will dismiss the claim in favor of the employer. FWA will dismiss an application due to either of the following grounds: (1) “application is not made in accordance with the Act” (2) it “is frivolous or vexatious” (3) it “has no reasonable prospects of success” (S.587 (1)). In Ms Toni Potter vs. Darwin City Council, [2010] FWA 6129, FWA dismissed Potter’s application for unfair dismissal remedy. The FWA commissioner deemed the application as inappropriate since the substantive issues of the case had already been settled (“Potter vs. Darwin City Council,” 2010, para. 62). To provide a clear case of dismissal, the law enumerates the instances when an individual is considered to have been dismissed or not from his or her employment. In such delineation, the employer’s fault is emphasized as well as the importance of complying with the terms and conditions contained in a contract of employment. As stated, if “the person’s employment has been terminated on the employer’s initiative or the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct engaged in by his or her employer,” that individual is said to have been dismissed (S.386 (1)). On the other hand, if “the person’s employment has terminated at the end of the stipulated period, on completion of the task, or at the end of the season or” (2) “the person’s employment has terminated at the end of the training arrangement or” (3) “the person was demoted in employment but: (a) the demotion does not involve a significant reduction in his or her remuneration or duties and (b) he or she remains employed with the employer that effected the demotion,” that individual is considered as not having been dismissed (S.386 (2)). In assessing whether or not the dismissal was harsh, unjust or unreasonable, the FWA must take into account the criteria provided under the statute. Amongst the enumerated criteria are the following: (1) “valid reason for dismissal was related to person’s capacity or conduct” (2) notification of the reason for dismissal (3) opportunity to respond to the notice of dismissal (4) “unreasonable refusal by the employer to allow the employee to have a support person to assist at any discussions relating to dismissal” (5) “any other matters that FWA considers relevant” (S.387). The last criterion means that the Fair Work Act grants FWA the authority to determine the harshness of the dismissal by considering other relevant factors not included in the enumeration. In other words, if the reasons cited by the employee in his or her allegation that the dismissal was harsh, unjust or unreasonable are outside the enumerated criteria in the subject law, it will be discretionary on the part of FWA to give recognition to such reasons or not. In such instance, if the FWA does not approve of the external criteria, then the allegation under this section is baseless or unfounded. In the case of Pak Hon (Patrick) Lau vs. Winra Pty Ltd T/A Oxford Technologies Australia, [2010] FWA 5188, it was held that Mr. Lau’s dismissal was just and not harsh. It was found out that the employer had a valid reason for dismissing him due to his act of obtaining “a confidential formula in a secretive and unacceptable way” and passing it onto a competitor (“Lau vs. Winra Pty Ltd T/A Oxford Technologies Australia,” 2010, para. 27 (a)). Furthermore, he was properly notified of the reason and was given an opportunity to respond. With regard to dismissals which are inconsistent with the Small Business Fair Dismissal Code, allegations under it shall be determined by referring to section 388 of the Act. Notably, what the law provides is the enumeration under dismissals which are consistent with the Dismissal Code. It states that, “if immediately before the time of the dismissal or at the time the person was given notice of the dismissal, the person’s employer was a small business employer and the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal,” the dismissal is deemed to be consistent with the Small Business Fair Dismissal Code (S.388 (2)). From such statement, it is to be deduced that if the person’s employer was not “a small business employer” immediately before the employee was dismissed or was given the notice of dismissal and the employer did not comply with the dismissal rule under the Small Business Fair Dismissal Code, the termination is acknowledged as inconsistent with the said Dismissal Code. In dismissals involving a case of genuine redundancy, the law imposes two requisites. First, “the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise” and second, “the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy” (S.389 (1)). In contrast, “if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer,” the situation is not one of a genuine redundancy (S.389 (2)). Since the law is specific with regard to this circumstance under unfair dismissal, one is to evaluate his or her claim under either of the two distinctions. This means to say, that if one alleges that his or her case complies with the fourth instance in the enforcement of unfair dismissal claim, he or she is to base it under the second distinction (the non-genuine redundancy case). This was illustrated in Joe Solari vs. RLA Polymers Pty Ltd [2010] FWA 5676. In this particular case, the FWA dismissed Mr. Solari’s application. The decision was not just based on the fact that his allegation was unfounded but also because his application was “beyond the jurisdiction of the Tribunal” (“Solari vs. RLA Polymers Pty Ltd,” 2010, para. 18). There was “no basis to conclude that the applicant’s termination was not a genuine redundancy” (“Solari vs. RLA Polymers Pty Ltd,” 2010, para. 18). Remedies Available The Fair Work Act of 2009 actually provides two remedies for unfair dismissal. These are reinstatement and compensation. Of the two, reinstatement is the primary remedy available to an employee (Pickering, 2010). Under the statute, reinstatement can be done by reappointing the employee to his or her old position or appointing him or her to a new position (S.391 (1)). Compensation on the other hand can be ordered if the employer chooses to “pay compensation to the person” instead of reinstatement (S.392 (1)). In granting an award for compensation, the “FWA must take into” consideration “all the circumstances of the case including” the following: (1) “viability of the employer’s enterprise” (2) “length of the person’s service” (3) “remuneration the person would have received” (4) person’s effort “to mitigate the loss” due to the dismissal (5) amount of “remuneration earned by the person” from the time of dismissal to the granting of the award for compensation (6) “future loss of earnings” and (7) “any other matter that FWA considers relevant” (S.392 (2)). “Shock, distress or humiliation and other analogous hurt” must not be taken into account by FWA in determining the amount of compensation (S.392 (4)). Furthermore, the award for compensation shall be reduced if the person’s misconduct contributed to his or her dismissal (S.392 (3)). One recent case involving compensation in lieu of reinstatement is the case of Ms Nicola Jones vs. Zamel’s Jewellers, [2010] FWA 6227. In this unfair dismissal claim, the FWA commissioner was satisfied by the evidences presented that Ms. Jones was unfairly dismissed and that reinstatement was inappropriate (“Jones vs. Zamel’s Jewellers,” 2010, para. 81). It was cited that the applicant actually “intended to continue her employment with the employer if it was not for the events leading up to her dismissal” (“Jones vs. Zamel’s Jewellers,” 2010, para. 83). The commissioner was satisfied that since being dismissed, she was not able “to work to mitigate her loss” (“Jones vs. Zamel’s Jewellers,” 2010, para. 83). Thus, by virtue of section 390(3) (b) of the Fair Work Act, compensation was deemed appropriate (“Jones vs. Zamel’s Jewellers,” 2010, para. 82). Procedural Matters An employee who has been dismissed from employment can “apply to FWA for an order granting a remedy” (S.394 (1)). It is the FWA who will receive and decide applications for the remedies provided in case of unfair dismissal. The person must file his or her application within the reglementary period provided under the Fair Work Act. It is clearly provided that unfair dismissal claims are to be made within fourteen days “after the dismissal took effect” or within such period allowed by FWA in exceptional circumstances (S.394 (2)). In the case of Hewlett Packard Australia Pty Ltd vs. GE Capital Finance Pty Ltd [2003] FCAFC 256, Branson J. described “exceptional circumstances as simply circumstances sufficient to render it just and equitable to grant relief” (as cited in “Morrison vs. Yooralla,” 2010, para. 44). Lord Bingham of Cornwell CJ also gave his comment about this in the case of R vs. Kelly (Edward) [2000] 1 QB 198 (as cited in “Morrison vs. Yooralla,” 2010, para. 44). He stated that the term “exceptional” must be construed “as an ordinary, familiar English adjective and not as a term of art” (as cited in “Morrison vs. Yooralla,” 2010, para. 44). It pertains to an instance “such as to form an exception, which is out of ordinary course, or unusual, or special, or uncommon” (Lord Bingham, as cited in “Morrison vs. Yooralla,” 2010, para. 44). Stated in another sense, for a circumstance to be exceptional, it “need not be unique, or unprecedented, or very rare” (Lord Bingham, as cited in “Morrison vs. Yooralla,” 2010, para. 44). However, “it cannot be one that is regularly, or routinely, or normally encountered” (Lord Bingham, as cited in “Morrison vs. Yooralla,” 2010, para. 44). In the usual scenario, what the FWA does is to examine first if the applicant has lodged the claim within the fourteen days requirement. If the FWA sees that it was not filed within the fourteen days period, it will consider the second option, to examine if the case falls under exceptional circumstances to allow an extension of time during which the application could be made. This was applied in the case of Ms. Tarlai Iggleden vs. Lismore Neighbourhood Centre Inc., [2010] FWA 6209. After the FWA commissioner took into account several factors, it was found out that there were exceptional circumstances which could allow further period to file the application for unfair dismissal. The commissioner justified such decision by noting the applicant’s depression, financial difficulties and responsibilities as a mother when she opted to bring an unfair dismissal claim before the FWA (“Iggleden vs. Lismore Neighbourhood Centre Inc.,” 2010, para. 17). For the application to be admitted, it is mandatory to pay for the fees prescribed by the regulations unless deemed waived by FWA (S.395). The application fee may be waived if the applicant could show that doing such could cause him or her “serious hardship” (“Unfair Dismissal Under,” n.d.). Serious hardship is to be determined based on the applicant’s financial status as shown in his or her “fee waiver application form” (“Unfair Dismissal Under,” n.d.). Nevertheless, if the claimant discontinues his or her application before a conference, the filing fee can be refunded by FWA (“Unfair Dismisal Under,” n.d.). The Impact to the Workplace With the implementation of the Fair Work Act of 2009, all national system or Victorian employers whether operating a small-scale or large-scale business can now be subjected to unfair dismissal claims by its employees. Unlike the former law (Workplace Relations Act of 1996), this statute has gathered tremendous support from the employees and trade unions. It significantly curtailed “the right to summarily dismiss an employee for certain forms of misconduct” (Bagaric, 2005, p.30). Since small business employers were no longer exempted from unfair dismissal claims, they have already been exposed to what the medium and large-scale employers experienced when the former legislation took effect. To reiterate, the former statute was completely favored by all employer organizations as oppose to this law. Nonetheless, the Australian society has acknowledged the significance of the workplace relation system. Greater Care in Recruitment and Dismissal Since the enforcement of the new unfair dismissal clause, employers had been exerting greater care in recruitment and dismissal (Evans, Goodman, & Hargreaves, 1985). In the present Australian workplace relation system, this impact is attributed to the adoption of the Fair Work Act. The unfair dismissal clause of this piece of legislation has granted more protection to the workers of constitutional corporations. As such, employers now are very careful in hiring their workers. Companies which do not have a human resource department before are now creating one. A rigid recruitment process has been adopted by some just to make sure that they are only hiring competent and qualified workers for certain positions. Somehow, this trend is a threat to the applicants since they have to pass a strict recruitment procedure. Nevertheless, this hiring method can be helpful to both the would-be employee and the employer. For instance, if the employer has hired the right person for a job, the employer may feel secure that the individual will do well in his or her work. The employer may also feel confident that if the person will be dismissed, he or she will be dismissed due to a valid and legal cause. On the side of the employee, he or she will be confident that his or her employer will treat him or her well in the duration of his or her employment. In such instances, it can be observed that the employer and employee are having reciprocal benefits under the new workplace relation system. More Formal Interaction in the Workplace To avoid claims of unfair dismissal under the new law, employers have been managing its employees formally. This means that sound procedures are employed in the workplace for every possible claim that an employee may have against the employer. The employer makes sure that everything is organized in such a way that it is almost impossible for any unfair dismissal claim to set in. Significantly, faithfully complying with company rules and regulations can lessen conflicts inside the workplace. Disciplinary procedures should be employed to regulate the unprofessional behavior of erring employees. Somehow, the way employees handle their customer reflects the way they are treated by their employers. Thus, if an employer’s interaction towards an employee is founded on good intentions and sound procedures, the employee will mirror this and apply it to the clients. In other words, the careful handling of every circumstance that involves an employee results in a formal interaction inside the workplace. Nonetheless, employees must also deal with the customers in a formal way so that his or her employer may not have any claim against his or her performance which could lead to dismissal. If this formal communication is maintained between employers and employees, productivity in the workplace can certainly be achieved (Jeanty, 2010). Employees will always be secured that their claims are to be resolved by their employer in a systematic and expedient way. Fair and Transparent Human Resource Management Practices In the enforcement of the unfair dismissal provision, the human resource departments of Australian companies are making sure that what they are implementing inside the workplace are only fair and transparent practices. They see to it that their workplace relation system is in accordance with the principles provided under the Fair Work Act of 2009. In such case, fairness is satisfied by giving an employee a notice for every wrong committed and granting him or her opportunity to explain the reason of such notice. Needless to say, there is fairness when employees of a company are all subjected to the same disciplinary method regardless of position. Equality of treatment therefore is the most obvious aspect of fairness inside the workplace. On the other hand, there is transparency when an employee is informed by the employer of the real reason of any notice. In other words, transparency is the divulging of information for the employee’s awareness with regard to a claim. The test for fairness and transparency can actually be exemplified by making clear policies and methods in dealing with performance and termination situations. To be fair, the human resource should apply the same standards for performance evaluation among the employees of the same rank. However, in ranking the employees, there should be substantial distinction. On the other side, to be transparent, the human resource should let the employee know the actual result of the evaluation. This can be done by providing the employee a copy of the performance evaluation result together with the evaluator’s comments and suggestions. In case of dismissal due to poor performance, it is “a good risk management practice to ensure that the reasons used to support the dismissal are supported by reliable facts” (Stanton, n.d.). Conclusion The Fair Work Act of 2009 has indeed granted more protection to workers in Australia. In the ultimate analysis, the law is actually promoting a balanced and transparent framework of workplace relation although the unfair dismissal clause has forced some companies to change their established rules and regulations. The expansion of the scope of unfair dismissal claims has truly changed the way employers and employees communicate and resolve conflicts in the workplace. The impacts may have been substantial but the corresponding benefits are reciprocal as between the employer and employee. References Adrian Read vs. Universal Store Pty Ltd T/A Universal Store. (2010). Retrieved August 25, 2010, from http://www.fwa.gov.au /decisionssigned/html /2010fwa5772.htm Bagaric, M. (2005). Time to curtail summary dismissal in australia. Labor Law Journal, 56 (1), 30. Evans, S., Goodman, J. & Hargreaves, L. (1985). 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