Interview: A Life And Death Matter
Unions: Fighting Back
Industrial: What Cowra Means
Environment: Scrambling for Energy Security
Politics: Page Turner
Economics: The State of Labour
International: Workers Blood For Oil
History: Liberty in Spain
Review: Go Roys, Make A Noise
The Locker Room
What Cowra Means
WHEN an abattoir in Cowra threatened to sack 29 workers so that some of them could be rehired on lower pay and conditions, a media firestorm exploded.
The Office of Workplace Services (OWS), the beefed-up federal labour inspectorate, "investigated" the Cowra situation following a telephone call from a political adviser to the Minister for Employment and Workplace Relations. The OWS then issued what was called a "ruling", which concluded that the Cowra Abattoir did not breach the Workplace Relations Amendment (Work Choices) Act 2005 because its decision was made for what the OWS said were "purely operational reasons".
Incredibly, that report is not a public document, and only a media summary is available. The information on which the OWS reached this decision is also secret, so it is not possible to analyse its reasoning. This in itself marks a break with traditional labour regulation in Australia, as decisions (including reasons for decision) of the independent tribunal, the Australian Industrial Relations Commission (AIRC), are publicly available and its processes are open and transparent.
The key issue here is the extent to which Work Choices expands the scope for employers to sack staff while avoiding sanctions under the unfair dismissal regimes at federal and state levels.
There is no doubt the protection against unfair dismissal has been reduced.
Under Work Choices, workers in firms covered by the Act with up to 100 employees can be sacked without recourse to the unfair dismissal jurisdiction of the AIRC. This means they can be sacked for any reason (they have red hair, the boss doesn't like them) or none at all, provided the dismissals are not discrimination as defined in the Act (based on sex, race, nationality, family responsibility etc).
Unlawful termination of employment is still prohibited, but sackings on these grounds are uncommon, difficult to prove and expensive to prosecute. Since 1996, the commission has dealt with 50,000 unfair dismissal claims, while 147 unlawful termination cases have been heard by the Federal Court. Common law remedies for breach of contract remain, but these have virtually nothing to offer ordinary workers.
Work Choices makes another important change to Australian's job security. Regardless of the size of the firm, workers who are sacked for "operational reasons" are prohibited from bringing an unfair dismissal claim.
Under the Act, operational reasons are "reasons of an economic, technological, structural or similar nature relating to the employer's undertaking, establishment, service or business, or to a part of the employer's undertaking, establishment, service or business".
In the parliamentary debates, the Workplace Relations Minister Kevin Andrews said that this new provision related only to the concept of redundancy, long-recognised in Australian labour law. A redundancy occurs when the employer no longer wants the job performed by anyone, and terminates the employee for that reason. But is the new provision for "operational reasons" broader than the old concept of redundancy? And can workers who are sacked for "operational reasons" be re-employed on lower wages and conditions, as in the Cowra abattoir case?
Under the pre-Work Choices law, a firm facing operational difficulties could sack staff in accordance with award or agreement provisions when the employer decided that s/he no longer wanted the job done by anyone. Redundant workers were entitled to notice and redundancy payments. In other words, the system had developed a clear definition of what was a genuine redundancy and an orderly, fair procedure that met the needs of both workers and firms.
Workers could bring an unfair dismissal application to the AIRC even if their sacking was labelled a redundancy, and even if they received redundancy payouts. This was because a dismissal, even if all the redundancy obligations regarding notice and severance pay were met, could still be "harsh, unjust or unreasonable", which is the test of the unfair dismissal.
It should be noted that the pre-Work Choices Act required the commission to consider whether or not there was a valid reason for the dismissal. One question it had to consider was whether or not the worker was dismissed in order to meet the operational requirements of the firm. In other words, firms which had genuinely responded to operational requirements had nothing to fear from the process.
A redundancy could be unfair if the boss selected staff for redundancy on the basis of personal whim (all Collingwood supporters must go), or if the procedures were deficient (for example, if staff with many years of service were notified by email that their job had vanished). In parliament, Minister Andrews stressed the vice of "double-dipping" implicit in this overlap between the unfair dismissal regime and redundancy schemes. In fact, in the few such cases brought before it, the commission took into account the amount of redundancy payout when determining what remedies, if any, should be granted to a worker who was unfairly dismissed through the redundancy mechanism.
How does the situation change after Work Choices?
First, those who are sacked for reasons of genuine redundancy can no longer argue that their termination was unfair. More importantly, Work Choices means that the employer can sack without concluding that s/he no longer wants the job done by anyone. In other words, although there is no genuine redundancy, the worker sacked for the widely defined "operational grounds" has no job protection through the AIRC at all. For example, an employer may want to institute a new shift roster (say a move from three eight hour shifts to two twelve hour shifts per day). Workers who refuse to sign up for the 12-hour shifts could be sacked for operational reasons, and replaced with other workers. The meagre protection offered the sacked workers under the Act is that the AIRC is able to look into whether or not the operational reasons were genuine.
Just what will constitute genuine operational reasons is not known, because the AIRC is yet to consider any applications. The OWS's Cowra ruling provides us with no insight, because of the secret nature of its investigations.
The Minister has warned that "sham" financial excuses will not be good enough and threatened employers with the intervention of the OWS. The capacity of the OWS to investigate any significant number of such cases is not clear. Nor is the legal effect of an OWS ruling, which is perhaps better characterised as an "opinion" or "interpretation" with no binding effect. The OWS's lack of independent status and secrecy of its methods do not bode well for the evolution of the law in this area.
One possibility opened up by the broader "operational reasons" provision is that employers will capitalise on the opportunity to sack staff and rehire them on lower rates of pay and conditions.
Before Work Choices, some protection was provided from employers whose reason for sacking or discriminating against staff to their detriment was to avoid giving workers the benefit of their award or collective agreement. Under Work Choices, this protection is limited to situations where the employer's "sole or dominant" reason is avoiding the award/agreement. In other words, where improving the financial standing of the firm is the most important reason, employers who sack in order to avoid the award will not be committing an offence under the Act.
Once workers are legally sacked, Work Choices offers employers several pathways to re-employ them on lower pay and conditions. For example, it is legal to make signing an Australian Workplace Agreement (AWA) a mandatory condition of employment for "new" staff, which would include those legally dismissed for operational reasons.
AWAs under Work Choices simply have to meet the low minimum pay and conditions standards in the Act. They operate so as to completely exclude any award or agreement binding the employer. This means that rates of pay could be lower, overtime and penalty rates removed, the protections of the collective agreement withheld and so on. Importantly, redundancy provisions won through the conciliation and arbitration systems are not part of the Work Choices statutory minima, so AWAs need not include any such protection. It is therefore legally possible that any re-employed workers will return to the firm into jobs of inferior quality.
The government's argument underpinning Work Choices can be encapsulated in one phrase: any job is better than none.
The government would no doubt argue that workers rehired on lower conditions are lucky to have a job at all. But, as we have argued in this article, the previous system allowed employers facing difficult economic conditions flexibility while at the same time ensuring decent treatment of affected workers.
Work Choices is drafted in such a way as to permit employers to utilise relatively minor shifts in operational matters as a reason to sack staff and rehire some or all on lower pay and conditions. This has the potential to undermine job security for workers in large enterprises. Just why this was necessary given the flexibility already in the system is a question the government has avoided answering.
John Howe and Jill Murray teach law at the University of Melbourne and Latrobe University respectively.
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