Unfair dismissal forces change to hiring practices

UNFAIR dismissal laws are forcing businesses to change their employment strategy. Other options are often considered that do not have the perceived legal implications attached.

This is the view of Combined Small Business Association of WA president Oliver Moon.

He says the unfair dismissal laws can be a legal minefield for some small businesses.

Businesses are often too frightened to dismiss someone, he said.

The statistics suggest businesses have good reason to fear being taken to court.

A recent study by consultants Davidson & Associates found large companies in Australia that dismiss an employee face a better than 50 per cent chance of being taken to court.

WA businesses have 22 per cent of dismissals end up in court, the study found.

New South Wales had the highest incidence of unfair dismissal where companies surveyed reported a 72 per cent chance of legal proceedings.

Davidson & Associates NSW director Nick Plummer said ten years ago court rulings appeared to be unfairly biased towards the employer. In 1999, this situation was reversed.

“Employees face a better chance of winning now and the stigma that used to be attached to taking legal action against your employer is gone,” he said.

Many employers are adopting to pay employees off rather than go through time consuming and expensive court proceedings.

Freehill Hollingdale & Page employee relations partner Graeme Watson said it was currently cheaper for employers to pay a few grand and get rid of the complainant – regardless of the merit of the case – rather than take the matter further.

Research by the University of Western Sydney Employment Relations Department indicate a early payout may be the cheapest option.

The research found that, of the dismissal claims that reach court, 47 per cent of cases are found in favour of the employee.

The average payout for those cases was around $10,000 but could be as much as half the employee’s yearly earnings.

Using contract labour is another way for businesses to avoid issues of unfair dismissal as well as workers’ compensation, superannuation and so on.

The recruitment industry has been one of the beneficiaries of the laws.

Bell Personnel managing director David Anderson, while condemning the laws, says the laws have been a windfall for his industry.

“There has been a huge growth because employers fear taking the plunge,” Mr Anderson said.

Yet as long as the proper process were adopted businesses had nothing to fear, Mr Moon said.

Chamber of Commerce and Industry manager of employee relations services Bruce Williams said individual cases were becoming more time consuming and legalistic.

“A fatal flaw for unfair dismissal laws in Australia is that, like all levels of industrial relations, they operate under two jurisdictions – State and Federal,” Mr Williams said.

“There is a lack of clarity and only roughly 20 per cent of claims make it to a full hearing.

“A new trend that has been observed is ‘jurisdiction shopping’ where claimants try to get the most they can from both systems,” he said.

“Claimants work under no-cost jurisdictions where there is no risk of being held liable for costs if you lose.”

“There should be some token cost risk so people really think about a claim before it is pursued,” he said.

Mr Moon said he would defy anyone to come up with a system that was better for both parties.

“I honestly believe the system is a fair system. There is, at least, a reasonably cheap mechanism,” Mr Moon said.

He said the fact that 86 per cent of cases were settled before going through the full court process was proof of a

system that worked well.

He said the laws were good because they forced employers to learn how to employ people and how to treat them.

“It inspired many small businesses to work smarter,” Mr Moon said.

Home Building Society general manager Jim Freemantle said the laws actually worked against employees, particularly young employees.

“Sometimes when you try to protect people, it can have a counterproductive effect, Mr Freemantle said.

Businesses may be less inclined to give young people a go because the three month probation period may not be long enough to judge how a person would work out.

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