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PM's dismissal plans far from family-friendly

By Peter Holding - posted Thursday, 28 October 2004

Will Family First back families that own small businesses or the families that work in them?

Orwellian in name, the Howard Government's "Fair Dismissal" legislation does the opposite to that which its name suggests. It allows companies that employ fewer than 20 people to unfairly dismiss its employees.

It not only removes the right to claim unfair dismissal for employees who are dismissed, but also affects the power relationship between the employer and those employees who are not dismissed. If an employer has the power to dismiss an employee unfairly, or without a valid reason, the whole context of the employment relationship changes.


The new law will be a recipe for bullying, harassment and exploitation. If a boss or supervisor gets angry and swears at a worker who then swears back, and on the spur of the moment the boss decides to sack the worker for "misconduct", there will be no right to claim unfair dismissal. To make matters worse, if misconduct is the cause of the dismissal, the ex-employee may also be precluded from claiming social security for a period.

Unpaid overtime will increase. Under the current law, an employee may be prepared to work back occasionally for no extra pay for a boss who lets them take time off on pay when family matters come up. That is a give-and-take situation. But under the new laws, an employer can require an employee to work back for no extra pay, knowing that if they refuse they can be dismissed with no questions asked. Of course there is a productivity increase to the employer in any situation where it can derive such free labour. But is this the manner in which Australians want to see productivity increases?

Rates of involuntary casualisation of the workforce are also likely to increase. Casuals who have not been employed regularly for more than 12 months are not to be counted in determining whether the company employs 20 people. This creates an incentive against offering workers full-time employment.

WorkCover says suppression is already a problem in many smaller businesses. It is not uncommon for such businesses to request employees to take sick leave rather than lodging WorkCover claims. But how comfortable will workers feel in resisting employer exhortations to suppress claims if they can be dismissed from employment without reason?

How confident will employees in small businesses be in raising or pressing concerns about their employer underpaying them, if they know they can be sacked without reason? Will they feel secure enough to raise or press occupational health and safety issues? Indeed, how comfortable will employees feel in raising any issue that implies a criticism of how the enterprise runs?

This is where the proposed laws have the potential to cause a decline in productivity. Just as government runs best when the public service gives free and fearless advice, so it is the case with private enterprise. The culture of fear that will be created by allowing employers to dismiss workers without reason will stifle individual initiative and the problem-solving required in a modern economy.


Discrimination in smaller workplaces will also increase. And although anti-discrimination laws will be retained, discrimination is extremely difficult to prove. As the courts have pointed out, only the employer knows the true reason it has decided to dismiss an employee. Not surprisingly, it is relatively rare for an employer to offer discriminatory reasons for dismissing a person.

Under the proposed laws, employers that employ fewer than 20 workers, if accused of discrimination, will be able to offer up any reason for the dismissal, however unfair or unreasonable, as long as it is not discriminatory. Older workers, who the Government says it wants to work to a greater age, will be able to have their services terminated without any reason being offered.

When the economic downturn comes (as it will), the new laws will enable smaller employers to dismiss workers rather than retain them until the economy recovers. This will particularly be so if laws that abolish the obligation on smaller employers to pay redundancy payments accompany any introduction of the proposed unfair dismissal laws.

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Article edited by Nicholas Gruen.
If you'd like to be a volunteer editor too, click here.

First published in The Age on October 15, 2004.

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About the Author

Peter Holding is a Melbourne barrister whose practice includes employment law. He is a member of the ALP.

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