Workplace Relations
Amendment (Fair Termination) Bill 2002
Background
- The Fair Termination Bill proposes to restore the exemption from the unfair
dismissal laws of casuals employed for a short period in the same terms as was
provided for in Regulations 30B(1)(d) and (3); that is, a casual was excluded
from making an exemption unless he or she had been engaged by a particular
employer on a regular and systematic basis for a sequence of periods of
employment during a period of at least 12 months and had, or but for the
decision of the employer to terminate the employee’s employment, would
have had a reasonable expectation of continuing employment by the
employer.
- The Fair Termination Bill has been introduced in response to the Federal
Court decision in Hamzy that the relevant regulations were invalid
because they were not authorised by section 170CC of the Act, which authorises
the exclusion, inter alia, of “employees engaged on a casual basis
for a short period”. [s170CC(1)(c)]
- The Court found the regulations to be invalid because the definition of
“short period” went well beyond the meaning of the
term.
“The effect of reg 30B may be illustrated by reference to two
hypothetical cases. First, suppose a person has worked on a casual basis for a
particular employer for ten years; frequently, but on an irregular employment
pattern. Despite the ten year period of service, reg 30B(3) would take that
employee to be ‘a casual employee engaged for a short period’.
Second, assume a casual employee has worked, even regularly and systematically,
for a particular employer for many years but learned, shortly before the
termination of his or her employment, that the employer's financial position had
so deteriorated that it was doubtful the employer would long continue in
business. That employee would be unable to fulfil the criterion in para (b) and
would therefore be deemed to be engaged for a short period.
“These examples demonstrate that reg 30B(1), as drafted, goes beyond
the regulation-making power conferred on the Governor-General by reason of
s170CC(1)(c) of
the Act. The problem
is that the Governor-General, being empowered to make regulations concerned with
the length of the period of employment, has made regulations that impose
criteria that have nothing to do with length of employment.” (paras
50-51)
Austalia’s
International Obligations
- The exclusion provided for in paragraph 170CC(1)(c) of the Act is derived
from Article 2, paragraph 2(c) of ILO Convention No. 158 on Termination
of Employment, which provides for the exclusion of workers engaged on a casual
basis for a short period.
- While the Convention does not define “short period”, the
Committee of Experts on the Application of Conventions and Recommendations has
considered relevant issues in its 1995 General Survey, which
states:
“Workers engaged on a casual basis for a short period may also be
excluded. Such workers are sometimes treated in the same way as those engaged
under a contract for a specified period or a specified task. In some cases,
these contracts are concluded to meet the temporary needs of the enterprise;
sometimes legislation specifies that these must be activities other than normal
activities and sets an upper limit on their duration. In Peru, for example, a
casual contract, which is one of the types of temporary contracts, is defined as
a contract concluded to meet temporary needs that are distinct from the normal
activity of the workplace.” (para 44)
- It is clear from this paragraph that the Committee of Experts sees
short-term casual work as primarily temporary and short term.
- The ACTU submits that 12 months is far too long a period to be reasonably
characterised as “short-term” and notes that the Federal Court in
Hamzy held:
“We do not find it necessary to determine whether a period of 12
months may reasonably be regarded as a ‘short period’ of casual
employment, either generally or in relation to any particular type of
employment.” (para 45)
Casuals, Employment And
Unfair Dismissal
- In his Second Reading Speech, the Minister claimed that without an
exemption, employers might be reluctant to hire casuals, and
continued:
“This could have affected their ability to do business and could have
left those seeking casual work, such as working parents, without a
job.”
- As with the debate about the proposed small business exemption, the
Government is making assertions about the links between employment and unfair
dismissal laws which are not backed by evidence.
- This issue was considered in Hamzy, where the Court rejected evidence
from Professor Wooden about the effect of removing the casual exclusion on
casual employment.
‘In para 69 of his affidavit, Professor Wooden stated what he
understood (accurately) to be the effect of the current regulations. In para 70
he said:
"In my view, the application of the unfair dismissal provisions of the
Federal
Workplace Relations Act 1996
to the types of casual employees excluded by regulations would be likely to have
an adverse effect on job creation in Australia. In particular, I consider that
it would be considerably more difficult for more vulnerable classes of potential
employees, such as early school leavers, to find work and to gain the ability to
progress to other positions within the workforce."
Professor Wooden did not offer any empirical evidence to support his view.
He was unable to do so. In cross-examination Professor Wooden said "there
certainly hasn't been any direct research on the effects of introducing unfair
dismissal laws".
Professor Wooden's view was an entirely theoretical construct. He said in his
affidavit:
"The question may well be asked as to what would happen if the unfair
dismissal laws were to apply to the types of casual employees excluded by the
regulations. The answer essentially is that there would be fewer jobs,
especially for early school leavers, unemployed people and persons seeking to
re-enter the workforce after a period of absence. Firms value the flexibility
afforded by casual employment. In particular, they value the ability to vary
working hours quickly and sever employment relationships at short notice.
Extending the reach of unfair dismissal laws to casual employees would
effectively remove one of these flexibilities. That is, employers would no
longer have the same flexibility to vary employment numbers in line with
variations in demand for their product. Further, employers would have to spend
more time, money and effort in deciding who they hire. If they hire someone who
is a poor fit with their business, it will now be much more difficult and costly
to remove that person."
Professor Wooden conceded "many employers do not use this flexibility",
"as is reflected in the large proportion of casuals working regular hours in
apparently long-term jobs". However, he argued that "just because a firm does
not use the flexibility that casual employment potentially affords does not mean
it does not value it".
Professor Wooden suggested flexibility was especially important to small
business enterprises, which had relatively higher casual densities. However, he
did not offer any evidence, either statistical or anecdotal, to support his
belief about the importance of flexibility to small business. This is
particularly disappointing in the light of a table set out in Professor Wooden's
affidavit in reply, in which he set out the current job duration, expressed in
mean years, of employees aged 15 to 69 years as at April-June 2000. The table
showed the position in respect of permanent and casual employees in each of 17
industries. The mean figure for casual employees ranges from 1.6 years (in the
construction and the accommodation, cafes and restaurant industries) to 4.9
years (in education).’ (paras 59-63)
- The CPA Australia survey found that 30 per cent of small businesses chose
unfair dismissal from a list of reasons for employing casuals. It should be
noted that respondents were able to choose more than one alternative, and that
reducing costs was chosen by 51 per cent, compliance by 31 per cent, variable
work patterns, etc by 60 per cent, and employee preference by 31 per
cent.
- The policy issue which this raises is the desirability of encouraging casual
employment by removing from this mode the benefits which accrue to full-time and
part-time workers.
- The composition of the casual workforce has changed dramatically in recent
years, with the male proportion increasing from 26 per cent to 45 per cent from
1984 to 1998. Male casuals averaged 29.1 hours of work per week, compared to
18.4 hours for women. (ABS Labour Force, Australia Cat. No. 6203.0)
Employers are using casual employment as a means of avoiding the obligations
which would otherwise apply, an approach which would be further encouraged
should the Fair Termination Bill become law.
- This has been increasingly recognised by governments and the Commission.
Unpaid parental leave has been extended to casuals in two states and by the
Commission to federal award employees. (Parental Leave for Eligible Casual
Employees Test Case Print PR904631, 31 May 2001) Both the South Australian
and the Federal Commissions have varied awards to provide a right for regular
casuals employed over a set period of time to elect to become full-time or
part-time. [Clerks (South Australia) Award Casual Provisions Appeal Case
File No. 263 of 2000, 5 March 2001; Re Metal, Engineering and Associated
Industries Award 1998 - Part 1 Print PR901028, 29 December 2000]
- If the Government’s policy is to encourage the growth of casual
employment it should say so, but the ACTU does not expect that this would win a
great deal of community support.
12 Months Exclusion And
Fairness
- The exclusion of casuals with less than 12 months service means the
exclusion of most casuals. In November 1998, 58.5 per cent of casuals had more
than 12 months service with their current employer, with 20.8 per cent having
more than five years and 9.8 per cent more than ten years. (ABS Career
Experience Cat. No. 6254.0) Adding the requirements for regular and
systematic employment, together with a reasonable expectation of this
continuing, means that an even greater proportion of casuals would be excluded
by the Fair Termination Bill.
- Most state parliaments have not been convinced to exclude casuals with less
than 12 months service from unfair dismissal laws. In NSW and South Australia,
the exclusion period is six months, while no exclusion operates in Tasmania or
Western Australia.
Filing Fee
- The ACTU is opposed to the proposed indexing of the filing fee, as well as
to legislating for it as a permanent provision. In practice, fees such as this
operate as a barrier to access to justice for employees, particularly those who
are in a weak financial position.
- The ACTU cannot see any fairness in legislation excluding employees from
making applications simply on the basis of ability to pay.
Conclusion
- The ACTU submits that the Fair Termination Bill should be amended to provide
that casuals are able to make applications in relation to unfair dismissal after
three months regular and systematic employment, in line with the provision that
applies to all other employees.