Changes to Unfair Dismissal Laws

In October, the Workplace Relations Minister Bill Shorten announced that parliament will implement numerous important changes to the Fair Work Act this year, following an independent review of the Act in June 2012. Chief among these changes are those concerning complaints brought about by employees upon termination of their employment. Here is a summary of the four key changes that we believe will impact positively on businesses and workplace relations.

  1. Time limits for bringing unfair dismissal and general protections claims will be aligned at 21 days. Currently, employees have 14 days from the date of termination to bring a claim for unfair dismissal, while they have 60 days to apply for a general protections claim. Unlike unfair dismissal applications, which are capped at 26 weeks’ pay (or half of the high income threshold – currently $61,650), compensation for general protections claim is not restricted. Currently there is some overlap between the two types of claim, as a general protection claim may also be brought against an employer in relation to a dismissal. The difference in time limits has sometimes impacted on an aggrieved employee’s choice as to which claim to pursue. Technically, the difference also allows an employee who fails in an unfair dismissal application to bring another application under general protections, potentially creating confusion and a protracted process. This loophole will be closed with the proposed changes to the legislation. It will also provide employees with more time to prepare their applications.
  2. Unfair dismissal applications will be required to contain more details about the circumstances of the dismissal. Although Mr Shorten said this would not necessitate any legislative amendment, we expect that there will be a change to the FWA application forms and the amount of detail and time required to complete them.
  3. Fair Work Australia will have the discretionary power to dismiss unfair dismissal applications where they believe the claim to be vexatious, frivolous or without merit. This power will be utilised, along with the requirement for more details in the application, to weed out baseless claims.
  4. Fair Work Australia will be able to order costs against a party that acts unreasonably in a proceeding. While currently this is a ‘no-cost jurisdiction’, these changes will mean that parties will need to act more responsibly and that there is a greater incentive to reach a settlement.

The Minister’s announcement contained a raft of other future changes relating to processes for negotiating and varying awards, enterprise bargaining, and an opt-out clause in enterprise agreements. Another interesting amendment will come in a name change for Fair Work Australia. The review panel has recommended a new title should contain the word ‘Commission’ and reflect its functions more appropriately. These changes represent more than a third of those recommended in the independent review of the operation of the Fair Work Act, which was finalised in June 2012.

Further changes to the legislation are expected next year as the government implements more recommendations from the independent review panel.

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