Repair not replacement – what the proposed Fair Work Act changes mean for you

by External29 Feb 2016
by Alan McDonald, Managing Director of McDonald Murholme

After a 12-month inquiry, the Productivity Commission released the Workplace Relations Framework Report on the 21st of December, 2015.

The report found the workplace relations system is in need of repair, but not replacement.
Upon review, the report suggests that there are necessary changes in multiple areas that would ultimately affect employers as well as employees. The following areas explore the most integral recommendations of the report.

Unfair Dismissal

It is important to note that the report does not put forward the need for fundamental change in the unfair dismissal law.

However, the suggested changes are significant and would destroy the remains of the unfair dismissal laws.

The Productivity Commission suggests to implement a two-stage test for unfair dismissal claims. The first stage would determine whether the reasons for dismissal were valid.

If proven genuine, the second stage determines if the correct process was followed in termination.

Therein lies an inherent tension and a suspected lack of knowledge of how the laws actually work, with the suggestions for change expected to be based on anecdotes. It puts the ‘cart before the horse,’ and fails to identify that if you follow the correct process, you normally achieve the right outcome.

The report also recommends compensation as a valid remedy for dismissal, instead of the previously suggested reinstatement of employment. This is ineffective as the report admits compensation payments are by and large paltry.  It is a return to the Howard Government policy.
The proposed changes within the report would also affect small businesses.

The suggestion to abolish the small business dismissal code by the Productivity Commission is foolish. It is this code that gives certainty to small business and a higher level of immunity to claims.

The code benefits workers because it ensures a common test and means that working for a small business does not expose them to the whim of the employer dismissing them, as might otherwise be the case.

With these changes, employers need to be more conscious of the potential impact the act of dismissing an employee may have to their business.

Greater emphasis would be placed on employers ensuring that proper course is followed when dismissing an employee and to ensure that proper performance management processes are followed, for compensation would now be the likely outcome of any dismissal found to be unjust.
The General Protections

The report calls for a more precise definition of what a workplace right is. The current framework differs in how extensive these protections are, with added uncertainty about their interpretation and implementation.  

One issue identified with the current general protections framework is the broad scope which it covers. The scope is there to cover a myriad of workplace rights, such as freedom of association and non-discrimination in the workplace. However, some feel it allows an unnecessary number of meritless claims to be made.

The report acknowledges the positive impacts that this large scope covers and to remove such protection would put employees at the mercy of their employers. However, it has found that this breadth may have resulted in false general protection claims being made.

More clearly defined meanings and applications of workplace rights, as well as reporting more information about general protections matters is proposed. All proposed changes have been suggested to be reviewed within 18 months of their implementation, to revaluate their effectiveness and impact on the workforce.

The general protections laws are world class in supporting the Australian standard of fairness and freedom. That will cease if the recommendations proposed in the report are implemented.


The report identifies the frequency of bullying behaviour in many Australian workplaces and acknowledges that the effectiveness of the provisions of the Fair Work Act 2009 (Cth) have not yet had time to be properly evaluated.

Having only been introduced three years ago and with a small number of claims being made, the report acknowledges the limitations when properly assessing the effectiveness of the workplace bullying provisions.

Due to this, the laws surrounding workplace bullying will remain largely unchanged.

However, two amendments have been put forward for consideration for employees who feel they have been the victim of workplace bullying.

These recommendations include the condition that those who submit a bullying application to the Fair Work Commission now need to prove that they have previously sought help from an independent regulatory agency such as a state work health and safety body.

To add a duplication to the claim is to be inefficient and demonstrates a flaw in the Productivity Commission thinking. It would also cause increased costs and delay as the victim would need to make duplicated claims. Furthermore, the victim would need to explain why the first agency was unable to assist.

The second recommendation is to expand the provisions regarding bullying to include the conduct of union officials towards workers and employees.

That would show that the Productivity Commission is not impartial in its thinking. To rope in union officials who are not in the workforce is to leave it open to abuse.

However, whether employees will choose to submit a complaint regarding workplace bullying remains unclear especially with the absence of compensation cited as a reason for the small number of claims.

Many employers still have little faith in the provisions surrounding workplace bullying – with some being of the contention that they are used as a method to extract advantageous exit packages from employers.

The laws are due to come under review in the near future, with the findings forming important input with the potential for a dedicated anti-bullying avenue within the Workplace Relations Framework.

What does this mean for employers?

If the changes proposed in the Productivity Commission report were to come to fruition – employers would now need to put a stronger emphasis on proper processes to minimise the number of claims that could be made against them under the Fair Work Act laws.

Many employers are welcoming these proposed changes such as less extensive definitions of what a workplace right is, with a common feeling that employees have the right to do and say what they please without accountability.

What does this mean for employees?

However, in a contrasting opinion - many employees would feel that these recommended changes deny them further of their right to be respected and appreciated for what they do.
In conclusion, any case that is brought before the Fair Work Commission will rise and fall in their own circumstances, depending on the merit of the case.

Whether or not the recommendations of the Productivity Commission report have a positive or negative impact on the laws will not truly be able to be evaluated until implemented, if at all.


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