Mr McCLELLAND (4:45 PM) —This is the second time the Workplace Relations Amendment (Fair Dismissal) Bill 2002 [No. 2] has come before the House and I think about the seventh time similar provisions have been brought into the House. The bill deals with the issue of unfair dismissal. Paradoxically, the bill itself is titled the fair dismissal bill. In setting the background to the debate, let me state and state firmly that the Australian Labor Party recognise the critical importance of small business to our economy. In total, 3.1 million people work in small business as either proprietors or employees. It is the major driver of jobs growth in the economy. We recognise that and, for that reason, we have said on a number of occasions that it is imperative that the burdens of unnecessary paperwork, complexity, legal form and procedure be removed from small business so they can get on with the job of creating successful businesses and employing people. In that context, we refer to removing the burden of GST red tape, we refer to equipping them to compete against predatory practices by some unscrupulous corporations and, indeed, we refer, more recently, to what we would otherwise see as very complex superannuation obligations being imposed on them.

Insofar as this bill proposes to exempt employees from federal unfair dismissal laws, when you analyse it you find it is not the answer. The reason I say that is that to be covered by federal unfair dismissal laws a small business must be both a corporation and covered by a federal industrial award. On the basis of research I have seen, it is estimated that around 27 per cent of small businesses are in that category. The majority of small businesses are not affected by this legislation because they are not in the category of small businesses covered by federal awards. The great majority would be sole traders, partnerships, noncorporate bodies or simply corporate bodies covered by state awards.

We recognise, and the Prime Minister has openly stated, that we should get ready for this bill to be a double dissolution trigger. I think in coming back into the House a second time this bill could be the first that could be included as a double dissolution trigger. That is something that people should have regard to in analysing the government's approach to this legislation. It is all about the politics of creating a double dissolution trigger rather than getting sensible outcomes that would genuinely reform this area in a meaningful way for small business.

The Australian Labor Party recognise that there is a need for simplification of the procedure and a reduction in costs in the area of unfair dismissal. We do recognise that, if small business proprietors are served with spurious claims and are forced to defend those claims, they may, under present circumstances, feel compelled to retain legal advice and end up with a bill for several thousands of dollars to defend the action. Even if they are successful, that expense is still incurred. We say that things need to be done to simplify the procedure, remove lawyers and paid agents from the conciliation phase so that cost burden does not become a necessary outcome of being served with an application. Towards the conclusion of my speech I will go through in some greater detail the amendments that we are proposing.

We recognise and the business community generally recognises, not simply the small business community, that there really is a need for uniformity in this area. While yes, as a result of ideological differences, we do recognise it is probably difficult to get uniformity in respect of all issues in the industrial relations area, but when it comes to issues affecting individual rights, as this unfair dismissal legislation does, we do not believe that, with a bit of goodwill from those involved, it would be difficult to achieve uniformity.

The imperative of achieving uniform standards around Australia is demonstrated by these figures. For the financial year ending 2001—and leaving aside the state of Victoria because they only have the federal provisions applying there—there were 2,534 claims filed under the federal legislation that this bill is proposing to amend, but there were 8,485 filed under the state systems in the rest of Australia. So that again comes back to my initial point: this bill is essentially a nonremedy for the majority of small business proprietors and underlines the need for uniformity of procedures, simplification and reduction in costs across the whole spectrum of federal and state application of these laws. I ask rhetorically: are you more likely to achieve such uniform standards if they are based on the concept of a fair go all round as opposed to a partial carve out, as this bill proposes? I think to ask that question, quite frankly, answers that question.

Another point I have mentioned—and other speakers and academic commentators have mentioned this—is that this is very much a case of not wishing for something too much because you might get it. If the small business community were confronted with the outcome of this legislation, they would receive exposure to far more expensive and complex remedies. For instance, if you examine the bill, you will see that it has a very limited operation. Section 170CE(5C) restricts the remedy available against small business proprietors, defined as those that employ 20 or fewer employees, to unfair dismissal only. It does not restrict the remedy to unlawful dismissal that otherwise exists under the act, nor does it restrict other remedies that may be available in the state sphere or, indeed, under common law or other remedies that exist in the federal sphere.

Just dealing with those remedies that otherwise exist in the federal sphere, we have the High Court of Australia confirming that the Australian Industrial Relations Commission has an extensive arbitral power when exercising that power pursuant to a disputes clause under a certified agreement. In terms of resolving a dispute, the High Court, as interpreted by various commentators, says that effectively the power is a power at large to arbitrate to resolve the particular dispute, if the dispute clause is framed so as to pick up issues of unfair dismissal. That clearly is a very broad jurisdiction.

If those in the business community take their minds back before 1993 as to how these matters were progressed, they will see that they were progressed by logs of claim being served throughout Australia on various businesses in the particular industry concerned to create a demand for an unfair dismissal remedy and then for that remedy to be tailored in respect of the particular employee or employees concerned. Just looking at some of the cases where those involved in industrial relations practice would readily recall the complexities of the litigation through various appeal stages—through the commission and the Federal Court, up into the High Court— we see the names of Ranger uranium, the Boyne Smelters case, the Wool Dumpers case and, quite an infamous case, the Vista Paper Products dispute case.

The Vista Paper Products case went on a series of what the chief justice of the industrial court said eventually was an orgy of litigation. Substantially involved in this issue was the power of creating a sufficiently framed or accurately framed industrial dispute such that it empowered the commission to order reinstatement, and such orders were in fact made in the Vista Products case. But the fact of the matter—and this is a good example—is that the expense of the litigation and associated procedures killed Vista Paper Products. Quite frankly, if small business proprietors think that is a good thing, it would astound me. But these are the things that have to be considered.

Arguably, it would also expose small business proprietors to state remedies, as I have mentioned. For instance, with the remedy of unfair contract in the state of New South Wales, there is currently a case on appeal that may well resolve that the remedy exists even in respect of circumstances where employment may otherwise be regulated by federal provisions. Also, there is an emerging area of the common law duty of mutual trust and confidence that exists in respect of contractual law generally but more specifically—as you would imagine and appreciate and, if you think about it, probably welcome—in respect of contracts involving the provision of personal services. Certainly it is quite a sophisticated jurisdiction in the United Kingdom, but increasingly it is a principle being applied by Australian courts. Indeed, as these things tend to follow debate, it is something that is the subject of current debate in various legal and industrial law conferences.

Inevitably, if these relatively straightforward remedy procedures—albeit they can be improved—under the federal unfair dismissal laws were removed, this whole gamut of complex and expensive litigation would confront small businesses as a reality. You might say, `Look, why aren't these being pursued now?' The fact is that they are not being pursued because there is a relatively straightforward procedure. Quite frankly, if you were advising someone to pursue a remedy for unfair dismissal, you would be mad to advise them to take these complicated procedures when there is such a relatively straightforward mechanism available in the federal legislation.

It is also vitally important to point out to small businesses—bearing in mind that again we are talking about only 27 per cent of small businesses being covered by this federal legislation—that nothing exists in this legislation to prevent them from being exposed to an action for unlawful dismissal. This is a dismissal involving an allegation of discrimination or a breach otherwise of the act or the family provisions in the act. It is not difficult to imagine that a number of claims that could be framed as unfair dismissal claims could simply be reframed as unlawful dismissal claims. Indeed, quite often these applications are made in what might be called double-bunger form: both unfair and unlawful. What would happen is that applications would still be made, but I suppose the first bunger would be extinguished by this legislation.

To suggest that this exemption is an answer to the legitimate concerns that we have recognised the small business community have in respect of the operation of these laws is pretty ordinary. It is not the answer. More likely than not, in my submission, it would create a nightmare of complexity and cost for them. The other point I want to make is that, if you are going to take away this concept of a remedy for unfair dismissal, you have to ask yourself what you are taking away. If you look at the early provisions of this schedule of the act, what you are taking away is the right to a fair go. The legislation specifically refers to these remedies giving employees the right to a fair go. In the case of Loty and Holloway, the reference was `a fair go all round'. The court said that you have to look at these things in a practical way. You have to look at what gives both parties—the employee, or the worker, and the employer—a fair go all round.

This educative effect has really developed over the last two decades, essentially since 1983. The termination change and redundancy cases in the Australian Industrial Relations Commission saw many federal awards adopting similar award provisions, giving employees remedies for unfair dismissal. That has had as much an educative effect as a regulatory effect, and has created a culture where, before someone is given the sack, they are at least afforded basic procedural fairness, advised of the allegations against them and given the opportunity to respond to those. Given the dramatic consequences—for them and for their family—of losing their job, we would submit that that is an entirely reasonable proposition.

The laws have also had a part, as some commentators have suggested, in businesses looking at more carefully defining for people the obligations or the tasks expected of them, procedures for review, feedback and then guidance, if necessary, followed by disciplinary proceedings. It is terribly important to the proper functioning and efficiency of a business that employees know what is expected of them, have standards against which they are judged and have interaction on whether or not they are achieving those. A very useful report issued in 1995 called the Karpin report said that more work can be done in terms of improving the management skills of small business. Rather than saying, `Don't look at these issues; you don't have to, because we are giving a carve-out,' which is again only a partial carve-out, Dr Rowena Barrett from Monash University has said, `These are the other issues which businesses should be looking at in terms of improving management styles.'

The other thing I want to point out is that these unfair dismissal law exemptions are not desired by the totality of small business proprietors by any means. Indeed, a survey that the opposition has referred to in several press releases referred to concerns that it may result in small business being regarded as the poor relation in terms of the business community as a whole. That is important in terms of the small business sector attracting talent. If they really are to match the rest of the world in being innovators—as the best of small business can be—that is a vitally important thing. I note that the Governor of the Reserve Bank recently made a speech on his concerns about a potential skills shortage in Australia. How much worse will that be for small business if employees think their livelihoods are exposed to arbitrary acts by the employer—they could simply sack them without any reason or any access to procedural fairness?

The other point that I wish to make is that the policy itself, in terms of the calculation of 20 employees or fewer, is basically illogical and poor policy. Marilyn Pittard, again from Monash University and a consultant to Clayton Utz lawyers, has referred to the ease with which businesses could restructure themselves to avoid this legislation. She notes that insofar as the legislation will apply to future employees it is a relatively easy thing for the Year 2002 company, for instance, to create the Year 2002A company, which would get 19 employees, and then create the Year 2003 company for further employees and so forth, thus avoiding the legislation. No-one would sensibly say that that is a good thing.

While small business proprietors are employers, more often than not they are also parents and grandparents. They do not want their children or their grandchildren to be forced to work in an environment where they can be exposed to arbitrary or capricious action by an unfair employer. The minister has said on a number of occasions—and I, with respect, agree with him—that the vast majority of small business proprietors are decent people and realise the value they have in their employees. But that is by no means universal. Without these provisions, quite often the most marginalised and vulnerable individuals—young employees without great skills—would be exposed to that arbitrary and capricious action by employers.

Having said that, you can appreciate just how vitally important these unfair dismissal laws are as a safety net. They are probably a prime safety net, if you view them in that context, because they represent the right to hang onto your job—unless there are valid reasons for your termination. As I have indicated, the consequences for individuals and families can be devastating. As a matter of sound administration and morality, you would ask: `Should the government be removing such a crucial safety net provision?' You would only contemplate doing that if you had sound reasons to do so. Quite frankly, the government has not made its case. I do not say that in the political context; I say that quite literally: it has not made its case.

When the case was tested in the Federal Court of Australia, in the Hamzy case, it was found wanting. The government appeared with senior counsel and called Professor Mark Wooden to give evidence on the impact of the unfair dismissal laws that the government alleged to be job killers. The Federal Court, after considering the cross-examination of Dr Wooden and the general submissions of the Commonwealth, unanimously concluded:

Later the court said:

Those are comments by the Federal Court of Australia. I do not believe the government has conducted any valid research that could withstand analysis to justify its assertion that the removal of these laws—for only 27 per cent of small businesses, in any event—would create jobs.

Having made all these points, it is imperative that the government and indeed the parliament look at the whole range of matters that affect small businesses and their ability to operate efficiently. The removal of the burden of red tape and expense is obviously something that we must all responsibly examine. It is in that context that the opposition will be sincerely proposing and moving a series of amendments to the Workplace Relations Act to improve the system so that it operates more efficiently and cheaply.

Before I briefly outline those amendments, I want to summarise how the current situation operates. Currently—indeed, as a result of amendments by the government, I will acknowledge—there is a conciliation phase in unfair dismissal claims. After that conciliation phase, the industrial commission grants a certificate regarding the merits of the case before them in which they will say whether it is a viable case or a frivolous case. If a case continues beyond the granting of that certificate when the commissioner has said that it is frivolous or without merit, there is every likelihood under the legislation that not only the applicant but also the advocate appearing on behalf of the applicant will face an order for costs. Quite frankly, you would be mad to take a case beyond that conciliation phase if you received an adverse certificate.

Our emphasis in the amendments we are proposing is on removing the issue of costs from that conciliation phase. We are proposing that, in the absence of exceptional circumstances, lawyers or agents appearing for fee or reward be removed from that concilation phase. That is to avoid a situation where a small business proprietor who is served with an application thinks that they have to automatically run off to see a lawyer, thus incurring expenses and so forth. In other words, it would get the employer and the individual concerned to sit down before the conciliator and try to resolve the matter at that point. That is the main thrust of the opposition's amendments, but we also think other improvements can be made.

We are proposing a gateway hurdle whereby, unless exceptional circumstances existed, the industrial commission would reject an application from someone who sought only financial compensation, as opposed to someone who genuinely wanted their job back. We have proposed, as I have mentioned, the restriction—unless there are exceptional circumstances—of paid representation at that conciliation phase. We are proposing the registration of paid agents so that they abide by an appropriate code of conduct. We are proposing the development of an information package so that people can find out that these principles are not too hard to abide by. For example, if you are going to sack someone for misconduct, you put to them the allegations against them; if you are going to sack them because of poor performance, you give them the opportunity to improve their performance; if you have to sack them because of operational requirements, you sit down and discuss the situation with them before the final decision is made. These are basic principles that could easily be discussed.

We are proposing an indicative time frame for these matters to be resolved so that it is not hanging over the head of either the applicant or the small business proprietor. We are proposing provisions to encourage the greater use of electronic communications, particularly to relieve small business proprietors who live away from the main centres of the burden of leaving their businesses and incurring expenses in travelling to cities. We are also proposing, in order to simplify the procedure when there are a number of dismissals for the same or similar reasons, the ability for representative actions to be brought.

I will be discussing those amendments in greater detail in the consideration in detail stage of this debate, but at this stage, I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) confirms that the protection from being unfairly dismissed is a fundamental safety net issue for Australian workers and their families irrespective of the size of the business in which they are employed;

(2) notes that the Australian Labor Party, in Opposition and as a future Government, is committed to working with small business, employees and peak bodies to make unfair dismissal laws more effective by addressing procedural complexities and costs; and

(3) condemns the government for:

(a) promoting socially divisive policies for its political purposes;

(b) using the issue of unfair dismissal to deflect criticism of the fact that its taxation policies have tied up small business in an unprecedented level of complexity and red tape;

(c) proposing legislation that would actually expose small business to other areas of more complex and costly litigation;

(d) undermining the security that unfair dismissal laws have given Australian workers and their families;

(e) failing to assist small business to develop effective human resource strategies in terms of the selection, ongoing training, supervision and management of employees; and

(f) failing to heed calls from the small business community for a more constructive approach to the issue of unfair dismissal that is likely to result in uniform national standards underpinned by the concept of a “fair go all round”.

The DEPUTY SPEAKER (Hon. I.R. Causley)—Is the amendment seconded?

Dr Emerson —I second the amendment and reserve my right to speak.