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This month marks the first anniversary of the Workchoices legislation. One year on, we examine the effect that this legislation has had on employees, employers and the union movement. We also note the reduction in unfair dismissal cases and the effect that this has had on the Industrial Relations Commission.
Additionally, over the past few months there have been some interesting developments in the area of Employment Law. In particular, there are three decisions that have been handed down which are significant.
Firstly, there is the case of Cook v CFP Management Pty Ltd [2006] QCA 215. This case related to an employee terminating their own employment. It considered termination by or at instance of the employee and whether the English common law notion of ‘Constructive Dismissal’ applied in an Australian context.
Secondly, we explore the case of Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104. This case, heard in the Supreme Court of New South Wales, introduced two new implied duties to an employment contract.
The case determined whether these implied duties applied to employment contracts. It also examined the impact for both employer and employee upon finding that the duties did apply.
Finally, we look at Woolworths v Banks [2007] NSWSC 45. In this case the defendant left their employment at Woolworths and commenced employment at Myer. The case relates to a Restraint of Trade clause in an employment contract. The court considered where restraint of trade clauses were valid, the nature of a ‘competitive business’ and the nature of confidential information.
Twelve months ago, many in the union movement saw with a certain irony, the Howard Government’s employment legislation as the change that would reverse their decline. An entire generation who had never been unionists would come to the fold. At last, unions would move beyond their middle-aged public sector base, because a new and urgent need for them had arisen. They would get their realistic numbers up above 10% of the private workforce for the first time in two decades.
On the other hand, the Government and their “employer spokesmen,” thought that, after a flurry of scripted outrage, most people would realize that it didn’t affect them ( just as medical matters don’t affect us until we get sick), and the debate would end. The unions would become more marginalized, the demonized wrongful dismissal jurisdiction would never again threaten the zero point one (0.1) percent of employers it had been oppressing, those irritating award minimum standards would disappear and people would stop talking about it. The aim of Australia “achieving” the general level of prosperity we find in New Zealand (this being the aim, according to Ian McFarlane) would be quite on track.
Neither wish has been granted. So, what has actually happened, and how will it really affect us?
The Effect of Workchoices on Unfair Dismissal in NSWEven if we include the first three months of 2006, before Workchoices commenced, we see that the number of cases before the NSW Commission dropped by 60% when we compare 2005 to 2006 (3708 unfair dismissal cases commenced in 2005, and 1490 in 2006). The “unfair contracts” jurisdiction was down by 54% (473 cases for 2005, against 218 for 2006). That includes the “burst-of-activity- filings” that always happen when legislation is about to change, so we can assume that the numbers will be even lower for 2007. An effect that can’t be ignored, therefore, is that the era of the State Commission may have been closed by Workchoices. Our State Commission has been effectively reduced to a State public sector dispute tribunal. This is not a good thing in many ways, but it is hard to see how a Federal Labor Government would see any advantage in surrendering a “previously State” power it has been presented with.
The unfair dismissal cases concerning “corporations” have all gone to the Sydney Registry of the Australian Commission. Their figures are actually up, 1303 for the twelve months up to February 2006, and 1457 to February, 2007. This reflects the cases that couldn’t start in the State Commission. Don’t forget that the jurisdiction is now closed altogether for corporations with fewer than 100 employees.
The Effect of Workchoices on Employers
A key selling point of Workchoices was that it was to be the saving grace of small business (“most claims were bogus” etc, etc). If you add the State and Federal figures together for the past two years, though, and get the aggregate figures, you will see that the total number of cases for NSW went down by about 40%. This probably tells us what proportion of cases before last March involved “small to medium” employers. There were about 10,000 cases a year Australia wide “before,” so if we broadly cut that by 40%, we can say is that so far, 4,000 people out of
a workforce of about 10 million, have been affected by the unfair dismissal changes. Much fuss about a small number, you may say.
Workchoices hasn’t changed anything for large employers, and it appears to have “solved” a problem that was much exaggerated for small ones. Nor has the law been idle in the meantime. Without quoting at length from learned judgments (as readable as they are) let us just mention some of the legal principles that have appeared in the last twelve months in the ‘courts proper:’ an implied right to procedural fairness; an implied assumption that ‘company policies’ must be followed by both sides (ie, reasonable conduct/ equality of opportunity and so on);
mutual trust and confidence (meaning ‘fair treatment’) and any right of discretion must be exercised with ‘equity and good conscience.’ There are further principles, which have been discussed elsewhere, in this and previous newsletters.
These movements mean that everything previously handled exclusively by the Arbitration Commission, can now more easily be taken to the general courts – without the controls and limitations of the unfair dismissal jurisdiction.
On top of that, we have an increased use of injunctions in the general courts to prevent employers doing certain acts and we have increased use of the State and Federal Anti-Discrimination agencies. In fact, the Local Court, the District Court, the Supreme Court, and the Federal Court have (anecdotally) become employment-dispute tribunals like never before. We also, by the way, have people employed by a corporation with fewer than 100 employees, simply “ticking the box” on the Australian Commission’s form to indicate ‘unlawful termination,’ which is still not
closed to them even though ‘unfair’ is. That gets them as far as the conciliation stage at no cost to themselves, whether or not they have a case. The nuisances, where they existed, persist.
This all means that Workchoices has made it potentially more difficult for employers in the area of dismissal, and increased the potential for loss. It has had the opposite effect to the one the Government, and the “employer spokesmen” were talking up a year ago. The only real difference is, that employers are now liable to pay the other side’s legal costs if someone takes them on and wins in the general courts. There is
also the unlikely saving grace of possibly getting costs out of someone with no money, if they “beat” the applicant. They do not have that risk in the Arbitration Commission.
Loss of Award Minimum Standards
The other serious miscalculation: This has been to place too much store in the fact that the loss of award minimum standards in place of “born again” lower ones with the Orwellian name of “fair pay and condition standards” won’t affect most voters. That is right, but this dramatic change at the lower levels of the workforce has affected the children of the voters! One receives constant enquiries from parents who have been required to witness an AWA for a shop somewhere, which their 17 year old has brought home and which cuts pay and allowances on a take it or leave it basis. Workchoices always was aimed at the restaurant trade and the retail sector. The “spokesmen” and the Government forgot that the young and voiceless workers in those sectors have parents. And parents have barbecues, which are still “stopping.”
None of this has helped the unions. Their numbers have not ballooned. People feel sympathy for them, perhaps, but don’t join. Their marginalization continues unabated.
Conclusion
It is still early days. General wages in the community have not – yet – gone down. A restaurant in Sydney that can’t get staff is hardly going to offer less pay as a way to remedy the shortage. That is a Sydney centric view, admittedly. One assumes this is not true in the poorer states, or in the country. The take up of AWAs in States where incomes were lower to begin with has been higher than in NSW. We must wait and see. What we do know, is that the Government has seriously miscalculated the effects on the population, and on business. It did not predict the resentment it would cause, and for how long that resentment would last. On the other side, the union movement has gained no traction from these changes.