Unfair dismissal laws dead


The decision by a full bench of the Australian Industrial Relations Commission (AIRC) on appeal to deny a Victorian cinema manager access to unfair dismissal laws because he was sacked for "genuine operational reasons" is another blow to attempts to hold unfair employers to account.

On January 15, Warren Carter, former general manager of the Village Roadshow cinema in Doncaster, Melbourne, had his successful claim for unfair dismissal against the company overturned. The AIRC decided that it could not consider the details of Carter's sacking because Village Roadshow could establish that he was sacked for "genuine operational reasons".

Carter had worked for Village Roadshow for 19 years. Last July, the Doncaster cinema he managed was closed and demolished. The company claimed that it had no equivalent position vacant at any of its hundreds of cinema complexes across Victoria.

Carter offered to take long-service leave for up to six months, to wait for a position to become vacant. He also agreed to a less senior position. Yet, despite finding work for all other Doncaster site employees, Village Roadshow ignored Carter's offers and sacked him.

Last September, at Carter's initial challenge to his dismissal, AIRC commissioner Hingley found that Carter was unfairly dismissed because Village Roadshow had failed to take into account his offers to make his redeployment easier.

Federal workplace relations minister Kevin Andrews then initiated an appeal on Village Roadshow's behalf to the AIRC full bench. The full bench found the facts that Carter had been willing to take leave, had been prepared to accept a lower paid job, and had worked for the company for 19 years irrelevant. All that Village Roadshow had to demonstrate was that the reasons for sacking Carter included a "genuine operational reason". Once that was established, a claim for unfair dismissal was not allowed to proceed.

Under the Howard government's Work Choices amendments to the Workplace Relations Act, workers in businesses employing fewer than 100 employees lose their right to challenge their employer for unfair dismissal. This measure was justified by the claim that it was necessary to safeguard the profitability of small business.

At the same time, businesses that employed more than 100 workers were given a loophole. Work Choices makes it clear that an application for unfair dismissal cannot be heard by the AIRC "if the employee's employment was terminated for genuine operational reasons, or for reasons that include genuine operational reasons" (s643(8)). Operational reasons, including technological, economic or structural changes, are given a very broad interpretation.

Writing in The Economic and Labour Relations Review in May 2006, industrial lawyer Anna Chapman argues: "Notably, the new provisions refer to 'operational reasons' not operational requirements. The concept of an operational reason is clearly much broader than the idea of an operational requirement and so easier for an employer to satisfy." In other words, all that employers have to show is that some technological, economic or structural adjustment had been made to the business to justify the sacking of any worker at any time.

Businesses do not have to show the AIRC that the operational reason was a compelling one. They do not have to show that it was necessary for the business's survival, or even for its prosperity. All they need to show is that it happened (in Carter's case, that the cinema was closed) and that, at least partially as a result, the employee was sacked.

In a federal election year, the Liberals are anxious to caution business not to use this newly established whip too freely. "No employer should get excited about this decision because they can't just assert carte blanche that there are operational reasons", Andrews said on ABC radio's AM program on January 16.

However, the burden of proof on employers is now minimal. "This decision says that as soon as the AIRC is satisfied that there were genuine operational grounds, they can't look any more at whether it was a fair decision or not", Flinders University law professor Andrew Stewart told the Melbourne Age on January 17.

The abolition of unfair dismissal laws has been a long-standing Liberal Party policy. It has also been the long-held dream of employer groups such as the Australian Chamber of Commerce and Industry.

In the August 2005 ACCI Review, they wail: "No matter how flimsy a former employee's claim to unfair dismissal is, the system works to pressure employers to settle matters to minimise their legal costs. Even if they are eventually successful, in most cases an employer will have incurred a greater cost defending themselves against the claim than if they initially settled. For this reason, employer advocates or lawyers will usually advise an employer to settle on commercial grounds."

Unsurprisingly, ACCI chief executive Peter Hendy welcomed the AIRC decision. "How anybody can object to a decision that says that a person can be made redundant for genuine operational reasons is beyond us", he told the Age on January 16. "Work Choices in this area balanced up the situation from where it was."

With the implementation of Work Choices, the Howard government has taken a big step toward the abolition of unfair dismissal laws. And the AIRC's recent decision to throw out Warren Carter's unfair dismissal claim narrows down the likelihood that the commission will even consider hearing unfair dismissal claims.