I pray that my small business clients aren’t reading this. Whatever people think of other provisions of Rudd’s proposed IR package, his restoration of some kind of unfair dismissal regime makes good sense.

Unfair dismissal laws create an environment in which relations between employers and workers are built on procedural fairness and performance feedback. Removing the remedy altogether removes that culture to some extent, which isn’t good for either of them.

Traditionally, unfair dismissal regimes at both state and federal level have been user-friendly, with simple forms and procedures. It’s always skewed in favour of employers. Employers aren’t ordered to pay workers’ legal fees, which eat away at any compensation or settlement legally represented workers might receive.

Further, a cap of six months’ wages has been placed on the amount of compensation a worker receives. Other limits (including strict time limits and income ceilings) are also placed on claims.

Under Howard’s regime, only business or employers large enough to hire at least 100 employees are still affected by the federal unfair dismissal regime. So, if you’re a good worker wanting real job security, don’t work for a “small” business of 98 employees.

Such smaller employers aren’t exempt from the even more expensive (in terms of legal costs) potential claims for unlawful termination, for example when termination is caused by unlawful discrimination. Naturally, applicant lawyers search for employer behaviour (discriminatory or otherwise) hinting at unlawful termination.

Rudd’s restored unfair dismissal remedy removes lawyers. Commissioners (or other persons appointed to arbitrate disputes, perhaps another area where lawyers can sneak in and make some dough) will even visit workplaces to resolve disputes, saving many suburban and regional employers from wasting valuable time and legal fees in handling claims.

Removing private lawyers means encouraging workers to get advice from non-lawyers, perhaps meaning more work for union-based advocates and pushing up union membership.

However, unfair dismissal won’t be universally available. From my own experience, what angered many employers under old state and federal unfair dismissal schemes was that non-performing employees just a few weeks past their probationary period brought dubious unfair dismissal claims, turning the relevant commission into a cash tribunal with employers paying money just for the disgruntled ex-employee to leave them alone.

Rudd’s plan means such employees won’t even be able to file a claim. So if you employ someone for less than a year, you should feel free to sack them. Naturally, there’ll be plenty of devils in the detail. Watch this space.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey