By: Mark Skulley
THE success rate for employees taking arbitrated unfair-dismissal claims under Labor's Fair Work Act is running at 51 per cent as claims rise to about 17,000 per year, according to new academic research.
The research will reinforce employer concerns about the growth in unfair-dismissal claims being pursued under new prohibitions on an employer taking "adverse action" against an employee on a range of anti-discrimination grounds.
It found a 33 per cent success rate for arbitrated unfair-dismissal claims under Work Choices was partly due to those laws exempting employers with fewer than 100 employees from claims.
Labor removed this exemption while keeping some protections for small businesses with fewer than 15 employees.
Lawyers are increasingly pursuing unfair-dismissal claims on the grounds of adverse action because they allow uncapped compensation, do not exclude employees who earn more than $118,000 from making claims and have a longer cut-off date for lodging claims.
Adverse action claims have risen from about 1200 in 2009-10 to almost 1900 last financial year and are on track to reach up to 2200 this year.
"I think the big story here is the increase in the adverse action claims," said one of the researchers, economist Paul Oslington. "They're the one employers are really worried about because they are uncapped with potential personal liability.
"This is where a dismissal is interpreted as adverse action under the general provisions of the act and you claim quite tough remedies with quite different burdens of proof."
The Act dictates that employers are taking adverse actions when they act against the a workplace right of the employee, for example, to complain or inquire about their work situation.
Adverse action is also prohibited where a person engages in lawful industrial activity or where an employer discriminates against an employee or prospective employee.
The research by Professor Oslington, of the Australian Catholic University, and an assistant professor of economics at the University of Canberra, Benoit Freyens, compared unfair-dismissal data under the last three major versions of workplace law. They found the number of claims for unfair dismissals had risen markedly under Labor's Fair Work Act to about 17,000 per year, mostly because the former Work Choices laws covered about half the workforce while Labor's new laws covered around 80 per cent.
But they found "crucial gaps" in the information on unfair-dismissal disputes provided by Fair Work Australia, including on the outcomes of cases settled at conciliation hearings, where about 83 per cent of claims were settled. About 3 per cent of claims were settled by arbitration in 2010-11.
The researchers argued that FWA had yet to release any information about claimant success rates and payouts in unfair-dismissal cases pursued through the adverse action provisions of the new legislation.
Workplace Relations Minister Bill Shorten yesterday did not answer questions on why this more detailed information was not being released, but pointed to the information made available by Fair Work Australia.
"The independent, expert review of the Fair Work Act, which is currently under way, will of course examine these and other matters," said a spokesman for Mr Shorten. "The minister has consistently said he will not pre-empt the recommendations of this review."
The research by Professor Oslington and Mr Benoit used data they gathered on all unfair-dismissal cases arbitrated by Fair Work Australia and its predecessors from the year 2000 through to late 2010.
They found that:
About 17,000 unfair-dismissals claims were being lodged per year under the Fair Work Act, up from fewer than 6000 under Work Choices, and about 7000 under the previous Workplace Relations Act.
This rise was "roughly in line" with the increased coverage through the transfer of employees covered by state laws to the national system and the restoration of unfair- dismissal rights for small business employees.
Claimant success rates had increased from 33 per cent under Work Choices to 51 per cent under the Fair Work Act.
Payouts were much the same under all three regimes, averaging about 12 weeks and capped at six months.
However, the researchers found no evidence to revise their view that the actual costs imposed on business by unfair-dismissal regulation were small, as were the impacts on aggregate employment.
They said a lower risk of dismissal could lift productivity if workers exerted more effort where they have a greater stake in the firm and investments in training could be greater.
"Conclusions about the productivity effects await further research, and questions should be asked about the mechanisms and evidence behind the claims frequently made in the press about productivity effects of dismissal regulation,'" they said.
They argued that behavioural economics suggested that even low probability of large losses weighed heavily up decision makers. Concerns about the fairness of compensation payouts also figured large because "employers don't like paying out when they are in the right".
In 2010, Fair Work Australia staff released data during Senate committee hearings which showed that three-quarters of conciliated unfair-dismissal claims in two months of that year involved payment to an employee. Three out of four monetary settlements were for a month's pay or less, in term of average earnings. The data showed that 28 per cent of the payments were for less than $2000, 30 per cent were for $2000 to $4000, 15 per cent for between $4000 and $6000 and 10 per cent for sums of $6000 to $8000.