Forward with Unfair Dismissal Claims

Kim Southey
ABSTRACT: A new regime of unfair dismissal legislation under the Forward with Fairness revisions is expected to commence in Australia from July 2009. This article outlines the major principles of the proposal, particularly the revisions to the employment categories restricted from lodging unfair dismissal claims. Secondly, the results of an analysis of unfair dismissal arbitration decisions of the Australian Industrial Relations Commission during 2004 and 2005 are presented to develop the benefit of hindsight, particularly where businesses demonstrated strengths and weaknesses at the unfair dismissal arbitration table. The variables explored in the analysis relate to: the arbitration result in association with the size of the employer's business; the industry sector in which the business belongs; the occupational skill level of the dismissed employee; the presence of a human resource expert during the dismissal; the reason for the dismissal; and the type of remedy when one is ordered.

Introduction
The first purpose of this article is to identify the major principles of the Forward with Fairness (FWF) unfair dismissal revisions to the Workplace Relations Act 1996 and to examine the categories of excluded employees that exist under the FWF proposals, compared with those within the Work Choices legislation. The Significance of these changes to unfair d ismissallegislation is that it affects Australia's job security, even though the vast majority of Australians will never make a claim. Peetz (2007: 37-8) suggested the critical public response to Work Choices, which saw only a small minority of employees on individualised workplace agreements, was a reaction to broader provisions like the unfair dismissal changes that reduced protections for several million workers. Since the introduction of Work Choices, unfair dismissal claims to the Australian Industrial Helations Commission (AmC) have shown a

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downward trend (AIRC 2008). The Labor government states the FWF revisions focus on restoring a balance between employee protection and employer needs (Gillard 2008b: 8). A Substantive Bill is expected to be introduced into Parliament by the end of 2008 for consideration by a full Senate Committee inquiry, with the ambition of commencing the new unfair dismissal system from 1 July 2009 (DEEWR 2008a). This will come six months earlier than other workplace relations amendments, so as to 'give Australians relief from the harshest remaining aspects of Work Choices as quickly as possible' (Gillard 2008b: 10). The second aim of this article is to present an analysis of pre-Work Choices unfair dismissal arbitrations determined by the AIRC during 2004 and 2005. The purpose of this analysis is to identify the areas in which businesses performed well and not so well in defending their dismissal actions. The value of this analysis is that it uses hindsight to better understand the arbitration outcomes for employers, employees and their representatives. The arbitration decisions made in 2004 and 2005 occurred before the Work Choices' employer protections for business size and operating reasons limited workers' access to the AIRC. On that basis the 2004 and 2005 arbitration decisions provide data more generalisable to the anticipated state of play under FWF in terms of eligible employees who can pursue an unfair dismissal arbitration claim. The variables explored relate to: the size of the employer's business; the industry sector in which the business belongs; the occupational skill level of the dismissed employee; the presence of a human resource (HR) expert during the dismissal; the reason for the dismissal; and the type of remedy where one is ordered.

The Forward with Fairness Substantive.BiII

Forward with Fairness aims to lift exclusions on employees in businesses with up to 100 staff and those dismissed for an operational reason. The introduction of these exclusions coincided with a decline in the number of claims received by the AIRC. The numbers in Table J show the lodgement of claims with the AIRC is lower under Work Choices, with jurisdictionally permissible (substantive) arbitration heavily declining (from 223 to just 69 official determinations). There was also a significant increase in cases rejected for substantive arbitration hearings as a result of jurisdictional issues. These are predictable results arising from the tough Work Choices limitations on allowable claims. Table J also indicates that the pre-, during and post-conciliation stages of claim handling experienced less fluctuation since Work Choices commenced. The vast majority of claims consistently settled at or prior to conciliation, with the number of claims resolved by conciliation remaining steady at around 75 per cent over the years. This would indicate that conciliation is working effectively

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in the AIRC's management of unfair dismissal claims. (Statistics on the number of claims settled prior to conciliation are not available in the reports.) The AIRC reports also show that annually, around JOOO claims either settle or discontinue, after conciliation but prior to an arbitration hearing. This indicates employees will frequently take a claim for conciliation but are reluctant to pursue their claim through the arbitration process. Uncertainty, cost or complexity of the arbitration process would be plausible explanations for this. Alternatively, they are settling with their employer outside the process.

Table 1: Australian lndustrial Relations Commission - unfair dismissal claim statistics

Pre-Work Choices 2003-04 Claims lodged lor unlair dismissal' Claims finalised at or prior to conciliation Claims finalised post conciliation but prior to arbitration Claims dismissed jurisdiction Claims dismissed no out-ol-time 7044 5763 1139 129 77 223 75 2004-05 6707 5654 985 120 41 202 77 2005-06 5758 4739 1143 128 62 124 73 Work Choices 2006-07 5173 4508 922 255 87 101 73 2007-08 6067 5282 930 382 135 69 73

Claims finalised by substantive arbitration Conciliation settlement rate (%J

'Claims lodged are not always finalised in the same year. Finalised claim figures contain approximately 200 cases lodged from previous years. Source: Australian Industrial Relations Commission 2004, 200Sa, 2006, 2007a, 2008.

The small business fair dismissal code

A new feature of the FWF Bill, and new to our industrial relations system, is a fair dismissal code for use by businesses with fewer than fifteen employees. The Small Business Fair Dismissal Code (DEEWR 2008b) allows an employee to be dismissed without warning in instances of serious misconduct, with examples of theft, fraud, violence or serious breaches of safety rules listed in the Code. Otherwise, dismissal can occur only on the basis of the employee's conduct or capacity to do the job. In this circumstance, the Code requires the employee to be warned that a dismissal is imminent if no improvement occurs. Whilst the warning does not have to be in writing, the Code places a requirement on the employer to allow the employee

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the opportunity to respond to the warning and to assist the employee by offer of training to improve his/her performance. The Code allows for the employee to have a representative present during discussions, provided the representative is not a hired legal professional. Finally, the Code places onus on the small business owner to substantiate compliance with the Code in the event the employee makes a claim. To assist with this aspect of the Code, a three-page, eight-item checklist has been developed for employers to guide them in a fair and compliant dismissal process. The checklist is not mandatory, but recommended to be completed and retained in the interests of the employer.

Fair Work Australia

A further major change under FWF is that the responsibility for settling claims will fall to Fair Work Australia (FWA), in place of the AlRC. Fair Work Australia is expected to be fully operational by ] January 201 O. Labor held concerns that appointments to the AlRC were unbalanced, with the Howard Government drawing significantly from people with employer-related backgrounds (Gillard 2007; Rudd and Gillard 2007a: 25). Described by its originating government as an independent industrial umpire with teeth (Gillard 2008b: 9), FWA will replace the AJRC, the Australian lndustrial Registry, the Australian Fair Pay Commission and the Fair Pay Commission Secretariat, Workplace Authority, the Workplace Ombudsman, and the Australian Building and Construction Commission (Gillard 2008a: ] -2). Fair Work Australia is being promoted as a' one-stop shop' for industrial relations advice, help and compliance.

Removing 'go away' money

It is also proposed that the FWF provisions will relieve employers of the need to pay 'go away' money (DEEWR 2008b) - statistics on 'go away' money are elusive and there are suggestions it is vexatious payment exploited by the worker (Finch 2005). A business consultant's survey found that 30 per cent of companies pay 'go away' money to avoid speculative or vexatious unfair dismissal clnims (Finch 2005). ln defence of the employee, Elton (2008: 8) found that aggrieved female workers in predominantly service-sector positions were not motivated by the opportunity to collect 'go away' money in lieu of a hearing. Whether this type of compensation happens at conciliLllion or 'under the table' is unclear, although the Rl.Idd Government is suggesting that it is part of the conciliation process if it believes FWA will be able to control such payments. Remedies awarded through arbitration are documented nnd made publicly avnilnble, whereas publiC records of conciliation settlements do not exist. lt is not clear whether records will be provided for public

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scrutiny by FWA, given it is to provide a non-legalistic approach to resolving claims for all businesses, by relying on informal mediation conferences and only using full public hearings for 'particularly complex issues' (DEEWR 200Sb). As public records of 'go away' payments do not currently exist, the question arises as to how FWA can provide evidence that it is meeting the commitment to stop such payments.

Revisions to Eligibility Requirements for Unfair Dismissal Claims

In order to comment on the anticipated impact of the FWF provisions on claims it is necessary to examine the variation between current and proposed legislation in terms of the employment categories permitted to make claims. The list of employees eligible to lodge a federal unfair dismissal claim has undergone several legislative iterations in the last four years, as shown in Table 2. Table 2 demonstrates that the widest breadth of employees excluded from lodging an unfair dismissal claim clearly occurs under Work Choices, and, in contrast, the pre-election FWF policy moved towards allowing the majority of employees to make unfair dismissal claims. There are a number of important implications that arise from these changes.

(a) From a 100- to a fifteen-employee business size exclusion

The 100 employee Work Choices exemption was legislated on the premise that small- and medium-sized businesses were restraining from increasing their work forces in fear of potential unfair dismissal claims. The literature has questioned the strength of the job growth -unfair dismissal link used to underpin the Work Choices exemption (Department of the Senate 2005: 31; Freyens and Oslington 2007: 13; Robbins and Vo1l2005: 248). In its place FWF sets a much lower exclusion limit: businesses employing up to fifteen staff. This exclusion occurs on the basis that 'they do not have human resource management they cannot afford to lose time and they cannot readily redeploy employees into other positions' (OEEWR 2008b: 1). The elimination of this category means businesses of fifteen or more'staff v.'i11 need to ensure their dismissal processes are procedurally fair.

(b) From probationary employees to service periods

Claims excluded on the basis of probation will be superseded by the FWF proposal to include a service period before employees can bring a claim (twelve months for businesses below fifteen staff and six months for businesses of fifteen staff or over). One of the benefits with this proposal is that it dispenses with the

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Table 2: Comparison of unfair dismissal grounds for exclusion

Workplace Relations Act 1996: Pre-Work Choices Workplace Relations Act 1996: Work Choices (2006)
If employed in a businesses wilh 100 or fewer workers If serving a three month or less qualifying period or other qualifying period provided it has been agreed in writing before commencing and reasonable for the nature of the employment If serving a six month or less qualifying period of employment or a three month or less probationary period that was determined in advance Forward with Fairness Pre-election Policy April & August (2007) If employed for less than 12 months in a business with fewer than 15 employees If employed for less than 6 months in larger businesses (15 or more employees) Forward with Fairness Bill as at 17 September (2008) If less Ihan 12 monlhs regular and systematic employment in a business with fewer than 15 employees If less than 6 months regular and systemic employment in larger businesses

If dismissed for a genuine operational reason which includes economic. technological or structural reasons relating to the employer's business If employed as a seasonal worker If under an employment contract for a specified period or task If employed under a National Training Wage Traineeship If employed as a casual employee less than 12 months If not covered by an award and earning $90.400 a year or above in remuneration (indexed). If under an employment contract for a specified period or task If employed as a trainee or approved apprentice If employed as a casual employee for a short period If not covered by an award or workplace agreement and earning $106,400 or above a year in remuneration (indexed). If pursuing other termination related proceedings If it has been over 21 days since dismissal If it has been over 21 days since dismissal

If made genuinely redundant because of downturn in business.

If made genuinely redundant because of downturn in business or position no longer needed

If at the end of a seasonal or specified task employment contract

If not covered by an award and earning $98.200 a year or above in remuneration (indexed)

If not covered by an award and earning $98.200 a year or above in remuneration (indexed)

If it has been over 7 days since dismissal

If it has been over 7 days since dismissal

Sources: Australi;ln Industrial Hclatiolls Commission 2005b, 2007b; DEEWH 2008b; Hudd and Gillard 2007a, 2007b.

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confusion between periods of probation and service (or qualifying) periods if a dismissal needs to occur. The FWF service period automatically applies to a new worker for the express purpose of excluding the employee from making an unfair dismissal claim if they are terminated during that time. In contrast, probation periods require a clear and agreed term in the employment contract advising that a probation period exists at the time of appointment (Michalandos 2007). Probation serves to alleviate notice period obligations for either party whilst they engage in a trial employment period (Michalandos 2007). The service periods will have a moderating effect on some of the exclusion categories for businesses of less than fifteen staff. This occurs in the case of traineeships that are normally of twelve months' duration, thus businesses of fewer than fifteen staff will not be exposed. But larger businesses will be exposed if they terminate a trainee after six months' service. Casuals of over twelve months' service have long been able to lodge claims. Small finns will not be exposed in this area, but the larger sized businesses will be exposed to claims from casuals with six to twelve months' service.
(c) From operational reason to genuine redundancy

The Labor government contends its use of' genuine redundancy' is different to the Work Choices broader application of a' genuine operational reason'. Labor's FWF policies have been criticised by the unions for yielding to the interest of big business (Bramble 2008: 231) and the exclusion of redundant employees from unfair dismissal protection could be cited as an example. The other side of the argument is that the redundancy exclusion addresses calls to 'more evenly balance the competing objectives of managerial freedom and employment security than the current Work Choices laws' (Forsyth 2008: 536). The chosen stance of the Labor government is that 'if an employee is made redundant because of a downturn or their position is no longer needed, it is not grounds for unfair dismissal' (Gillard 2008b: 9). This exclusion provides a balance between managerial prerogative and employee security, provided the redundancy candidates are selected fairly. A complication arises if the employer uses redundancy as an excuse to dismissan employee for a personal or performance reason, or if the employee feels the redundancy process was not conducted fairly. The \-\lork Choices application of an 'operational reason' means employee claims are rejected without further consideration into the fairness of the process, once the employer successfully pleads an operational reason (Forsyth 2007: 75). That is, under Work Choices the AIRC must deal with the operational reason exclusion before even providing its conciliation services (Forsyth 2007: 74), either through hearings or an 'on the papers' evaluation (Forsyth 2008: 5] 5). The risk is redundancy claims will continue

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to be blocked if FWA also addresses the employer's need for a redundancy before hearing the employee's concern that the redundancy was unfair.

(d) Seasonal workers, specified task and specified period employees

The FWF Bill excludes seasonal and specific task employees because 'the ending of employment that was for a fixed period or task is not considered to be a dismissal' (OEEWR Factsheet 2008b: 2). This could be interpreted to suggest that seasonal, specified term and specific task employees outside the minimum service periods of six or twelve months - but not yet at the end of the nominated expiry date or completion of a project or season - could pursue a claim if they feel they are unfairly dismissed for summary or performance-related reasons. Such an interpretation will mean that this is a new area of exposure for employers. Currently, the AIRC will not entertain a dismissal claim if the employer successfully argues the employee was a seasonal worker, specified task, or specified period employee, regardless of whether the termination occurred before the trlle e1Jd of the work. If FWA similarly deals with the jurisdictional issue first, then this aspect of the legislation will maintain the Work Choices status quo. If however, FWA rejects claims only when the contract has come to its natural end, then FWF wiIl afford much better employment security to these workers.

(e) Casual employees

The FWF exemptions do not identify casual employees as an excluded category, unlike the current and previous legislation. The implication of this is that businesses of fifteen or more staff will be exposed to a new source of claims: casuals that perform systematic and regular employment with at least six months' service. Casual work, whilst originaIly intended to cater for short-term and intermittent positions, often involves employment of an ongoing nature (Pittard 2006: 233). The removal of casuals as expressly excluded employees under the FWF signals support for Australia's increasingly casual workforce and a recognition of the need to provide a better level of protection for such workers.

(j) Apprentices and tminees

Table 2 reveals that apprentices and trainees will be able to make an unfair dismissal claim. This will complicate the cmrent process for cancelling a training agreement. Save for the service periods, this is a new area of exposure for business. Australia has experienced declining apprenticeship rates for over a decade and is now challenged by trade shortages (Toner 2003: 457). Toner (2003: 478-9) concluded

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that the strongest explanations for a decline in apprentices are structural changes over the last decade, such as increased outsourcing and labour hire, and reduced public-sector apprenticeships resulting from privatisation of public utilities. While one single factor cannot explnin the decline in apprentices, on an intuitive level, it is hard to discount the proposal that allowing apprentices to claim unfair dismissal will not discourage employers from engaging apprentices. This response requires one to reject the sound arguments that unfair dismissal does not deter employers from providing jobs (Barrett 2003: 92; Department of the Senate 2005: 4; Robbins nnd Voll 2005: 250). The FWF proposal will add a never seen before dynamic to the apprenticeship contract of employment, and government and industry groups should plan to monitor this aspect to detect whether the legislation produces a deleterious effect on apprenticeship numbers.

(g) Claim /odgemel1 t period

A tougher provision on dismissed employees is found in the FWF revisions: a reduction in the claim lodgement period to seven days. Currently, employees have 21 days to lodge a claim. This means an employer has had time to hire a replacement employee before the hearing takes place, which forecloses the possibility of reinstatement. The reforms propose a seven-day deadline to maintain the viability of reinstatement as the remedy of choice (Rudd and Gillard 2007b: 19). Both pieces of legislation allow employees to ask for an out-of-time claim. The downside of the much shortened lodgement period is that it is likely to produce an increase in out-of-time claims. Seven days to lodge a claim provides a dismissed employee with an inordinately short time to reflect on their circumstances and put a claim into action, particularly if the dismissed employee is without union representation to provide timely advice. Where a union is involved, its research, counselling, advice and lodgement activities will need to be conducted under much greater time pressure. For employers the seven-day lodgement period may provide some offset to increases in claims, with it likely that there will be workers who miss the lodgement period. Pittard (2006: 24]) suggested the Work Choices unfnir dismissal regulations promoted a two-tier system of unfair dismissal labour rights: the 'excluded' and 'included' employees. In its plnce, the FWF Bill reflects in general the Labor party's election policy by revising all of the Work Choices exclusions. Apart from the stricter seven-day lodgement period employees will be given an improved level of job security. That said, the exclusions relating to redundancy, seasonal workers, task nnd specific period employees have potential to continue to disadvantage employees. Just how businesses perform, when conciliation fails and arbitration takes place, is addressed in the next section.

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Research Method
A list of all nrbitration decisions made by the AIRC between] January 2004 and 31 December 2005 was downloaded from the AIRC website, in which 505 decisions were identified in relation to unlawful termination of employment or unfair dismissal. Each case was viewed online in order to select for printing those decisions pertaining to a first-round unfair dismissal arbitration decision made by a single member of the Commission. Also selected were outside-jurisdiction claims where the Commission found that the employee was a trainee, apprentice, short-term casual, or on probation, or that employees, believing they had been dismissed, had surrendered their employment contract through a resignation. These cases require a judgement by the Commission after hearing submissions on the jurisdictional suitability of the claim. Excluded from analysis were Full Bench hearings of appeals made against arbitration decisions, and out-of-time cases where the grievant lodged the claim more than 21 days after the termination took place. (At the time of data collection for this study, lodgement periods were not an issue. In hindsight, it would have been useful to have collected the out-oftime claims.) Claims lodged by non-award employees or salary earners above the remuneration cap in 2004-2005 were further excluded, although there were limited occurrences of this nature. This process resulted in 384 decisions from which data were collected on the arbitration decision, the size of the business, industry sector, occupational skill level, presence of a HR expert, reason for the dismissal, and remedies awarded to successful grievants. Where decisions awarded a financial remedy without noting a weekly wage, a conservntive estimate was made using the 2005 minimum wage. In instances where decisions did not record details about business size or the presence of a HR expert, reference was made to the Australian Business Who's Who database to supplement the data. Industry was classified according to the Australian and New Zealand Standard Industrial Classification (ABS ] 993). Frequency counts in some of the industries were insufficient to perform sound statistical analysis on all seventeen industries and it was necessary to combine these classifications into three major sectors for further analysis: a product-related sector; a trade-related sector; and a services-related seclor. Table 3 identifies the collapsed categories. Occupational groups for this study were determined using the Australian Standard Classification of Occupations (ABS 1997). This nine-level classification differentiates occupational groups according to formal education, training, and previous experience required. Again, low frequency counls occurring in several

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of the individual categories required the collapsing of nine categories into three logical categories for analysis: higher skilled; intermediate skilled; and lower skilled. Table 3 identifies these categories.

Results of Statistical Analysis and Discussion

The research findings and discussion are presented in two sections. The first section describes claims where conciliation was unsuccessful and the aggrieved employee pursued the next stage: arbitration. It examines both within-jurisdiction claims (substantive arbitration) and those dismissed because of jurisdictional barriers (non-substantive). The second section contains the bivariate analysis of the substantive arbitration claims determined by the AIRC.lt is noted that whilst this study provides a sound sample of unfair dismissal claims that proceed to arbitration, generalisation to the wider ambit of unfair dismissal claims settled through conciliation is neither valid nor the intention of this study.

Section one: unfair dismissal arbitration - substantive and non-substantive claims

Table 3 contains descriptive statistics showing frequencies and percentages of values within the independent variables to provide a profile of the unfair dismissal arbitration activity for 2004-2005. By default, the outcome of an outside-jurisdiction claim always favours the employer and the awarding of a remedy favours the worker, thus conducting further comparative analysis on these variables is impractical, with further discussion best drawn from the descriptive statistics.

(a) Outcomes of claims seeking unfair dismissal arbitration

The 384 cases in Table 3 included ]42 cases favouring the workers (37 per cent) and 242 in the employers' favour (63 per cent). This figure is inflated in the employers' favour as it includes cases that were filed and then found to be out of jurisdiction (non-substantive claims). The split counting the 274 within-jurisdiction cases (substantive claims) is 132 (48.2 per cent) favourable to the employer and] 42 (5].8 per cent) favourable to the worker. This study's figures are within the vicinity of those found in the Chelliah and D'Netto (2006: 489) study of AIRC arbitration outcomes between] 997 and 2000, which found 50.6 per cent supported the aggrieved employee, leaving 49.4 per cent of decisions supporting the employer.

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Table 3: Unfair dismissal, claims for arbitration 2004-2005, descriptive statistics

Variable Outcome of Unfair Dismissal Claim (n=384) Arbilralion decision in worker's favour Arbitration decision in employer's favour Case rejected - outside AIRC jurisdiction , Remedies (n=142) Reinstatement Reinstatement with back pay Financial compensation under $1,000 Financial compensation $1,001 to $5.000 Financial compensation $5,001 to $10,000 Financial compensation $10,001 to $15.000 Financial compensation $15,001 to $20,000 Financial compensation over $20,000 Other Business Size (n=226) 10 or less employees 11 to 25 employees 26 to 50 employees 51 to 100 employees 101 to 200 employees 201 to 500 employees 501 10 1,000 employees 1.001 to 10.000 employees Over 10.000 employees Industry Sector (n=384) Agriculture, Forestry and Fishing" Mining" Manufacturing" ElectriCity. Gas and Waler Supply" Construction" Wholesale Trade l Retail Tradel 8 11 81 3 28 8 36 2.1 2.9 21.1 0.8 7.3 2.1 9.4 2.1 4.9 26.0 26.8 34.1 36.2 45.6 12 13 27 29 25 21 18 44 37 5.3 5.8 11.9 12.8 11.1 9.3 8.0 19.4 16.4 5.3 11.1 23.0 35.8 46.9 56.2 64.2 83.6 100.0 40 18 22 10 8 18 14 11 9.9 7.7 .7 28.2 12.7 15.5 7.0 5.6 12.7 9.9 17.6 18.3 46.5 59.2 74.7 81.7 87.3 100.0 142 132 110 37.0 34.4 28.6 37.0 71.4 100.0 Number of Cases

Cumulative %

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51.3 62.0 65.1 66.7 76.3 83.1 89.1 95.6 98.4 100.0

Accommodation, Cafes and Restaurants# Transport and Storage# Communication Services# Finance and Insurance# Property and Business Services# Government Admin and Defence# Education# Health and Community Services# Cultural and Recreational Services# Personal and Other Services# Occupational Skill Level (n=365) Managers and Administrators H Professionals H Associate Professionals H Tradespersons and Related Workers l Advanced Clerical and Service Workers l Intermediate Clerical and Service Workers l Intermediate Production & Transport Workers l Elementary Clerical, Sales & Service Workers L Labourers and Related Workers L Presence of Human Resource Expert (n=311) HR expert No HR expert

22 41 12 6 37 26 23 25 11 6

5.7 10.7 3.1 1.6 9.6 6.8 6.0 6.5 2.9 1.6

23 31 38 40 25 47 74 24 63

6.3 8.5 10.4 11.0 6.8 12.9 20.3 6.6 17.3

6.3 14.8 25.2 36.2 43.0 55.9 76.2 82.7 100.0

188 123

60.5 39.5

60.5 100.0

Notes: *=product sector; t=trade sector; t=services sector; H=higher skill; I =intermediate skill; L=lower skill.

(b) Remedies awarded in successful unfair dismissal claims

The data in Table 3 indicate that reinstatement occurred in ] 7.6 per cent of the cases, in which 7.7 per cent also received backpay. The largest percentage of cases (28.2 per cent) awarded a payment ofbehveen $],000 and $5,000. Robbins and VolI's (2005: 248) extensive survey of regional small businesses in 2003 found the median compensation payment was $2,000. What cannot be ignored in Table 3 is that 12.6 per cent of remedies equated to amounts over $] 5,000. Celliah and D'Netto (2006: 494) found the AlRC awarded an average] 3.2] weeks' worth of wages as a remedy. Researchers are starting to identify the average range of compensation amounts (albeit using different measurement scales), which provides helpful information to

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employers and claimants. Beyond Voll's assessment that payouts 'may be relatively minor' (2005: 1), we have limited capacity to comment on the actual impact these payments have on the financial health of smaller businesses.

Section two: bivariate analysis of substantive arbitration decisions

Chi-square tests, with significance recognised if p <.05, were used to determine if arbitration of the witiJin-jurisdiction claims favoured employers or workers in terms of their business size, industry, occupational skill level and HR presence. The results are contained in Table 4. The variable pertaining to the reason dismissed is treated separately in Table 5.

(a) Business size

The Work Choices' 100-employee business size exemption provided the basis for the Table 4 chi-square test pertaining to business size, which revealed that there is a strong significant difference in the number of decisions won by businesses employing less than 100 workers compared to larger sized employers. It suggests that larger employers have a significantly higher chance of successfully defending their dismissal activity and firms of fewer than 100 employees are significantly less successful in defending their dismissals. Without the protection of the Work Choices exclusions, businesses of under 100 employees can be predicted to perform worse at the arbitration table than their larger business counterparts. There is a potential issue of under-representation of small business employees in this study's sample. To explain, Table 3 reveals 11.1 per cent of the claims for arbitration were from businesses with less than 25 staff in this study In comparison Barrett (2003: 91) calculated that 22 per cent of unfair dismissal claims for the four years after the 1996 Workplace Relations Act were from small business employers. A more recent Senate inquiry estimated 34..1 per cent of claims were from businesses of 20 or fewer employees during 2003 (Department of the Senate 2005: 19).111 reality, ABS statistics show small businesses of less than 20 employees employed 38 per cent of Australian workers in 2001 (ABS 2003). Despite the variation amongst these studies, each figure still reflects a disproportionately lower number of arbitration claims from the small business sector compared with the number of positions they provide in Australia. Several explanations could explain this phenomenon. It could be that small businesses settle at conciliation to avoid the resource drain of an arbitration hearing. Further, the challenge for unions to penetrate small and medium enterprises compared to a greater union presence in larger organisations (McCracken and Sanderson 2004: 287; Parker 2000: 248) results in employees being more aware of

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their appeal rights in big firms compared with small business employees. In concert with this is the close proximity of the working relationships within small businesses and the networks formed amongst workers, suppliers and customers (Kinnie et al. 1999: 233). This proximity might breed reluctance from dismissed employees to pursue an arbitration claim for fear of severing social support or employment prospects from various stakeholders with whom they interacted during the term of their employment.

Table 4: Unfair dismissal substantive arbitration X2 results

Variable Worker Favour Employer Favour X2, df, P value

Business Size (n

=179)
44 50 20 65
X2

Up to 100 employees Over 100 employees Industry Sector (n Product Sector Trade Sector Service Sector Occupational Skill Level (n Higher Intermediate Lower Presence of HR expertise (n HR expertise No HR expertise

=10.5306. df 1. P =.0012
Significant p <.05

=274)
62 16 64 47 10 75
X2

=3.9596, df 2. p =.1381

Not significant p > .05

=266)
22 71 45 40 66 22
X2

=12.9462. df 2. P =.0015
Significant p <.05

=244)
64 57 88 35
X2

=9.0346, df 1, P =.0026
Significant p <.05

(b) Industry sector in which the employment occurred

The industry sector in which the claim originated is not significantly associated with an arbitration result based on the chi-square test shown in Table 4. The premise of including this variable was that Klass, Brown and Heneman (1998: 157) found variations in the achlal rates of dismissal amongst industries in Australia. Additionally, Head and Lucas' (2004: 695) and Mills and Dalton's (1994: 58) research into grievances in service-related industries propose that service industries may have different patterns of disputes and grievance resolutions compared to industries that do not have the same intangible output. These propositions have not been

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supported by the findings in this study, which is positive sign for workers across industries.
(c) Occupational skill level of the employee

Table 4 reveals a strong statistical association between the occupational skill level and the arbitration decision. Employees in the lower skilled occupations, such as labourers, sales assistants, filing clerks, telemarketers, guards, cleaners and kitchen hands, are associated with gaining favourable arbitration outcomes. The results suggest a further trend, with intermediate skill level employees, which would include tradespeople, secretaries, plant operators, drivers, storepersons and accounting clerks, being less likely to win their case compared with lower skilled workers. However, these employees are more likely to win a case than the higher skilled workers. It is the higher skilled workers who are associated strongly with unfavourable arbitration decisions. Higher skilled workers include engineers, accountants, technical officers, chefs, nurses, police, musicians, teachers and managers. An explanation for this trend could be Australia's increasing labour demand for highly skilled workers such as managers, professionals and para-professionals (Gall an, Pickersgill and Sullivan] 996: ] 6; Kelly and Lewis 2003: ] 3; Kelly and Lewis 2001: 8-9; Lewis 2004: 7). Within a competitive labour market, employers would ensure they have exhausted every discipline and/or developmental avenue before dismissing a highly qualified employee. This would serve the employer's defence well when presented at an unfair dismissal arbitration hearing. The converse of this situation appears to be occurring for people in lower occu pational skill grou ps - that is, employers failing to defend their actions at arbitration hearings. Kelly and Lewis (2001: ] 2) and Lewis and Ong (2000: ] 3) describe Australian low skilled workers as facing diminishing work opportunities and redundancies because of automation and organisational demands for productivity improvements. The 'expendability' of labour in lower skilled occupations may be exposing these workers to harsher dismissal practices - which are being noticed by the unfair dismissal arbitrators who find in favour of their claims.

(d) Presence of HR expertise and arbitration decisions

Also shown in Table 4 is the existence of a statistically Significant difference between the decisions given according to the presence of HR expertise. As would be anticipated, firms with an HR expert are more likely to receive a favourable outcome. Human resource specialists provide the benefit of legally conversant and formalised people management processes (Pratten and Lovatt 2005: 297-8).

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In organisations void of a HR expert, which in most instances are the smaller operations, the locus of control reverts to owners or managers, who, in using informal practices and arbitrary decision making (Head and Lucas 2004: 697), risk neglecting 'procedural justice' during a discipline and/or termination process (Earnshaw, Marchington and Goodman 2000: 72).

Table 5: AIRC arbitration decisions according to reason for the dismissal

AIRC Decision Reason provided by employer (n=384) No. of Claims 97 74 40 53 18 78 13 11

Cumulative

Worker Favour

Employer Favour

Outside Jurisdiction

Serious misconduct Performance related Employee resigned Casual/short-term/traineel apprentice On probation Made redundant (operational reason) Medically unfit Other, e.g. abandoned employment

25.2 19.3 10.4 13.8 4.7 20.3 3.4 2.9

25.2 44.5 54.9 68.7 73.4 93.7 97.1 100.0

38 30 6 3 0 59 5

58 44 2 nil 32 49

17
17 8 2 nil 9

(e) Reason for the dismissal

Chi-square tests require a minimum of five cases in each cell. Two of the values within the variable of the dismissal reason fell below five and prevented the calculation of an 8 x 3 cross tabulation. In addition, combining categories to meet minimum assumptions meant important details were lost by over-broadening the categories. Instead, Table 5 presents the descriptive statistics of how workers and employers fared in their dismissal claims based on the reason for the dismissal. The statistics show that employers who dismiss on the basis of serious misconduct or performance successfully support their actions in the majority of cases. Table 5 shows that employees made redundant in 2004 and 2005 accounted for 20.3 per cent of claims for arbitration, with the vast majority of decisions (75.6 per cent) falling in the workers' favour. Work Choices legislation currently prevents such cases being heard. Under the FWF, the supplementation of the 'operational reason' exclusion with 'genuine redundancy' may mean that employees will

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continue to be left without recourse if FWA rejects claims from employees that, although they are subject to a genuine redundancy situation, they were selected for redundancy on an unfair basis. The FWF proposals will allow claims to be heard from casuals, trainees and apprentices (once minimum service periods are completed) and possibly seasonal/ specific project employees. The results shown in Table 5 suggest that ]3.8 per cent of all claims were from employees of this nature. Jurisdictional restrictions in force then (and under Work Choices) resulted in an overwhelming majority being ruled out of jurisdiction.

Preparing for the Forward with Fairness Regime

The examination of the available information on the FWF Bill undertaken in the first section of this article, in combination with the arbitration data explored in this study, reveal important insights into 1.1I1fair dismissal that can inform employers (and employees) as we prepare for a new unfair dismissal regime. In 2004 and 2005, 20.3 per cent of arbitration claims were from employees who had been discharged in the name of redundancy. The lesson to be learned from the decisions of 2004 and 2005 is that employers were being noticed for a deficiency in their methods for conducting redundancies, only managing to successfully defend their practice in less than a quarter of the arbitration cases. Work Choices protected employers from any deficiency by eliminating access to employees terminated for a 'genuine operational reason'. Under the FWF, employers who are remiss in their redundancy process may still be provided a safe haven through the exclusion of claims from employees who are dismissed due to a genuine redundancy. This is an area of the Substantive Bill that warrants further explanation by the Labor government. The analysis of the 2004 and 2005 decisions indicates that businesses employing less than ]00 staff were significantly poorer in their performance at the arbitration table compared to larger organisations. Put another way, their pre-Work Choices approach to dismissal was found to be unfair, unjust or unreasonable much more frequently than bigger businesses. The lesson to heed is that businesses of less than ]00 staff, but without the benefit of the Small Dismissal Code, must prepare for their re-exposure to liability by ensuring they incorporate formalised dismissal processes to provide FWA with indications that they have approached a dismissal with neutrality and fairness in the event of a claim. Preparation could mean developing formal procedures to guide a sound dismissal process and facilitate the collection of documentary evidence along the way. Barrett and Mayson (2007: 308) suggest formal procedures are those which are written down, regularly applied, and assured to take place.

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Conventionally, it is the human resource expert who provides the skills and expertise to administer a fair dismissal process within larger organisations. The lesson to be learned from the 2004 and 2005 decisions is that businesses benefited from the expertise provided by HR staff when engaging in the dismissal process. The Fair Dismissal Code only applies to businesses with up to fifteen staff, and the checklist provided on the Department of Education, Employment and Workplace Relations' website is an innovative attempt to take the mystery out of providing a fair process for these smaller businesses. Small business employers are also promised to have access to 'prompt, easy to follow, specific advice' and assistance from FWA (Rudd and Gillard 2007a: 20). Apart from the checklist, the detail on how this assistance and advice is to be delivered will be clarified as FWA establishes its operations. Small business operators will benefit from access to HR expertise through a telephone or online advisory service that provides individualised guidance to conduct a fair dismissal process. The scope for businesses to access this advice would also ideally extend beyond fifteen-employee businesses to incorporate medium-sized operations. Government services do not need to carry the full burden of educating employers on mles and there is a clear role for employer associations to implement and/or promote fair dismissal advisory services to current and potential members. It appears some consistency existed in the use of HR practices to administer dismissals across industries sectors. No particular industry can anticipate a better or worse performance in dismissal proceedings pertaining to permanently tenured employees. It is predicted that claims will increase for those industries relying on casual workers or apprentices as a consequence of allowing claim access to casuals, trainees and apprentices after six months' service who work in businesses with fifteen-plus staff. For example, casual positions account for approximately 45 per cent jobs in retail (DEEWR 2005), making this industry more susceptible. As we have seen, the 2004 and 2005 decisions revealed that lower skilled workers were significantly more likely to win a claim compared to higher skilled workers. This trend showed an increase in the employer's ability to defend a dismissal as the employee's skill level increased. This suggests that the practices and processes used to dismiss workers improve in procedural fairness as their skill level increases. The lesson of note is that employers need to be acutely aware of the treatment of lower skilled workers during the dismissal process. Employers and workers can enter arbitration with the knowledge that historically they have around a 50 per cent chance of 'winning' their substantive arbitration claim and that reinstatement was ordered as the remedy in just one in six cases. Dismissed employees will need to be astute regarding the shortened seven-day lodgement period. Unions will need to provide expeditious service to

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their members before the lodgement period expires. The FWF factsheet states that 'the maximum compensation will be six months' pay, but normally compensation will be well beneath the cap. Businesses can be concerned (or comforted) with the knowledge that compensation amounts generally ranged between $1,000 and $20,000.

Conclusion
The anticipated FWF changes to unfair dismissal were examined as a preface to analysing pre-Work Choices arbitration decisions, with the aim of providing intelligence on business performance at the arbitration table. In summary, employers, unions and employers can benefit from observing this Sh.ldy's findings. Firstly, nearly fourteen per cent of non-substantive arbitration claims were from trainees, apprentices, casuals, and specified task/period employees. A number of these employees can anticipate improved access to a claims process. Secondly, prior to 2006, employees made redundant could generally expect to win their arbitration claim. Such employees lost their protection under Work Choices. Under FWF the potential remains for them to be denied justice depending on the application of the 'genuine redundancy' rule by FWA. A third point identified in this study was that, pre-2006, businesses of under 100 employees did not perform as effectively as their larger business counterparts at the arbitration table. This underscores the significance of the safety shield that these businesses had under Work Choices and the importance for them to follow sound processes with their renewed exposure under FWF. The major bonus is that it also reflects the return of unfair dismissal rights for the employees caught by the Work Choices firm-size exclusion. Another valuable finding was that human resource experts are associated with successful defences by the employer at the arbitration table, suggesting businesses benefit from involving human resource professionals in the dismissal process. It also underscores the importance of the Fair Dismissal Code for Small Business and the usefulness of the resource provided in the form of the checklist. One very important finding was that unfair dismissal arbitration clearly helped lower skilled workers achieve justice, more so than intermediate or highly skilled workers. Employers must therefore ensure the same standard of dismissal procedures are afforded to all staff, regardless of whether the person is a doctor or a cleaner. In relation to the industry sector in which the employment relationship occurred, the arbih'ation results studied indicated that no particular industry sector outperforms another at arbitration. However businesses of fifteen-plus staff in industries with a high casual workforce - for example the retail sector - need to be alert to the withdrawal of casuals as an excluded employee after six months' service. And finally, it was found that the most frequently awarded compensation

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amount ranged between $],000 and $5,000, but payments of up to $]5,000 were not unusual. In addition, several other issues were identified during the course of this article regarding potential implications of FWF. These concerns are listed in the form of the following five questions:
1.

2.

3.

4.

5.

Is there potential, by removing apprentices (and trainees) as excluded employees, for a decline in new apprenticeship opportunities (and trainee) opportunities? Will seasonal workers, specific task or specific period employees be able to use FWA's services if they believe they have been unfairly terminated for a reason other than the normal expiry of the job? How will FWA implement the 'genuine redundancy' exclusion: as an initial jurisdictional matter or as a part of its overall assessment of the merits of the employer's case? What proactive measures can FWA, the government and employer associations provide for businesses that have over fifteen staff but are still without the clear benefit of an HR expert? FWF promises to stop 'go away' money, but there is limited information available on this practice. How can this be monitored?

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KIM SOUTHEY - School af Management and Marketing,

University af Sauthern Queensland