Unfair dismissal win for small business – one warning and then it’s the sack

Workplace Minister Julia Gillard has unveiled new unfair dismissal laws that will allow companies with less than 15 employees to sack a worker after giving them one warning and time to change their behaviour.

Workplace Minister Julia Gillard has unveiled new unfair dismissal laws that will allow companies with less than 15 employees to sack a worker after giving them one warning and time to change their behaviour.

The laws are seen as a big win for small business, which had feared aspects of the Rudd Government’s roll-back of the protection for small companies under the Howard government’s WorkChoices regime. Under those laws, every business with 100 employees or less is exempt from unfair dismissal laws.

Under Gillard’s proposed laws, an employee of a small business with less than 15 workers will only be able to claim for unfair dismissal after they have been employed for at least 12 months.

To dismiss someone fairly after 12 months the employer will have to comply with the new Fair Dismissal Code for Small Business, a simple six-paragraph checklist.

The two key things a business operator must do to comply with the code are:

• Give the employee a warning, based on a reason that validly relates to the employee’s conduct or capacity to do the job.
• Provide a reasonable opportunity for the employee to improve his or her performance.

“It’s as simple as that,” Gillard said yesterday. “Multiple warnings are not required. There is no requirement for ‘three strikes and you’re out’. It is desirable, but not necessary, for a warning to be in writing.”

Employers can still sack workers instantly for serious misconduct such as theft, fraud, violence and serious breaches of occupational health and safety procedures.

But they will not be able to sack employees for “operational reasons” such as a business downturn or change is the nature of a worker’s role.

All unfair dismissal disputes will be handled by new arbitration body Fair Work Australia, which Gillard says will use “fast and informal processes”. Legal representation will be allowed only in exceptional circumstances.

Compensation will be capped at six months’ pay, with the full amount only available for the most serious cases.

Gillard plans to introduce the new unfair dismissal laws on 1 July, 2009, with the rest of the new workplace relations system set to come into force on 1 January 2010.

New collective bargaining rules

The other key part of Gillard’s new workplace laws is an increased focused on collective bargaining.

Fair Work Australia will have the power to ensure collective bargaining is conducted in good faith by making good faith bargaining orders that can direct parties to meet, disclose relevant information, consider proposals and respond to them, and refrain from unfair conduct.

However, workers in low-paid industries such as childcare, community work, security and cleaning will be able to band together and have an industry-wide bargaining agreement negotiated on their behalf by a union. Under the new laws, a union or bargaining representative will be able to apply to Fair Work Australia for entry into a new “low-paid stream” to bargain with a specified list of employers.

Content of agreements

Labor’s new legislation will allow unions to bargain over a much wider range of content than they could under WorkChoices.

While workplace agreements can only include matters relating to employees, employers and unions, agreements will be able to include matters like training salary sacrifice arrangements, health insurance, childcare and payroll deductions of union dues for union members.

“But matters that are properly the prerogative of management – like decisions about closing an unprofitable plant or using a preferred supplier – will not be included in enterprise agreements, as has always been the case,” Gillard said.

Industrial action

The new workplace laws will seek to establish clear differences between protected and unprotected industrial action.

Protected action will be allowed during bargaining periods under strict rules, including a secret ballot of employees and three days’ notice of intention to take the action.

Unprotected action such as snap bans, wildcat strikes or industrial action for social or community issues will not be allowed.

Employees will still face a mandatory minimum deduction of four hours’ pay for any incident of unprotected industrial action.

Related stories:

• Business groups cautiously welcome new IR regime

Click here to see the Small Business Fair Dismissal Code and checklist