Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

“Operational reasons”:

The area of legislative reform would involve amendment to s389 of the FW Act to allow an employee to challenge an employer’s decision to terminate for reason of redundancy on the basis that the employer’s criteria for selection of the employee operated unfairly (having regard to the skills and attributes of the employee) or was applied unfairly to the employee (that is, capriciously or without proper justification). Whilst it is true that the general protections in Part 3-1 of the FW Act protect an employee from dismissal (including purported redundancy) on the basis of a number of specifically protected attributes, this protection does not extend to more general categories of unfair behaviour in selecting employees for redundancy.⁶²⁴

In providing a comprehensive defence to the employer on the basis of ‘genuine redundancy’ – the FW Act goes too far in protecting employer prerogatives by precluding examination of the method or application of selection criteria for termination. However, the ACTU is not contending for a radical change to the defence. The right of employers to decide to make a position or job redundant would remain and would reflect the position that existed between the introduction of Commonwealth UD laws in 1994 and the introduction of the first ‘operational reasons’ restriction introduced by the Howard Government in its 2006 ‘Work Choices’ amendments. What would change is that an employee would have the opportunity of challenging the decision to select him or her for redundancy, when it could be clearly shown that the employee was unfairly selected. The possibility of a growth in unmeritorious claims in respect to aspect of the UD laws would be precluded by the historic experience and jurisprudence of the AIRC. As Stewart has observed:

It had never been in fact possible for an employee to complain that a redundancy was unnecessary. The industrial tribunals, both at federal and State level, took the view that the employer’s judgment as to the needs of their business should be respected: see eg Quality Bakers v Goulding (1995) at 333. But what a retrenched employee could do, at least before Work Choices, was challenge the procedure used to reach that decision, in relation to matters such as consultation, or selection for termination.⁶²⁵

Improving Fair Work Commission UD processes:

Statistics produced in the FW Commission 2013/2014 Annual Report reveal that 90% of UD applicants had to wait a period of 61 days from lodgement of the application until the first conciliation hearing⁶²⁶ (which is normally by way of telephone).⁶²⁷ This result compares to the FW Commission’s own key performance indicator of 34 days.⁶²⁸

In relation to arbitration, the comparable statistic provided by the FW Commission indicates that 90% of applicants wait 146 days from lodgement to finalisation of the matter by way of arbitration.⁶²⁹ However, anecdotal evidence from ACTU affiliates indicates that in some cases the waiting period from lodgement to finalisation of a claim for arbitration can be far longer – and in some cases significantly more than a year.⁶³⁰

Clearly, the timeliness for processing UD applications is a major issue for affected employees and may be one reason why relatively few applications as a proportion of the total proceed to arbitration. In other words, regardless of whether an employee has the best case in the world, the prospect of waiting six months or more to obtain a ruling on the merits of a case can act as a serious disincentive to going to arbitration. It is difficult to see how the timeliness measures produced by the FW Commission are consistent with the “quick, flexible and informal process” described in the EM. This is not to discount the importance of negotiated settlements in appropriate cases and the need for the FW Commission to efficiently marshal its limited resources. Nor is it a criticism of FW Commission personnel. Rather, what is required are a number of practical measures to ensure that employees can fast-track their applications if they so choose and not be overly burdened by technical and legal processes that inherently favour those with the most resources at their disposal.

To this end, the ACTU proposes the following measures to improve the operation of the UD process:

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  In circumstances where an applicant is represented by a lawyer or registered organisation⁶³¹ the applicant should be given the choice of having the conciliation conducted by telephone or in person in the FW Commission. Where the applicant opts for face-to-face conciliation, the conciliation conference should be conducted by a member of the FW Commission and not a conciliator, as the latter does not have the power to require the attendance of the parties to the application.
  

It is the experience of a number of affiliates that face to face conciliation is often more successful in obtaining a negotiated settlement, or at least a practical agreement on how an arbitrated hearing is to proceed.

• 
  As a general rule, telephone conciliators should not express a view (or worse, a purported legal opinion) as to the strength or weakness of an applicant’s case in circumstances where the applicant is represented by a registered organisation or lawyer. This is because there should be an operating presumption in such circumstances that the applicant has had the benefit of advice from his or her own representative. Rather, the proper function of the telephone conciliator should be to ascertain whether a settlement is possible and on what terms, and to encourage a settlement where appropriate.
  

We are concerned about reports from affiliates that on occasions conciliators have provided wrong or unjustifiably pessimistic opinions as to prospects and that this has had the effect of discouraging applicants from pursuing legitimate claims. Whilst the active encouragement to settle matters is welcome, undue pressure on applicants to drop their claims or to settle on unsatisfactory terms is not an appropriate function of the UD conciliation system.

• 
  When a matter has been unable to be resolved at conciliation and before standard directions for a hearing have been issued, there should be convened a short case conference to decide whether the matter proceeds to a formal hearing, or an “arbitration conference”. The arbitration conference is an alternative to a formal hearing and ought to be conducted more quickly and informally than a traditional arbitration hearing. The arbitration conference would proceed on an inquisitorial rather than adversarial basis in which the FW Commission member controls the process by asking questions of the respective parties, rather than allowing the case to be framed by the respective advocates. Ideally, the decision of the Commissioner should be issued on the same day as the conference and should only be recorded in transcript. Reasons for decision should be expressed, but should be brief.
  

The process described is something like that envisaged in the EM and Forward with Fairness. The arbitration conference model should be particularly urged upon unrepresented applicants as a cost effective and practical way to have a claim determined quickly. The incentive that the arbitration conference model should offer parties is that the conference would occur within two weeks of the case management conference, wherever practical. Whilst it is noted that one concern about the arbitration conference model is the possibility of appeals being instituted on the basis of a denial of procedural fairness, we believe this concern is overstated, particularly given the new procedure adopted by the FW Commission in relation to separate preliminary hearings of unfair dismissal appeals dealing only with the question of permission to appeal.

• 
  Related to the above measure, the FW Commission should strictly enforce the presumption against legal representation in matters before the FW Commission generally, but in UD proceedings in particular. The increasing legalism of the UD system has the effect of increasing the costs upon represented applicants (or their organisations) and also results in a serious imbalance in situations where only one party is represented. One way to address this issue would be to deny legal representation to both parties, where one party opts for an arbitration conference rather than a hearing.