TERMINATION OF EMPLOYMENT – 12 MONTHS ON

We have previously discussed the changes made to termination of employment laws under the federal Workplace Relations Act 1996 (‘Act’) with WorkChoices. It has been 12 months since these laws commenced and we thought that it may be useful to provide you with an update on how they are working and what other remedies employees are turning to where they are unable to commence unfair dismissal proceedings.

Under WorkChoices, employees are exempt from commencing unfair dismissal proceedings where the employer is a constitutional corporation with 100 or less employees. Given that there is no requirement on employers to provide their employees with information up-front on the number of employees they have, a large number of unfair dismissal claims are being dismissed in the early stages once the employer establishes to the satisfaction of the Australian Industrial Relations Commission (‘AIRC’) that they have 100 or less employees. The other main exemptions are where an employee is terminated due to “genuine operational reasons” or where their employment is terminated during the qualifying period (first six months’ of their employment).

With these new exemptions in place, there has been a massive drop in the number of employees with access to unfair dismissal proceedings. In fact it has been reported in Workplace Express that that the number of successful unfair dismissal claims being commenced by employees has fallen to an average of one a month since WorkChoices commenced. As a result, there has been a marked increase in the number of applications for “unlawful termination”, particularly on the grounds that the employee was terminated for an unlawful discriminatory reason. As of September 2006, applications for unlawful termination due to an unlawful discriminatory reason had increased to more than half of the applications seeking relief for termination of employment. These include that their employment was terminated because of, among other things, their sex, family responsibilities, religion, age, disability, sexual preference, etc. There are also other grounds for unlawful termination, including when an employee’s employment is terminated while on a temporary absence due to illness or injury.

Genuine Operational Reasons

In January, Village Cinemas Australia Pty Ltd successfully argued on appeal before the Full Bench of the Federal Court that a former manager had been made redundant for ‘genuine operational reasons’. Under the Act an employee who is terminated for genuine operational reasons, or reasons that include genuine operational reasons, cannot bring an application before the Commission for relief in respect of their termination. The bench accepted the company’s argument that the dismissal "was a direct consequence of the closure of the Doncaster cinema complex [where he worked>. In this case there was no suggestion that his employment was terminated for any other reason."

The bench said that the Commissioner at first instance was wrong in being guided by "extraneous or irrelevant matters." These matters included the employee’s 19 years of service; the fact he was multi-skilled and redeployable; that the company did not offer him a job of lower status and that, of 12 employees, he was the only one terminated when the cinema closed. The bench stated that "where, as in this case, it can be clearly established that the termination of employment was for operational reasons it is not necessary to have regard to such matters."

Unlawful Termination

In Lee v Hills Before & After School Care, a recent decision of the Federal Magistrate’s Court, it was held that employees who are absent due to workplace injuries and who take workers’ compensation leave are protected by unlawful termination provisions in the Act.

The Federal Magistrate allowed a dismissed child care worker to proceed with her unlawful termination claim after being dismissed while on workers’ compensation benefits. The employee was injured at work in October 2002 and receiving workers’ compensation payments since that time. At the time she was dismissed she had returned to work and increased her hours to a total of 20 hours per week of the 25 hours she previously worked. She continued to receive workers’ compensation payments for the remaining 5 hours per week.

Under the Act it is unlawful to dismiss an employee because of a temporary absence due to illness or injury within the meaning of the Workplace Relations Regulation (‘Regulation’). The Regulation excludes an employee from making this claim where they have been absent for more than three months, unless they are on paid sick leave. The employee had been absent from work for more than three months in the previous 12 months. The Commission considered whether the reference to paid sick leave included paid workers’ compensation leave. This needed to be clarified as there was no precedent case on this point possibly because pre- WorkChoices these cases were ran as unfair dismissal claims. The Commissioner concluded that an absence on paid workers’ compensation leave fell within the definition of sick leave in the Regulation and allowed the matter to proceed to hearing.

21 Day Time Limit

Under the Act, employees have 21 days from the date of termination to commence proceedings for unfair dismissal or unlawful termination claims. The AIRC has the discretion to extend this time period on application. Recently, in Baptist Community Services v Makenja, the Full Bench of the AIRC held that the 21-day time limit for lodging these claims may vary depending on when the employee was informed of their dismissal.

In this case the employee made an application for relief due to the termination of her employment 60 days after termination. The employee was absent on authorised annual leave between 12 May and 30 June 2006. On the 29 June 2006, the employer received a text message from the employee’s father stating that the employee was unwell and would not be able to return to work. On the 5 July 2006, the employer wrote to the employee’s home requesting her to contact them or risk being terminated. No response was received. On the 13 July 2006 a further letter was sent advising the employee that due to no-response to the previous letter her employment had been terminated. At this time the employee was in Tanzania and subsequently claimed that during the course of her annual leave she received institutionalised care. The employee believed that her father had informed her employer of this.

The Full Bench stated that the employer’s letters to the employee indicate that the employer was aware that the employee was not at the residence and probably overseas. There was also evidence of a subsequent phone call from the father where it was requested that the employee contact the employer however, the phone line was allegedly inaudible and the message may not have been conveyed. The Full Bench formed the view that the employee had not been clearly advised to contact the employer and once she was aware of her dismissal, she had acted promptly in filing her application and contacting a solicitor. Accordingly, the time for lodgement was extended to the actual date of lodgement.

Main Implications for Employers

• Protection under the Act will be afforded to employers who terminate an employee’s employment for genuine operational reasons without a need for the Court to consider the employee’s years of service; experience or whether another position was offered to the employee.
• An employee who is on workers’ compensation is deemed to be on sick leave for the purposes of the Act. Therefore, employees who are still in receipt of any workers’ compensation payments will have access to unlawful termination proceedings where their employment is terminated.
• Ensure that when terminating an employee’s employment that the employee is personally informed of the termination. Do not rely on written communication or telephone messages as this may allow the employee to successfully obtain an extension of time to file an unfair dismissal or unlawful termination claim.
• Although, you may employee 100 or less employees and be safe from unfair dismissal, your employees may have other remedies available to them, so be careful and seek advice if you are unsure.

If you have any queries in relation to this Employment Update please contact Aitken Legal.