During the first three months of this year, the Fair Work Commission received a total of 3583 unfair dismissal applications. Less than 1% of these cases resulted in a finding of ‘unfairness’ by the Commission.
It is worth noting that 3411 of these applications were settled during mediation and/or conciliation, with the remaining 172 (i.e. 5%) being formally brought before the Commission.
“The details of mediation and conciliation between the parties is confidential and so we have no data on the proportion of these applications that were likely valid – and those that were not”, said ACAPMA CEO Mark McKenzie
“From ACAPMA’s experience, the vast majority of the matters subject to mediation and conciliation result in either the employee withdrawing the application after mediation, or the employer deciding to make a modest ‘go away’ payment – rather than go through the stress and expense of fighting the claim in the Commission”, said Mark.
While the Union movement might argue the contrary position, neither employer organisations nor unions can prove their point given that the settlements reached in these matters are rightly confidential between the parties.
“We do, however, know the outcomes from the cases that are formally brought before the Commission”, said Mark
During the first three months of 2019, a total of 172 cases were brought before the Commission. Of these, just 32 cases (or 19%) were resolved in favour of the employee. The 2019 experience is similar to the results in the two prior years of 2018 (15%) and 2017 (17%).
“Interestingly, 79 (or 46%) of the claims considered were dismissed by the Commission because they were ‘without merit’”, said Mark
A further 32 cases (or 19%) were dismissed by the Commission owing to the cases being deemed legally invalid due to the claims being lodged ‘out of time’, the case being a genuine redundancy, or the case being ineligible on other technical grounds.
“In other words, 111 (or 65%) of the cases brought before the Commission in the first three months of this year should not have been presented to the Commission in the first place”, said Mark
Given the significant financial and time penalties associated with preparing a defence against an adverse dismissal claim, the high number of cases that were dismissed by the Commission suggests that the current operation of the Code is imposing unnecessary costs on small business owners.
“That is to say nothing of the stress involved in defending these actions and the fact that they often result in the business owner losing sight of their small business and suffering other financial consequences (e.g. lower revenues due to less time spent in the business)”, added Mark.
But the case for a comprehensive review of the current Code is further strengthened by examining the nature of some of the cases that did not reach the Commission – but required the business to spend significant time and money formally responding to a Conciliation process for a spurious application.
The first case involved an employee who was recorded on CCTV consuming alcohol. The employee was called in for a performance management meeting with notice, attended a performance management meeting with a support person as a witness and had the breach formally put to him. He responded by denying that he had consumed alcohol at work and stated that the CCTV footage must have been altered.
The employee was given an opportunity to formally respond (in writing) prior to a decision being made by the business. He provided a written response that denied the consumption of alcohol. He was subsequently terminated in writing for a major safety breach of consuming alcohol while at work (i.e. he was working at a major hazardous goods facility) and was provided with payment in lieu of notice.
This employee brought an unfair dismissal claim forward but lodged it ‘out of time’. He claimed that he was not provided the reasons for his dismissal and that he was not given an opportunity to respond to the business – despite clear and documented evidence to the contrary.
The business was required by the Fair Work Commission to lodge a formal response (approximately 8 hours work) and participate in a conciliation conference (approximately 2 hours). The case was ultimately resolved without any compensation being paid to the employee.
A simple review of the facts reveals that the application was lodged ‘out of time’ and that the reasons for termination were valid – yet the business owner was required to invest significant time and money responding to what was essentially a spurious application.
So why was the application accepted by the Fair Work Commission in the first place?
“If staff at the Fair Work Commission are always going to accept applications that are lodged ‘out of time’ then it begs the question of why the provision is there in the first place”, said Mark
The second example involved an employee who was repeatedly late to work, repeatedly out of uniform and repeatedly failed to complete assigned tasks. After following a clear and well documented performance management process – with the employee failing to address the communicated issues – the employee was dismissed, issued with a formal termination letter and paid in lieu of notice.
The employee had only been employed by the business for 8 weeks which is clear grounds for an application of unfair dismissal being deemed ‘invalid’.
Nonetheless, the application was accepted by the Fair Work Commission and the business was forced to spend time and money defending a case that involved an employee being terminated in the probation period for valid reason – and despite them having followed a procedurally fair process.
The two cases cited above provide clear examples of where Fair Work Commission staff have not followed key provisions of the Unfair Dismissal Code. As a result, the small business owners incurred significant and unnecessary costs defending spurious applications.
“Any objective examination of both the unfair dismissal statistics published by the Fair Work Commission and recent case history, suggest that there are clear problems with the current operation of the Unfair Dismissal Code”, said Mark.
Specifically, employers are being required to fight more than 65% of claims that are ‘without merit’ or ‘invalid’ in the Commission and/or spend time and money in mediation and conciliation processes for applications that should never have been accepted by the Fair Work Commission in the first place.
“It is time to review the operation of the Unfair Dismissal Code – and the degree to which the administration of this Code is consistent with the original objectives that were set out when it was first established”, concluded Mark