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Friday, 11 October 1996
Page: 4014

Senator WATSON(10.45 a.m.) —I believe the coalition's Workplace Relations and Other Legislation Amendment Bill is an outstanding piece of legislation, representing a major overhauling, simplification and streamlining of a very complex area of industrial relations in Australia. I also think it is appropriate to use this opportunity to commend the Hon. Peter Reith for his diligent efforts in presenting this bill to parliament so early in the life of the new government and in a form which so faithfully reflects the industrial relations policy the coalition parties put to the people of Australia in the lead-up to the election on 2 March.

I want to confine my remarks largely to schedule 7, relating to the termination of employment, commonly known as unfair dismissal. This section relates to one of the most controversial aspects of earlier legislation which was brought in by the previous ALP government in the Industrial Relations Reform Act 1993. The vociferous criticism it attracted was only partly addressed by that government's amendments in 1994 and also in 1995.

Before the last election, the then ALP government ran its usual scare tactics. The then industrial relations minister, the Hon. Laurie Brereton, unable to get the legislation right himself, tried to avoid wide-ranging criticism by declaring that a coalition government would scrap the unfair dismissal law—scare tactics typical of the Labor Party. We are used to that.

What have they been doing in the lead-up to the budget? Precious little except scaring people in Australia, frightening off potential investors in Australia and undermining confidence in the Australian economy with outrageous claims that they know have absolutely no substance. As we know, they claimed that we were going to scrap the unfair dismissal legislation. This was an environment intended to create uncertainty and undermine people's confidence. Unfortunately, they paid lip service to the truth. When criticism zeroed in on their botched up legislation, I believe they just had no answers. So we have a number of outrageous but predictable claims from the Labor Party.

The point I wish to make is that we are not scrapping the unfair dismissal legislation. That is a surprise to so many. Protection of workers unfairly dismissed by their employers—we all know this—is still here in this legislation to protect the genuine employee. What Peter Reith has done in relation to these unfair dismissal laws—it is important that all Australians know this—is streamline, simplify and make them a lot fairer to all Australians, both to employees and to those who pay the bills, the employers. This is something the Labor Party could not do, despite their many attempts.

I submit that Labor just did not listen. This was acknowledged, may I say very graciously, by their leader, Kim Beazley, when he was interviewed by the ABC in Launceston on 7 August. I submit that our side of politics, the Liberal-National party coalition, has listened. We have consulted as we promised and this new legislation is a response to that listening and to that consultation, particularly by the minister, the Hon. Peter Reith.

Up until now, it has been the process by which the employee has been dismissed which has been of paramount significance in the federal legislation. The employer has been forced to keep to the letter of the law while the basic reason for the dismissal has often become insignificant. As a result, in cases brought before the industrial court more often weight was given to the employee's side of the story than to the employer's.

This sort of overemphasis on whether the correct procedures have been taken to dismiss an unsatisfactory employee has attracted a lot of criticism. It has been seen to be far too legalistic, far too inflexible and far too narrow. This is largely why there has been such an outcry for a fair go all round. I believe that the coalition, through this legislation before us today, has responded to this outcry across the community, and I believe that because of this concern employers have been reluctant to take on additional employees.

The previous government had to amend their legislation three times in two years and still they could not get it right. With the most recent amendments they claimed that the changes would make the handling of unfair dismissal claims simpler, more effective and less legalistic while still guaranteeing protection for employees. They were meant to ensure that the court would take into account all the aspects of the case when arriving at a decision; however, none of their amendments went far enough, nor did they satisfactorily remedy the faults in the original legislation.

The creation of a federal unfair dismissal jurisdiction was one of the major features of the Industrial Relations Reform Act 1993. Power was given to the newly created Industrial Relations Court of Australia to deal with unfair dismissal from employment in prescribed circumstances; however, the Labor Party was forced to amend their unlawful termination provisions of the reform act significantly in two important respects.

In the amendment of 1994, access to the court's unfair dismissal jurisdiction was limited to employees who were either employed under a federal or state award or whose basic wage was no more than $60,000 per annum. This was in spite of the International Labour Organisation's convention No. 158, stating that it should apply to all branches of economic activity and to all employed persons. One of the objects of the convention was that no-one was to be excluded. But surprise, surprise, the Labor amendments at the time did exclude, and were intended to exclude, high income earners.

It is true that the employers were the ones who sought the cut-off of $60,000. But my point is that for the Labor Party to parade around saying that they are the ones who have upheld our ILO conventions while the coalition has not, I believe is quite hypocritical. I have just given you a good example to explain.

Those opposite have ignored the ILO convention in the past themselves with regard to this aspect of comprehensive coverage. They also put a cap on compensation in an amendment in 1994. Where reinstatement was thought to be impractical, aggrieved persons became entitled to an amount of six months remuneration in the case of employees covered by such awards and for such non-award employees to either six months remuneration or $30,000, whichever was the lower.

Secondly, after much pressure, again from our side, a 1994 amendment changed the onus of proof from being entirely on the employer, in respect of compliance with the provisions of the act, to confining the onus of proof imposed on employers on these matters concerning the giving of valid reasons for dismissal and for proving that one or other of the specific proscribed grounds of dismissal did not apply.

Just recently the High Court has determined that the two features of the Labor Party's unfair dismissal laws actually `exceeded the external power in the constitution'. The court held that a ground that a dismissal was harsh, unjust and unreasonable and going beyond its powers is not a ground sanctioned by the Termination of Employment Convention of the ILO. It also determined that shifting the onus of proof to the employer had been beyond its jurisdiction, even while affirming that external affairs powers do have a broad reach. So the High Court upheld our view—that is, the coalition's view—that this law was excessive and too biased. What greater authority can we get in Australia than the High Court's interpretation?

The present Minister for Industrial Relations, the Hon. Peter Reith, has reiterated that the government will remain in the ILO and will continue to meet the obligations of membership. But you still get the ACTU foreign affairs spokesman, Bill Mansfield, complaining about the government's commitments to the ILO. Just let him remember that we funded a tripartite delegation to Geneva. We will cut back Labor's extravagant expenditures on the ILO and the government will give a fair go all round. But it will not bow to pressure from vested interests. It will not give into one side of the dispute at the expense of the other. It will not, as the Labor Party has done, incorporate holus-bolus into legislation everything turned out by the ILO at the expense of all the small business operators in Australia who were not represented when the previous industrial legislation was drawn up.

The ILO has particular issues to promote, as do the World Bank, the International Monetary Fund and a host of other world bodies. But we will respect our obligations to them equally and weigh up their recommendations in a judicious manner to get the most acceptable result for all Australians—that is the emphasis, for all Australians.

As Sir Raymond Ferral so rightly reminded us in the local Examiner of Tasmania of 18 March this year, the majority of nations that agreed to adopt the ILO conventions have produced entirely different regulations to the originals—regulations that in most cases provide equal care to both employer and employee.

Back in February 1993, just before the election, the previous government ratified the ILO's Termination of Employment Convention and the Termination of Employment Recommendation, convention 158, so that it could enact unfair dismissal legislation in Australia in all states by swinging into action the Commonwealth's external affairs powers. Theoretically, their legislation overrode all existing state laws. Apart from the opprobrium the use of these powers arouses in the states—the beware, Big Brother is watching you syndrome—the laws simply have not taken into account the other side of the coin.

I believe that Australians accept that there must be common Australia-wide regulations for companies. They accept that the federal government does have jurisdiction over the territories. It is the Commonwealth's corporate and territories powers which will now be used to achieve uniformity and jurisdiction in certain circumstances where Australians will accept that this should be the case.

Under this new legislation unfair, as distinct from unlawful, dismissal claims will now be held in the Australian Industrial Relations Commission, not the Industrial Relations Court. The jurisdiction of the IRC will be transferred to the Federal Court of Australia. Only where the IRC has recommended a substantive hearing will it retain its jurisdiction and only until that hearing is completed. It will, however, for constitutional reasons, continue in existence until the last IRC judge resigns his commission or retires.

The new federal laws will reduce the wrangling over which jurisdiction should operate in particular cases. The government's changes propose that the application of this legislation in unfair dismissal cases should be limited to Commonwealth employees, territory employees and workers covered by federal awards.

A new jurisdiction for the AIRC will be established which will apply only to traditional federal areas. The AIRC will now have the power to consider whether the termination of employment was harsh, unjust or unreasonable and will have the power to create new entitlements which will be enforceable in a court. The states will also be asked to ensure that their jurisdictions provide unfair dismissal arrangements which meet our international obligations.

The states arrangements for unfair dismissals have never elicited the outcry which has erupted in response to Labor's federal legislation. Many of the federal government's proposed reforms, including unfair dismissal laws, closely resemble those of my own state, Tasmania. The Tasmanian government and the Commonwealth government have continued to work closely with each other. By comparison with Labor's federal law, for example, Tasmania's legislation is so simple. It is recognised as the fairest, most flexible jurisdiction in the country. It gives the commissioner wide ranging powers to address the complaints brought before it, yet it is cheap and quick. Workers have to lodge claims for unfair dismissal with the commission within 14 days of being sacked, whereas previously there had been no time limit. The magistrates court now has the power to force employers to pay money awarded to workers.

Furthermore, changes made to Tasmania's law at the end of last year saw the adoption of the ILO convention on sacking. Part (ii) of convention 158 has now been spelt out in the act and has been supported by the Tasmanian Chamber of Commerce and Industry. It has meant that workers continue to take unfair dismissal claims to the Tasmanian Industrial Commission.

These points should be considered in the context of schedule 5 of the new Commonwealth bill. It provides that state enterprise agreements and voluntary employment agreements will no longer be automatically overridden by Commonwealth awards. Nor will the AIRC now be able to prevent a state tribunal from dealing with a dispute where this is facilitating the making of a state employment agreement. The new Commonwealth legislation proposes that a state agreement, which is usually less prescriptive, will indeed override a federal award. Contrary to the claims of some, the remedies for unfair dismissal under a state agreement will be more than adequate.

There are other important provisions in our legislation which, unfortunately, I do not have time to deal with today, but I will draw your attention to one of them. The awarding of a remedy will be at the discretion of the AIRC based on the entire circumstance of the case. Importantly, the employer is to be given a fair go because the commission must also take into account, when assessing payment, the effect on the viability of the employer's business. The employee should not be able to bankrupt his boss's business even if his boss has dismissed him unfairly. Furthermore, the fact that the employer has not carried out the termination procedures to the nth letter of the law should only be one of the factors considered in assessing whether this dismissal was unfair. Other relevant factors must be taken into account.

With the coalition's bill, the new jurisdiction is to give priority to the weighing of the industrial merits of the case—the substantive matters, not the enforcing of individual rights. These changes will make the legislation more transparent, simpler and cheaper. They comprehensively address the issues arising from the lack of trust by business, particularly in the unfair dismissal section of the previous legislation.

A very significant factor inhibiting business employing new recruits has been the ramifications of the earlier 1993 industrial reform that I referred to. The general opinion in the Australian community is that it has been too hard to get rid of the unsatisfactory employee. Fears that you would not be able to prove that the employee had refused to do the job required, had insulted customers, had negligently or wilfully damaged property or had been the object of sexual harassment charges by clients, hardened the resolve of the business people to not employ new recruits if they could possibly avoid it. The message was out there quite simply: do not employ; you might make a mistake.

We have sought to overcome all those sorts of criticisms. We as a coalition want to improve the employment opportunities in Australia. With the scenarios I have mentioned, it is not surprising that unemployment was unsatisfactorily high. I believe that this legislation will contribute in some way to reducing the unemployment level in this county and encouraging employers to take on new employees. I therefore trust that senators opposite will give their support to this legislation to ensure its passage and encourage employers to take on new employees. I commend the bill to the Senate.