Figures from Fair Work Australia have revealed that three quarters of the unfair dismissal claims conciliated involved employers paying a financial settlement to former staff.
The new data comes just a week after the Parliamentary Secretary for School Education and Workplace Relations, Sentator Jacinta Collins, revealed a 35% increase in unfair dismissal claims under the Labor Government’s Fair Work industrial relations regime, although Collins claimed the increase was not leading to a return of “go away” money.
The new data on conciliation settlements was provided by Fair Work Australia official Bernadette O’Neill to a Senate estimates hearing held yesterday.
The figures show that of claims that were settled at conciliation with an employer payment, 28% of these were settled for less than $2,000 and 30% were settled for between $2,000 and $4,000. A further 3% of claims were settled for payments of between $20,000 and $40,000.
Previously released figures showed the number of claims in the 12 months to June 18 was 10,751, compared with 7,994 claims in 2008-09, when the Howard Government’s WorkChoices rules were still in place.
Collins said last week that in the first 11 months under the Fair Work Act, 83% of matters that were conciliated were resolved at conciliation, compared to a settlement rate of 75%.
Despite the high settlement rate, Collins says “go away” money has not made a return.
“There is no substantiated evidence that businesses are paying “go away” money to unmeritorious claims.”
However, Opposition IR spokesperson Senator Eric Abetz says the fact that 25% of cases are settled with no payment at all, and that most cases are settled for very little payment shows many cases are a “try on”.
“The fact that 25% of claims that don’t even have any money change hands shows that are a try on. But for the business – and the small business – this is down time and that costs them,” he told SmartCompany today.
“If someone has been unfairly dismissed, one would imagine that the payment would be much more than a few thousand dollars.”
He says that on top of having to pay out settlements, small businesses are also having to meet the costs of legal services and simply not being able to run their business.
However, IR lawyer Andrew Douglas Douglas Workplace & Litigation Lawyers suggests that the fact that conciliation is being used so regularly and that payments are relatively low suggests employers are getting better at managing the risk of unfair dismissal claims and avoiding litigation.
He says that many businesses struggle when dealing with difficult employees and “there are failings that have occurred with the procedural aspects because the people dealing with these employees are under-skilled, under-resources and overwhelmed by the matter.”
His advice to firms looking to minimise the potential for unfair dismissal claims is “treat the most difficult people the best” but says it is also pragmatic for business owners who become involved in a claim to make a financial provision for a settlement at conciliation.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
