Hurdles ahead for fair dismissal code plan

Huge challenges lie ahead for the small business groups being consulted in drafting Labor’s fair dismissal code.

There are high hopes that the code will be effective in reducing dismissal red tape and eliminating go-away money, a leading workplace relations lawyer says.

Groups such as the Council of Small Business of Australia and Restaurant and Catering Australia will tomorrow have their first meeting with Small Business Minister Craig Emerson to start work on a draft code.

Labor promised to introduce a fair dismissal code to help small business cope when the current exemption for unfair dismissal for businesses with fewer than 100 employees is abolished, a move most small business groups opposed before the last election.

But cracks have already started to emerge in the consultation process, with several groups responding negatively to reports today that the code will include a formal warning system similar to the “three strikes and you’re out” rule.

CCI Victoria Legal principal Peter Vitale says it is a common myth that large employers are currently required to warn employees three times before dismissing them to avoid an unfair dismissal claim.

The introduction of a requirement for all businesses to give three warnings before dismissing an employee would introduce less flexibility into the employment system than currently exists, Vitale says.

“There will still be issues about whether a particular warning is justified or the decision to fire was an appropriate response,” Vitale says. “I find it difficult to see how a code is going to avoid a lot of the arguments that we already have in unfair dismissal cases.”

The underlying problem is how to create a system that provides simplicity and certainty without creating so much inflexibility that both employers and employees are left unhappy.

“In short, I think they’re facing a very difficult task,” Vitale says. “‘Three strikes’ is the perfect example. All that really needs to happen is for the employee to suggest they shouldn’t have been given one of the three warnings in question, then you have an argument that needs to be resolved, and in a lot of cases that will mean an employer paying go-away money.”

Limiting the role of lawyers in the dispute resolution will bring down costs and could help minimise the role for go-away money, he says.

“Whether you can have a system where people’s rights are determined but they’re not allowed to have a representative of their choice – and at the same time get a right to natural justice – is a hard question. We will have to wait and see how they Government answers that.”