A fair point with an unfair law Shopfront

Monday, 01 April 2002


    Unfair dismissal is the main game for employers, right? Wrong. Believe it or not, most small business employers and their accountants believe the calibre of job candidates is a much bigger issue.

    Unfair dismissal is the main game for employers, right? Wrong. Believe it or not, most small business employers and their accountants believe the calibre of job candidates is a much bigger issue. That was the surprise finding of a recent survey by accounting group CPA Australia. And given this revelation, is the Government's "hard man" - Tony Abbott - worried that he is shaking the wrong tree with his reform of the unfair dismissal laws starring in Parliament?

    No way. In fact, Tony tells me the survey proves his point: that he did the right thing by making employing a whole lot easier. Is this bravado or spot-on analysis?

    According to the survey, the main reason employers won't take on new staff is a lack of skill. One in four argued this, while 20 percent nominated a lack of motivation and 7 percent were turned off by training requirements. Those who blamed the economy numbered 24 percent, and wages costs KO'd 17 percent from hiring. And that left only 5 percent of bosses blaming unfair dismissals for not taking on workers.

    Responding to this strange story Abbott was typically unflustered. In a quick piece of arithmetic, he took the one million or so small businesses and multiplied it by 5 percent, arriving at the answer of 50,000. Then he repeated his war cry: "If only 50,000 businesses took on one extra worker because of better unfair dismissal laws then that would create 50,000 jobs."

    Abbott is trying to secure exemptions for businesses with less than 20 employees from unfair dismissal laws. This is bound to get the heave-ho by the non-Coalition-dominated Senate. But you can't blame Tony from trying.

    "The Government believes that it is in the public interest to open the door to the new jobs that can be created by small business by easing the pressure that excessive workplace regulation puts on Australia's hard-working small business men and women," Abbott told me.

    So what happens if his play fails?

    Bob Herbert of the Australian Industry Group has a reasonable alternative strategy, which not only looks helpful to small business but looks politically possible.

    AIG believes a middle-of-the-road solution would appeal to the Opposition and the other parties. He pointed to Blair Government initiatives in the UK, where employees may not pursue an unfair dismissal case until they have 12 months of continuous employment. "Small business is not geared up like a big business with a personnel department and that means the steps for procedural fairness for dismissing someone are a disincentive to employ someone full-time," Herbert said.

    Currently, before anyone is sacked, procedural fairness requires an employer to give three warnings and there are other compliance issues that must be attended to. Not doing this has been cited in unfair dismissal cases, where some employers have faced financial penalties. Small employers should only have to notify the reason for a dismissal and then give employees a chance to respond to any reason related to capacity or conduct before the termination.

    Herbert says this would conform with the ILO's convention on terminating employees. Under the Abbott amendment, those who employ less than 20 workers would be exempt from unfair dismissal laws for new employees. However, existing employees could still make an unfair dismissal claim and a new employee would not be excluded from any claim if the dismissal was based on discrimination.

    This more reasonable adjustment to unfair dismissal laws has been supported by groups such as the Victorian Employers Chamber of Commerce and Industry. Apart from the draconian nature of the laws for smaller operators without HR experts, the CPA survey underlined one of the key problems with the laws - no-one understands them!

    Close to a third admitted not knowing how to comply with unfair dismissal laws. And of those who had an idea how the law worked, nearly half said it was a rough one. In a telling observation, 76 percent of CPA members said their clients don't understand the law.

    All of this underlines the crucial issue that unfair dismissal laws don't help create jobs, and it justifies Abbott's attempt to change them - though what he is asking for might be viewed, objectively that is, as excessive. VECCI's survey of its members has consistently shown that unfair dismissal laws rank among the top five of business issues that they care about.

    And as Tony argued in a recent phone call: "The fact that it is not the main factor holding back employment doesn't mean it is not an important one."

    This is a fair point, which would never escape anyone who actually has employed someone before in their business life.

    A very fair point with an unfair law.


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