SUBMISSION TO FAIR WORK ACT REVIEW PANEL
SMALL BUSINESS AND UNFAIR DISMISSAL PROTECTION
The issue of the application of unfair dismissal laws to small businesses has beset the
federal regulatory regime since the inception of Federal unfair dismissal law in the
Industrial Relations Reform Act 1993 (Cth).
The perceived interests of small business employers have been accommodated in a
variety of ways or at least there have been measures aimed at accommodating the
interests of small businesses and their employees since 1993. The different ways include
exemptions based on business size, the tribunal being required to take into account the
size of the business in considering the unfair dismissal application and whether there was
a dedicated human resources department within the enterprise.
My submission is that the Fair Work Act’s current approach in treating small business
employees as falling outside the application of the unfair dismissal laws if there is
compliance with a Small Business Fair Dismissal Code as provided for by the Act, is a
more sophisticated and nuanced approach and, although not perfect, is the most workable
approach to date. The definition of small business employer embraces true small
businesses and there is also a requirement for a longer qualifying period of employment
by the small business employee before they are eligible to make an application for unfair
dismissal under the Act.
The current system has worked well taking into account the following:
1. The simplicity of the Small Business Fair Dismissal Code:
The simplicity of the Small Business Fair Dismissal Code has lead to acceptance
of that form of the Code and certainly no strong calls for its revision. This can be
contrasted to the similar Code in the United Kingdom. Over time the UK code
had become so long, detailed and comprehensive that it was ultimately unwieldy
and unworkable and, after calls to make it more practical for small business
employers and employees, it was revised and scaled down. The Australian Code
has been expressed in terms of general principles to be applied and so has avoided
the unnecessary detail of the UK Code.
2. The cases before the Fair Work Australia tribunal:
To the extent which may be judged from the cases which have occurred in the
Fair Work Australia tribunal, there does appear to be a reasonable degree of
compliance with the Code by small business employers. There have been a
relatively small number of cases which have come before the Fair Work Australia
tribunal in which it has been asserted by an employee that the Code has not been
complied with. Based on a review of those cases, in most instances, the tribunal
has found that there has been compliance with the Small Business Fair Dismissal
Code, therefore precluding a review of the small business employer’s decision to
dismiss. These cases are exemplified by the following examples in which the Fair
Work Australia tribunal ruled that there was compliance with the Code, thus
affecting the ability of the applicant to apply for unfair dismissal relief:-
Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading
Trust T/A Banana Tree Café [2010] FWA 7891
Ms Tania Nielson v Cadle Park Pty Ltd [2009] FWA 1737
Ms Kathryn Docking v Raine & Horne Midland - Mantova Holdings Pty
Ltd [2010] FWA 195
Jan Knecht v Renaissance Parquet [2011] FWA 1079
Mr Mark Scott v Aqua Environmental Pty Ltd T/A Aqua Environmental
[2011] FWA 3713.
3. The genuine access to ‘review’ of dismissal decisions:
In cases where the Fair Work Australia tribunal has ruled that there has not been
compliance with the Code, the effect is then to provide genuine access to a
‘review’ of the dismissal by the independent tribunal and to enable the possibility
of a remedy for these dismissed persons, see, eg, Mr Gregory Wayne Jarvis v
Anderson Plumbing & Roofing Pty Limited [2010] FWA 8896. There is no
precluding of inquiry into the fairness of the dismissal simply because the
employer business meets the small business definition and has claimed to comply
with the Code, but as indicated above, the majority of cases have found there has
been compliance with the Code.
Overall balancing of interests:
Overall, therefore, there is a reasonable balance between employer interests and
employee interests. It seems that the simply-drafted Code acts to inform employers
and employees of the requisite unfair dismissal standards and I submit that this
approach should not be changed. To prevent small business unfair dismissal claims
would lead to a two-tiered approach which was seen under Work Choices – one group
entitled to fair dismissal and another group excluded.
Finally, it should be emphasised that anti-discrimination legislation at state and
federal levels do not exempt employers from their operation according to size of the
employer. By way of contrast in approach, the Fair Work Act 2009 (Cth) does make
concessions to small businesses and strives for balancing of the interests of the
various parties affected. Whilst the two approaches are in stark contrast, the Fair
Work Act’s current approach may be seen as giving rise to a reasonable balance of
rights and obligations, in the light of the different objectives of anti-discrimination
legislation compared to federal industrial relations legislation.
PROFESSOR MARILYN PITTARD,
Faculty of Law, Monash University
16 February 2012