Labor sacking code fog

Labor’s proposed “fair dismissal code”, the solution it has attempted to sell to SMEs as compensation for its promise to remove their current exemption from unfair dismissal laws, is mired in uncertainty, with employers entitled to know far more about the details before Labor is elected.

Labor says, if elected, it will establish a small business working group to prepare a set of guidelines on how to fairly dismiss employees.

According to Labor’s Forward with Fairness policy document, if an employee is sacked in accordance with the proposed code, “the dismissal will be regarded as a fair dismissal and no compensation will be payable”.

But given that employers are unlikely to see the detail of the code before in this year’s federal election, they are entitled to ask: will the code be workable, and will it be an improvement on the current legal arrangements governing unfair dismissal?

According to Peter Vitale, the head of CCI Victoria Legal Services, constructing a viable legal code to govern the endless circumstances that can surround a particular dismissal situation is fraught with difficulty.

“Trying to codify obligations that have been interpreted with a great deal of flexibility by commissions and courts down into simple few steps will not be easy,” Vitale says. “We will probably end up with a situation where a dismissal that under current rules is considered fair won’t be, while conversely you might get something that is currently deemed unfair that will become fair.”

And unavoidably, Vitale says, where there is legal confusion, in will rush the lawyers.

“For SMEs to use, it will have to be a very basic, clearly understood set of rules which inevitably will compromise some of the currently understood wisdom – eventually people might get used to it, but in the meantime every complication will be an invitation for lawyers to get involved,” Vitale says.

Another crucial issue that remains unanswered is whether the code will merely be a set of aspirational guidelines or a legally binding document, says Mathew Guyer, a senior associate in the employment law division of the National Retail Association.

“It is unrealistic to think that the complicated issues associated each particular dismissal case can be reduced down to a simple guide for small businesses,” Guyer says. “At the moment we don’t know if it will be a document to be complied with, a guide book or something that will provide legal protection to an employer that has sacked someone – that would be just about impossible.”

As more and more questions rise, pressure will increase on Labor to provide more detail on its fair dismissal code before the election. Australian Industry Group national industrial relation adviser Stephen Smith says it is difficult for business groups to take a position with the information they currently have.

“I think it is a good idea to have simple guidelines for small businesses, but at this stage the whole concept of code is just one line in Labor’s policy – even if they are elected, we would want to consider the issue before we expressed a view on the content it should have,” Smith says.

Fair enough – but in the meantime, how should SME owners and their supporters make up their mind on how to vote when the election comes?