New Unfair Dismissal laws from tomorrow

30 June 2009

Unfair dismissal laws change from TOMORROW.

The exemption to an unfair dismissal claim where an employer has 100 or less employees will no longer apply. This will lead to an increase in unfair dismissal claims.

The Fair Work Act which commences on 1 July, introduces some protections for ‘small business’ – being a business with 15 or less employees. Employees of a small business will have a 12 month qualifying period. If their employment is terminated during that period they will be exempt from commencing unfair dismissal proceedings. Employees of a business that has more than 15 employees will have a qualifying period of 6 months. Accordingly, employers need to use the qualifying period to ensure that an employee is suitable. If an employee is not suitable it is vital that the employee’s employment is terminated during their qualifying period.

In addition, there will be a Fair Dismissal Code for Small Business. The Code provides a procedure for small businesses to follow when dismissing an employee after the 12 month qualifying period. If followed, the Code operates as a defence to an unfair dismissal claim. The Code doesn’t require multiple warnings to be given, but says employees must be given a ‘fair go’. Where an employee is underperforming they need to be told and given a chance to improve before being dismissed. Summary dismissal is allowed where the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to warrant immediate dismissal. The Code also provides a Checklist for Small Business employers to work through.

KEY POINTS: From tomorrow employers will need to ensure they determine an employee’s suitability and dismiss any underperforming employees during their qualifying period. They must follow a fair procedure when dismissing an employee, particularly after the qualifying period has expired – and if they are a small business, follow the Fair Dismissal Code.

WILL THEY GET IT RIGHT

10 June 2009

Recently I wrote about the effect that Modern Awards will have on some industries, in particular the smaller retail and restaurant and catering industries.

The published Modern Awards for these industries are designed to apply to the industry as a whole and don’t take into account small business, nor that they are currently covered by awards that don’t impose hefty penalty rates.

On 29 May 2009, the Minister of Employment and Workplace Relations, wrote to the Australian Industrial Relations Commission instructing them to create an award for the restaurant and catering industry that’s separate from the sectors in the hospitality industry that provide hotelier, accommodation or gaming services. The new Modern Award is to provide penalty rates and an overtime regime that take into account the operational requirements of restaurants and catering businesses, including their labour intensive nature and core trading hours.

The creation of this new Modern Award isn’t surprising and should have happened at first instance.

The Opposition Leader, Malcolm Turnbull MP, has been critical of the whole Modern Award process believing it will increase costs for small businesses and result in more unemployment.

The Modern Award for the retail industry has the potential to increase costs for small businesses with viability consequences for those businesses. To date the Minister has not indicated that she will instruct the AIRC to create a separate Modern Award for smaller retailers.

KEY POINT: Until the new restaurant and catering Modern Award is published it is unknown what penalty rates and overtime regime will be introduced come 1 January 2010. As discussed previously, the only way to avoid the impact of the Modern Awards is to lodge a collective agreement by 31 December 2009. By doing this, the collective agreement will be assessed using the No Disadvantage Test against the current award – allowing a business to continue to utilise the current penalty rates and overtime regime. From 1 January 2010, the agreement will be assessed using the Better off Overall Test against the Modern Award.