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Return of the Unfair Dismissal Laws

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The Federal Opposition has conceded that the majority it gained in the Senate, as a result of the 2004 Election, has proven to have been a poisoned chalice. The WorkChoices legislation, epitomised by the virtual removal of the unfair dismissal laws, provided the 2007 Rudd Government with a mandate to re-introduce a universal unfair dismissal regime.

Rather than react with the immediate replacement of the legislation with the reformist zeal of the Whitlam/Barnard early days, the Rudd/Gillard emphasis has been on creating a balance between business and labour. It took twelve months of consultation and drafting before the release of the Fair Work Bill. The Fair Work Act was subject to considerable debate, particularly in the area of unfair dismissal. These changes are now in operation, having commenced on 1 July 2009.





Employees of small/medium size businesses (100 employees or less) exemption.  This was the most controversial of the Work Choices laws.  This exemption, alone, removed the unfair dismissal protection from 56% of the workforce.

Increased qualifying period (12 months) on employees of small businesses . This is clearly a sop to business interests as, logically, a longer probation period is less likely to be of benefit to small business. Will provide protection to 80% of employees.

The definition of a small business will, until 31 December 2010, be defined as a business with fewer that 15 equivalent full time employees. From 1 January 2011, the definition of a small business will be a business with a simple headcount of less than 15 employees.

Defence to unfair dismissal for small businesses which use procedures of new Small Business Fair Dismissal Code.

‘Genuine Operational Reasons’ exemption.  This became notorious as there were varying interpretations and the legislation provided no guidance.

‘Genuine Redundancy’ exemption.  Must comply with award consultation requirements and redeploy if possible.

Casual employee exemption.

Retained fixed term and fixed task exemptions.

A casual employee will be entitled to make an unfair dismissal application where the casual employee has worked on a regular and systematic basis and has reasonable expectation of continuing employment. Casual employees will save the same qualifying period as permanent employees.

Australian Industrial Relations Commission (AIRC) with conciliation and arbitration.

Fair Work Australia (FWA) as investigator, inquisitor in private sessions.  Less reliance upon formal, public hearings.

Hearings may only be conducted where FWA considers a hearing to be appropriate and not simply the application of an employee or employer.

Applications must be lodged within 21 days of effective termination date.  Created market for lawyers/advocates in applications for extensions.

Applications must be lodged within 14 days of effective termination date.  Explanatory Memorandum justifies this on the basis that it will promote quick resolution.

Unlawful Terminations

The good news for employers is that the decrease in unlawful terminations (discriminatory terminations) is likely to be inversely proportional to the increase in unfair dismissals.  This is good news as unlawful terminations tend to be more legalistic than unfair dismissals and they are uncapped (ie there is no 6 months earnings limit on compensation).

There will be a new prohibition on employers taking ‘adverse action’ against employees with certain attributes such as age, sex and disability.  This appears to be a move to simplify the process by removing the requirement for the ‘comparator test’ to establish that such an employee was treated differently because of the employee’s attribute.


Businesses with 100 or less employees need to ensure they are educated on necessary procedures to be followed prior to executing any termination of employment. Employers should be wary of terminating employees where it could be argued that a reason for the termination was a discriminatory ground, such as temporary absence due to illness or injury; family responsibilities or trade union membership.

If you have any questions or concerns about how the new unfair dismissal or unlawful termination laws will apply to your business, please contact one of our Workplace Relations lawyers.