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Thursday, 12 December 2002
Page: 8013

Senator LUDWIG (10:38 PM) —I seek leave to incorporate my second reading debate speech on the Workplace Relations Amendment (Fair Termination) Bill 2002 in Hansard.

Leave granted.

The speech read as follows

This is yet another of the Government's Bills designed to make it easier to sack workers. This Government is intent on removing protection for workers against unfair treatment in the workplace, and the main target behind this move by the Howard Government is a group in the labour market that is probably the most vulnerable, namely, casual employees.

Typically, casual employees are engaged by the hour. For many casuals, the extent of their job security goes to the next hour. Once given a start, casuals may not know whether they have a job past lunch. At the end of each day's work many casuals will be unsure of whether they have work on the following day. For many casuals, if they fall out of favour with their boss, or if their labour is simply not needed on a particular day or part of a day they will join the ranks of the unemployed. This precarious situation is compounded with no rights to paid leave or paid holidays. For many casuals a holiday with their family or a few extra dollars for the Christmas period remains nothing more than a dream. The reality is for the army of casual workers in the Australian labour force is that their rights are few and their pay is low.

This highly unsatisfactory situation was the subject of a recent groundbreaking case in the Australian Industrial Relations Commission. In the Metals casuals' case of 2000 the Commission was presented with extensive evidence and argument on the status of casual workers in contemporary Australia. In evidence before the Commission were affidavits of numerous workers employed as casuals for years on end and on low pay: they were deprived of holidays, sick leave, family leave, income security and dignity. Aggregate evidence before the Commission showed that, despite the fact that most casuals are entitled to a loading of 20 per cent, many receive wages lower or not much better that their permanent counterparts. This harsh situation largely reflects the reduced capacity of casuals to bargain for better pay and conditions. Most casuals rely on award and statutory rights for protection against exploitation, and the Commission's decision did the right thing, it tightened up the award protections. It raised the loading for casuals from 20% to 25% and it gave casuals the right to convert to permanent employment after six months' employment.

However, the Commission's decision was limited to workers in the metal and engineering industry; the Commission's work here has yet to extend across the board. Nonetheless, what I do want to bring to the House's attention was the reaction to the Casuals' decision by the Chief Executive of the Australian Industry Group, the industry association that felt the full force of the Commission's determination. Mr Bob Herbert from the AIG said, and I quote:

“There has been no adjustment to casual employment for 26 years. Certainly, there will be some murmurs among employers over the increased loading rates but, in reality the AIRC ruling simply brings casuals to roughly the same pay and condition levels as their full-time colleagues.”

This shows that balance and fairness would dictate that casuals, who now constitute over a quarter of the workforce, deserve improved protections. However, balance and fairness is not what drives this government; instead, what we find in this bill is a further diminution of the rights of casual workers.

The Metals casuals' decision hasn't been the only decision of late to give aid to the lot of casuals. Late last year the Full Court of the Federal Court of Australia issued a decision that ruled invalid a regulation that prevented regular casual employees from mounting an unfair dismissal action until they had been with an employer for a year on a regular and systematic basis and had the expectation of continuing work.

In Hamzy v Tricon International Restaurants trading as KFC the Federal Court was faced with the question of whether the statutory discretion conferred on the Government to prescribe an exemption from unfair dismissal protection for “employees engaged on a casual basis for short period” meant that the Government could knock out casuals who had not put in 12 months' regular service with an employer or who could not hold out an expectation of continuing employment.

The full court was unanimous in holding that the prescribed regulation, namely, regulation 30B(3) of the Workplace Relations Regulations did not conform with what the Act allowed. In other words, the regulation unlawfully excluded various classes of casuals who were entitled, by an Act of Parliament, to the right to some measure of employment security.

In hearings in the Hamzy case the Commonwealth appeared and it tried to defend the impugned regulation with the argument that making it easier to sack casuals would help casuals because employers would be more inclined to pick up workers if they could dump them with a minimum of fuss. This argument moved attention away from the “employees engaged on a casual basis for short period” criterion to the ground found in section 170CC(l)(e).

To help make out the Government's case, expert opinion evidence was led from Professor Mark Wooden, a Professorial Research Fellow with the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.

In what must have been a huge disappointment for the Government, the Professor's evidence failed to convince the Court that job protection hindered job creation, the Court commented:

“It seems unfortunate that nobody has investigated whether there is any relationship between unfair dismissal legislation and employment growth. There has been much assertion on this topic during recent years, but apparently no effort to ascertain the factual situation.”

In this case the Government had an opportunity to justify its claims that unfair dismissal laws were bad for jobs, but when the Government put its case their myth making was exposed. The Government's approach to unfair dismissal laws is a scare-mongering fabrication.

So, with the Government's big-ticket policy in workplace relations looking ever so flimsy, it was no great surprise around the end of October when the Government came out with a study showing that unfair dismissal laws were costing an estimated 77 000 jobs and $1.3 billion. However, if the production of this study was somewhat predictable, what was always on the cards was the source of the amazing claim, namely, Melbourne Institute of Applied Economic and Social Research at the University of Melbourne. This is the same source a Government's discredited evidence put in the Hamzy case, and while it's unlikely that the Government will ever put this report before a court of law for examination, it can, at least, be put to some scrutiny here in this Parliament.

The Institute's Assistant Director, Mr Don Harding, authored the Melbourne Institute's report.

Mr Harding's report is based on a telephone survey of small and medium sized businesses, and he prefaces his report with mention of earlier surveys of business and employers that touch on unfair dismissal laws. Unfortunately for Mr Harding, in earlier surveys, unfair dismissal laws barely rated mention as deterrent to hiring decisions. However, to Mr Harding's credit he does cite the results of earlier studies, and because, for reasons I will give later, Labor finds the results of these studies more reliable than Mr Harding's survey, I will inform the Parliament of what was found in:

1. The July 2002 Yellow Pages Small/Medium Business Questionnaire; and

2. The 1995 Australian Workplace Industrial Relations Survey (“AWIRS”).

In the Yellow Pages survey 5.6 per cent of firms mentioned any of the following as a barrier to hiring new staff: employment conditions, unfair dismissal/ industrial relations and safety and health. Now, remember, unfair dismissal was lumped in with a bundle of other factors and one could assume that this figure is on the high side. And this assumption is borne out when one reconciles the Yellow Pages' result with the AWIRS findings.

According to the AWIRS survey, only 1.4% of respondents mentioned unfair dismissal laws as a discrete impediment to taking on new employees.

Of course, these are not the sort of figures that would not impress a panel of judges, nor any other free thinking person. 1.4 per cent hardly stands out as crushing figure.

So Mr Harding takes another tack, instead of asking employers freely to volunteer what they thought were influences on their hiring decisions, he resorted to push polling.

Mr Harding argues that a more reliable result can be obtained by prompt and suggestion, and that's what he does. For example, in the conduct of his telephone survey, when interviewers called up businesses seeking a dollar figure from the business on the cost in time and money of complying with the law and reducing the business's potential for exposure to an unfair dismissal action the interviewers were given the following instruction, and I quote:

Instruction to interviewer. If response is that it is hard to quantify costs prompt by asking for best estimate. If response is that costs vary from year to year ask for cost in best year and cost in worst year and take midpoint. If a range is given code midpoint of the range.

After all this prompting, it should be pointed out that only about a third of businesses surveyed said that there was an increase in costs associated with unfair dismissal laws; however, buried in the report was the fact that a greater proportion of employers surveyed said that unfair dismissal laws had no effect on the bottom line, despite the prompting.

Moving along, when looking at the amounts proffered by employers after all this prompting there appears to be no rhyme or reason in the results. While Mr Harding said care should be taken in relying on these figures, some of them bounce around so wildly one can only be sceptical. Take the figures given for the costs of unfair dismissal laws on businesses in the finance industry. The average cost per full-time employee in the finance industry broken up by the size of the business, the sizes given are 1 to 5 employees; 6 to 10 employees; 11 to 20; 21 to 50; 51 to 100; and 100 plus employees. Now one would expect some fluctuation in the reported costs associated with unfair dismissal on different sized businesses. In the House Mr McClelland mentioned the finance industry, here I might go to the accommodation industry where you might expect some discernable pattern, but I can't find it. The figures are:

1 to 5 employees: the average cost is $1087 per employee

6 to 10 employees: the average cost is $1027* per employee

11 to 20: the average cost is $453* per employee

21 to 50: the average cost is $295* per employee

51 to 100: the average cost is $0* per employee

For more than 100 employees: the average cost is $0* per employee

* Note average is based on very few observations and should be treated with great care.

The figures are really useless for any statistical purposes or for any conclusions to be drawn from them.

Going across industries, for businesses with I to 5 employees the figures jump about from $44 per employee in the wholesale trade to $1087 in accommodation. Overall, the figure given per employee per year appeared to range from $30 000 to zero! Despite no apparent science or reason in these reported amounts, Mr Harding still averaged them out to $296 per employee per year then multiplied this figure with the number of employees in small and medium sized businesses in Australia. This then gives a figure of about $1.3 billion, which was then picked up and put as the banner on the Minister's press release on the report. While the Minister buys this figure, we on this side of the House don't.

Labor stands committed to the ideal that workers deserve rights and justice, so with this Bill we won't vote with the Government to take rights away from workers that the Courts have given them. The exemption from unfair dismissal for “employees engaged on a casual basis for a short period” is the standard set by the International Labour Organisation's Termination of Employment Convention 1982, article 2.2(c). This Convention has been ratified by Australia and is a schedule to the Act. Labor has no intention of derogating from this.

It is also interesting to note that in 1999 the OECD compared the standard of employment protection legislation in member states, and ranked the standard from I to 26 with 1 being the least strict and 26 being the strictest. Australia ranked 4th, behind the US, the UK and New Zealand.

We do not stand out as a paragon of employee rights, we fall at the other end of the scale, but this is, apparently not good enough for this Government.

The Short-term casual exemption, a history

With this Bill the Government proposes to exclude casual employees of less than 12 months' regular and systematic service and who do not have a reasonable expectation of continuing employment.

In 1994, as the Minister acknowledged in his Second Reading Speech, Labor introduced an exemption for casual employees engaged for a short period. What he failed to mention was that in Labor's view a short period was 6 months, not 12 months.

In 1996, the Government broadened the exclusion to 12 months. Shortly thereafter, Labor moved to disallow the Government's amendment. We did so on that basis that 12 months is not, on any reasonable view, a “short period” of casual employment, and such a period would promote further casualisation in the workforce.

In a deal struck at the eleventh hour, the Democrats allowed the Government's amendment to stand. However, the Democrats did so on one important condition—that the Minister review the regulations after 12 months and that the Democrats be given an opportunity to review empirical evidence of the operation of the exclusion after that period. It is now more than 50 months since that occurred and we're all still waiting to see the evidence.

It is important to be clear about the impact of a 12-month exclusion.

Australia is close to leading the world in the trend towards casualisation of the workforce. According to the ABS, in 1982 there were 700,000 casual employees in Australia. By the turn of the millennium, there were 2.1 million. Casual employees now represent more than one quarter of the labour force.

The reasons for this trend are complex and its consequences are profound. Of course, this Government has shown no interest in exploring them.

But there can be no doubt, even from the Government, that federal legislation should not provide an artificial incentive to employers to prolong the period in which a person is employed as a casual unnecessarily. The Government professes to be concerned about the distorting effects of government regulation on people's economic behaviour.

We say that the Government's 12-month exclusion has precisely such an effect. If a casual employee has been working for 6 months and has every expectation their employment will continue indefinitely, it is likely that the Government's 12-month exclusion is playing some part in the employer's decision to maintain the employee's casual status.

The Government will claim it has addressed this concern by denying the benefit of the exclusion to an employer where a substantial purpose of holding the employee as a casual is to avoid their obligations under the Act. As I recall, the Democrats extracted this exemption from the Government. The Opposition does not regard this as an adequate protection. In the first place, it does nothing to correct the message that a 12-month exclusion sends to employers. In the second place, it only has any real effect if an employee can persuade the Commission, or a court, after lengthy evidence and argument, that of all the reasons advanced by the employer for keeping the employee's status as casual, a substantial purpose was to avoid the operation of the Act.

The Opposition recognises that an employer may have legitimate reasons for employing a person as a casual. What is often missed, and is certainly never mentioned by this Government, is that an employee has legitimate reasons for wanting security and stability in their employment. People simply cannot make major economic decisions without a measure of employment security.

One of the Minister's favourite themes is that people can prosper if they are prepared to take a few economic risks. No one would disagree with that. Sometimes risks produces rewards. Sometimes they don't. But no person, be they an employee or an employer, is likely to take those risks without an understanding of the security involved.

The Government should be concerned to ensure that risk and security are shared equitably. Instead, with measures like this, it has shown itself to be more interested in having employees bear all the risk, with illusory and unfounded promises of job creation down the track.

For these reasons, the Opposition will move an amendment to restore the 6-month period. Our amendment will also allow this period to be reduced by agreement between an employer and employee in an award or certified agreement. This is consistent with the Government's own principle of allowing employers and employees to agree on terms of employment in the workplace.

Fixed-term employees

We note that the Government proposes to exclude employees “engaged under a contract of employment for a specified period of time”.

We are concerned that this exclusion does not require or impose any limit on the period of time, or require that the period of time be reasonable.

Under Labor, the regulations originally required that the period of time be reasonable. They were later amended by Labor to require the period to be less than six months.

The reason for this was simple. An employer should not be given an incentive to avoid their obligations under unfair dismissal legislation by placing an employee on a fixed-term contract, when in reality their employment will be ongoing.

Even the Productivity Commission has recognised this danger. In its research paper on fixed-term employment published in February this year, the Commission acknowledged:

“an employer may believe that they can terminate a fixed-term employee at any point during their contract without the employee being able to take legal action for unfair dismissal. The employer may therefore perceive that fixed-term contract employees are less costly than ongoing employees to terminate.”

In 1996, the Coalition Government removed the 6-month requirement from the regulations. To the Coalition's way of thinking, it makes no difference if an employee is engaged for a period of six months or six years—they should all be denied access to remedies for unfair dismissal. In reality, the Government was saying to employers: “Here is your ticket out of unfair dismissal legislation. Simply keep people on fixed-term contracts. Whatever you do, don't make them permanent.” And this is a Government that talks about job security.

Appropriately, the Opposition moved to disallow the removal of the requirement from the regulations. We remain concerned about this provision.

As I mentioned earlier, we do not think the “substantial purpose” provision meets our concern.

We note, however, that courts have taken a sensible and realistic view of whether an employee has been engaged on a contract for a specified period of time. For example, they have taken the view that the exclusion might not apply to an employee engaged under a contract, which contains a power to dismiss the employee with notice, nor to an employee who has been engaged continuously under a series of fixed-term contracts.

We also note the paucity of systematic and ongoing data on the use of fixed-term contracts. It was a matter usefully addressed in the Australian Workplace Industrial Relations Survey in 1995. It is essential that the Government carries out another such survey in the near future and ensures that the survey examines this issue.

Because the courts have taken a sensible approach to the issue—in contrast to the Government—the Opposition will not move an amendment to this provision. However, we will continue to examine the extent to which the Government's provision has the perverse effect of encouraging the use of fixed-term contracts to circumvent the unfair dismissal legislation.

The filing fee

We are opposed to the inclusion of the filing fee for unfair dismissal applications in the Workplace Relations Act.

The Government first introduced the filing fee by regulation in 1996. It claimed then, as it does now, to be acting to deter frivolous and vexatious applications.

It is worth reminding the Government what the Access to Justice Advisory Committee said about filing fees in its 1994 report on access to justice:

“Court fees may be used as a means of deterring frivolous litigation. Clearly, however, the deterrent effect will vary according to the means of the particular litigant. The present fee structure may well deter poorer litigants with substantial claims; yet not deter wealthy litigants from vexatious or tactical use of the courts. If courts fees are to be used as a deterrent, there should be a closer link between the fee and the degree of frivolity of the case. For example, one approach is to reduce or even remove fees, subject to a power in the court or tribunal to order cost recovery where an application is judged to be frivolous or vexatious.”

Labor moved to disallow the filing fee in 1996 on precisely this basis. A person with a substantial claim and limited resources may well be deterred, while a person with a frivolous claim and ample resources would not be. A filing fee is a blunt instrument, with a real potential to deny access to justice.

The real motive of the Government in moving this amendment is to remove the filing fee from parliamentary scrutiny. Presently, the fee is contained in a regulation that will cease to have effect on 31 December 2003. Given the potential for any court fee to act as a barrier to justice, it is appropriate that the Government remain accountable to Parliament when imposing them. It is quite extraordinary for a filing fee to be prescribed in legislation passed by Parliament.

Like most of the Government's ideas in this area, entrenching the filing fee is a political gesture, rather than genuine attempts to ensure a fair go all round for employers and employees.

Labor will move an amendment removing this provision from the Bill. If the Government wants to make the fee permanent, it can seek to do so by regulation when the present regulation expires.


This Bill exemplifies the Government's approach to workplace relations, where workers have rights these must be reduced, where employers have obligations these must be reduced. Labor will continue to do all it can to stop this spiral. Casual employees have scant protection under the law now; there is simply no case to reduce further what little protection they have.