Employers are worried. Employees are bemused and lawyers are salivating.
On April 1, the Industrial Relations Reform Act will come into force.
The most significant part of the reform are the provisions about unfair dismissal. Unions have welcomed the changes, without understanding that they carry the potential to undermine union power.
The reforms could eliminate some of the worst aspects of the Australian workplace. To explain why, some legal history is necessary.
Late last century Victoria was protectionist and NSW free trade. When they came together at federation with the other colonies, much of the debate about the nature of the new federation was economic.
Neither of the big states wanted to give large economic powers to the new central government, in particular employment conditions were to be state matters. However, they begrudgingly recognised that the Federal Government should have power if industrial disputes crossed state boundaries. The big strikes of the 1890s were still in their minds.
The federal government, however, pushed its limited industrial relations power as far as it could, by getting unions to become Australia-wide organisations so that any dispute involving them would cross state boundaries.
But its power was still limited to the settlement of industrial disputes and was limited to union members. It was not a general power about employment conditions everywhere. The Federal Government had no power to enact minimum wages and rules about unfair dismissal. And state governments were not interested in doing so because they thought unions and workers were powerful enough.
So while European countries in the past 30 years have built up a body of law and practice dealing with unfair dismissals, in Australia there was a vacuum.
The only remedy for dismissed employees has been to go to the union. The only action open to a union was to threaten an industrial dispute unless the dismissed employee was reinstated. This rarely if ever addressed the issue of whether the employee was fairly dismissed. It usually boiled down to power plays, mates, accusations and fear and loathing.
In the meantime, those employees who were not a member of a union, had virtually no remedy. Non-union members were either managers or powerless people in small businesses.
They had no remedy because the common law is biased in the employer’s favour. It puts the onus on the employee to prove the dismissal was wrongful and provides pitiful remedies _ usually payment of a reasonable notice period. And legal costs are prohibitive.
It was a most unsatisfactory situation, now to be remedied by the new law. Employers have been belly-aching about the new law and lawyers have been ringing alarm bells to encourage a state of uncertainty and fear from which they can benefit.
In fact, employers should be applauding the new law, and unions should fear it.
Basically, the new law says an employer cannot dismiss someone without: paying a notice period; having a valid reason relating to the employee’s conduct or the requirements of the business; and giving the employee a chance to respond to allegations about conduct or work performance.
The reason the Federal Government has suddenly been able to legislate whereas before it had a constitutional limit is because of the coming into force of an international treaty on labour law. The Government has now used the foreign affairs power to deal with employment across the board.
Employees (and that includes managers and non-unionists) who have had these rights abridged can apply to the Industrial Court for compensation. Further, under the new rules, an employer cannot dismiss an employee on half a dozen unfair ground: race, colour, sexual preference, being on leave, being sick, whistle-blowing, being a member of a union or not being a member of a union.
Despite employers’ belly-aching about open-ended compensation and denial of employer rights and so on, all this reform does is bring Australia up to speed with most European countries.
Employers who deal with employees decently and honestly have nothing to fear and a lot to gain.
Very significantly, it puts into law a right for employees not to be a member of a union. When that is combined with effective remedies for non-unionists for unfair dismissal, it has the potential to undermine union power.
A lot of people join a union for security. They want someone to be on side if their employer does the dirty and sacks them unfairly (in their eyes). In the past, it was the only remedy. The common law was hopeless, so you had to get a union to apply a bit of pressure. With a decent system to deal with unfair dismissal the need for a union at least partly falls away.
A further good point for employers is that the reforms should end the “”everybody-out” syndrome. Under the old law an employer could catch an employee asleep, drunk, with their hand in the till and still face disruptive industrial action removed from the merits of the dismissal. If the reforms work properly, dismissals can be treated on merit in the Industrial Court.
After a time a good body of practice and law should emerge. Employers, especially those in small business, will have to learn how to deal with employees honestly. Of course, many businesses have decent practices in place and will continue as now.
Another good point for employers is that they can contract out. If they put, say, a top manager on contact with equivalent or better severance provisions, the Industrial Court must turn the case to the ordinary courts.
The reform measures also provision for minimum pay and minimum paternity and maternity leave. Unlike previous awards which only applied to unionists, these apply across the board.
There is an interesting irony in this. There are great similarities between this reform and the Opposition’s Fightback-Jobsback reforms pushed by the Opposition before the last election.
The similarities are: room for non-unionists; minimum conditions; unfair-dismissal rules; and recourse to a body other than an expensive court where non-lawyers can be heard in plain English.
Obviously there are differences in things like: the quantity of conditions, the nature of the Industrial Court, the loss of secondary boycott remedies for employers, and a greater role for unions than the Opposition would like. But these reforms could go a long way to removing both union and employer bullying.