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Tuesday, 27 June 2000
Page: 18323

Mr REITH (Minister for Employment, Workplace Relations and Small Business) (4:23 PM) —I move:

That the bill be now read a second time.

The coalition's 1998 workplace relations election policy More Jobs, Better Pay contained commitments to further legislative reform in our second term of office.

These commitments were reflected in four pieces of legislation already introduced by the government since October 1998 dealing with small business unfair dismissal exemptions, superannuation, youth wages and multiple reform issues in the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999.

That bill was passed by the House of Representatives on 14 October 1999 but was subsequently blocked by the combined opposition of the Labor Party and the Australian Democrats in the Senate.

Since opposing the 1999 more jobs, better pay bill last November, the Democrats have publicly indicated that they prefer to deal with the contents of that bill on an issue by issue basis, not as an omnibus piece of legislation.

In a speech to the ACT Industrial Relations Society on 6 April 2000, Democrats spokesman Senator Murray said:

In my view only technical bills should be general and broad ranging. Policy bills should be specific. It is far better for a reformist government to deal with one issue at a time on a specific and limited basis.

And, again, in the course of the inquiry by the Senate Employment, Workplace Relations, Small Business and Education Legislation Committee into the bill, Senator Murray said:

It seems to me the act can be conveniently broken up into major sectors . . . I find these kind of omnibus bills result in a lot of negativity and it is very difficult to progress them.

Taking these sentiments into account, the government has sought to accommodate the preferences of the Australian Democrats by proceeding, other than on technical issues, with an issue by issue consideration of policy matters arising from the more jobs, better pay bill 1999.

The first of these issue by issue bills was a bill dealing with pattern bargaining and related matters which passed the House on 1 June 2000 but which is now also being opposed in the Senate by the Labor Party and, so far, by the Democrats.

The government is now in a position to introduce further single issue bills drawn from the more jobs, better pay bill 1999.

This bill proposes amendments to the termination of employment provisions of the Workplace Relations Act 1996. The current provisions in the act are based on the concept of a `fair go all round'. This bill is designed to maintain the fair balance between the rights of employees and employers while addressing some of the procedural problems that have become evident during the operation of the act. The bill contains a range of provisions designed to reinforce disincentives to speculative and unmeritorious unfair dismissal claims, to introduce greater rigour into the processing by the Australian Industrial Relations Commission of unfair dismissal claims and to remove unnecessary procedural burdens that unfair dismissal applications place on employers.

In the Australian Democrats minority report of the Senate inquiry into the more jobs, better pay bill, Senator Murray stated that:

. . . [t]he Democrats have consistently opposed removing the right to access unfair dismissal provisions, but have always supported improvements to process.

In a speech to the Victorian Employers Chamber of Commerce and Industry on 27 October 1999, Senator Lees stated:

I think that there are still some problems in the way that unfair dismissal applications are dealt with by the Commission.

She then went on to say:

But there is some scope at least, to simplify the Commission's proceedings to prevent employers being forced to pay `hush' money to litigious but unworthy employees.

Discouraging abuses of the process and unmeritorious and speculative claims

In the Australian Democrats minority report into the Workplace Relations Amendment (Unfair Dismissals) Bill 1998, Senator Murray acknowledged that some parties to termination of employment applications engage in `deliberate time wasting' and impose `cost pressure . . . for tactical reasons'.

This phenomenon is also recognised by the Australian Industrial Relations Commission. In a recent decision involving an application for costs against a legal practitioner whose conduct had resulted in the other side incurring costs unnecessarily, the commission suggested that a reconsideration of the limits currently imposed by the current costs provisions may be in the interests of justice.

Senator Murray further highlighted the problem in his speech to the Industrial Relations Society of New South Wales, on 19 May 2000, when he said:

. . . we acknowledge that the unfair dismissal laws are to some degree being abused with speculative claims by employees, sometimes encouraged by lawyers on contingency fees. I have constantly stated the Democrats view that it is necessary to reform process and cost issues in unfair dismissal cases. I think this is an area of law that does need some further refinement to ensure the laws do provide the `fair go all round' they were designed to deliver.

This bill proposes to make amendments that will ensure that the laws do provide the `fair go all round'. In response to these concerns, the costs provisions of the act will be amended to allow the AIRC to make orders for costs against parties in respect of a wider range of proceedings and in relation to a wider range of conduct.

In the Senate minority report into the Workplace Relations Amendment (Unfair Dismissals) Bill, Senator Murray also made the following recommendations:

(b) if either party, in the opinion of the Commission, is abusing the process, deliberately wasting time or deliberately applying cost pressures, the Commission should be given the power to award costs against that party's legal practitioners, or those advising the applicant or respondent, which should specifically be precluded from recovery from the client; and

(d) the Commission must have regard to disciplining any legal firm whose ethical approach is coloured by commercial predation.

Unfortunately, conferring power on the commission to award costs against third parties is probably beyond the Commonwealth's constitutional power. Hence, to give effect to the spirit of Senator Murray's recommendations, the bill proposes to insert a new series of provisions which will contain a prohibition on advisers from encouraging people from instituting or pursuing speculative or unmeritorious unfair dismissal claims. Where an adviser contravenes this prohibition, a respondent to an unfair dismissal claim will be able to apply to the Federal Court for a penalty against that adviser.

The bill gives the commission the discretion to require an applicant who is seeking a remedy in respect of termination of employment to provide security for costs. This will also serve as a disincentive to unmeritorious or speculative claims.

The amendments also address the role of legal representatives and advisers by enabling the commission to ascertain whether they are engaged on a costs or contingency arrangement. This is in response to another of Senator Murray's recommendations in his report into the Workplace Relations Amendment (Unfair Dismissals) Bill 1998, in which he stated that:

... cases being conducted on a `no win, no fee, contingency' basis should be made a matter of public record.

Streamlining the process

A number of amendments in the bill are designed to improve the efficiency of the process for conciliating and arbitrating claims.

To help ensure the efficient processing of claims, the bill confirms the commission may hear applications by the respondent to have an application dismissed for want of jurisdiction at any time. It also confers express power on the commission to dismiss an application where the applicant fails to attend a hearing. The bill also includes amendments to clarify the circumstances in which out of time applications should be accepted.

To improve the effectiveness of the conciliation process and reduce the number of unmeritorious cases which proceed to arbitration, the bill also includes amendments to the requirements for the issuing of conciliation certificates. These proposals, which have been amended to take into account concerns expressed by the Australian Democrats, place an onus on the commission to make a finding at the conciliation stage and prevent unfair dismissal applications from proceeding to arbitration where the commission is satisfied that the applicant does not have a substantial prospect of success. This will enable parties to have a clearer view of the merits of the case so it will be more likely that applications are resolved early, either by settlement between the parties or by being dismissed by the conciliator, and before large costs are incurred.

Taking the needs of employers into account

Unfair dismissal claims can be a particular burden upon certain types of businesses, especially small businesses, and in certain circumstances. The bill contains a number of provisions to assist in reducing such special burdens.

Crucial amongst these is the proposal to require the commission when determining whether a termination was harsh, unjust or reasonable to have regard to the size of an employer's operations and the degree to which this would be likely to affect the procedures followed by the employer. This would enable the commission, for example where a respondent employer is a business which is too small to have a separate human resources function, to determine that different procedures may be reasonable for such a small business compared to larger businesses with greater resources, specialised personnel and greater capacity for more formal procedures. These provisions would not deny employees of smaller businesses a fair go, but would recognise that expectations as to administrative processes need not be the same in smaller businesses as they are in larger businesses.

Termination on the ground of operational requirements presents a particular situation in which it is inappropriate for there to be scope for unfair dismissal claims to be made. Such situations of redundancy are difficult for employers and employees alike and, if an employer establishes that terminations were genuinely required for operational reasons, the employer should not then be required to justify the fairness of those terminations in the commission. It will not prevent, however, employees making applications in regard to unlawful termination in such circumstances.

Establishing certainty in jurisdiction

The bill also proposes amendments to ensure certainty in jurisdiction. The act is designed to ensure that `federal award employees' who were not employed by an employer within the constitutional reach of the unfair dismissal provisions of the act are still able to apply for a state unfair dismissal remedy. The unintended effect of these amendments has been to enable forum shopping between federal and state jurisdictions. This undermines the authority of the legislation, results in inconsistency of treatment and creates considerable uncertainty for employers concerning their obligations. Amendments in the bill will remove the scope for forum shopping by potential applicants.

Similar uncertainty for employers and scope for double jeopardy situations can arise under the current provisions, which enable an employee to bring multiple actions under the Workplace Relations Act in respect of the same termination. The bill proposes to ensure that only a single application can be made in respect of a dismissal, ensuring that once an employee has had his or her `day in court' then that settles the matter conclusively.

Two other amendments in the bill aimed at ensuring certainty in jurisdiction will make it clear, firstly, that independent contractors do not have a remedy for termination of employment, consistent with the original intent of the Workplace Relations Act, and, secondly, that the demotion of an employee does not constitute termination of employment where that demotion does not result in a significant reduction in remuneration and the employee continues to work for that employer.

In addition, the bill proposes amendments to preclude the commission and the Federal Court from taking certain non-economic factors into account in determining compensation in lieu of reinstatement.

The bill also proposes to make a number of minor and technical amendments.

In introducing this bill I am clearly indicating that the government is determined to proceed on an issue in respect of which there appears to be Democrat support. The government is prepared to consider amendments to refine the detail of the procedures proposed by the bill, if it is the detail that is the barrier to the bill's passage through the parliament.

This bill will build on the objects of the 1996 reforms and improve the process of dealing with termination of employment claims in the interests of employers, employees and small business.

Of course this matter has already been referred to a Senate committee. However, the government would welcome further Senate scrutiny provided that such a committee will review the bill in order to achieve a scheme that truly ensures a `fair go all round'.

The right of the coalition to implement its workplace relations mandate, subject to constructive Senate review, is a principle that has been acknowledged by the Democrats—and one that they should now act upon.

On 15 June 1996 the then Leader of the Australian Democrats, now Labor shadow Minister Kernot, said on the issue of workplace relations:

The Democrats accept that the Government has been elected to govern and that it has its right to present its legislative program to the Parliament for consideration. But the Democrats have been elected to do a job, and that is to closely scrutinise legislation to ensure that it is fair, and workable and the best solution to an identified problem.

... the Democrats have no intention of being obstructionist in this Senate. As we have done for 15 years of holding balance of power, we will carefully review legislation, suggesting ways to make it work better if possible.

Adopting a `just say no' attitude to this bill would be inconsistent with not only the proper role of the Senate as a House of Review, but also breach the principle under which the Democrats themselves marked out their past approach to these issues, at least until 1997.

I therefore commend this bill to the House and I present the explanatory memorandum to the bill.

Debate (on motion by Mr Martin Ferguson) adjourned.