Following some recent public commentary on AMMA’s ongoing advocacy for a separate, independent appeals panel to sit above the Fair Work Commission, AMMA chief executive Steve Knott has penned this special update to our members to re-affirm the merits and logic for introducing this new appeals jurisdiction.

Best practice
Inconsistent decisions
Tribunal structure and politicisation
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SOME OF OUR members may have seen this article in The Australian Financial Review last week raising questions about the merits of a new specialist appeals jurisdiction, comprising a small number of experienced IR jurists, to independently review decisions from the Fair Work Commission and ensure consistency in decision making.

For the past two years, the creation of such a new specialist IR appeals body has been a key priority area of AMMA’s reform advocacy.

This has been driven primarily by an identified need for its members and all employers to have greater certainty and consistency of Commission decisions and proper application of long standing industrial precedents in order to run their businesses effectively.

Consideration of an alternative appeals process was included in the Coalition’s pre-election IR policy document in mid-2013. After the election, AMMA was among several organisations that provided confidential submissions to Employment Minister Eric Abetz in late 2013, at his request. While the Minister is understood to be reviewing these submissions and his policy options, public discussion over the merit of a new appeals process of this nature has ensued.

Unfortunately, as we’ve seen with the Law Council of Australia in last week’s reports, one increasing element of this public debate has been to question the merit of AMMA’s arguments in favour of an alternative appeals jurisdiction.

Despite AMMA reiterating that such a move would be in-line with international best practice and restore complete impartiality and employer confidence to the system, some public commentators have moved away from an academic and practical debate about the merits of this proposal, and rather have questioned AMMA’s motivations or merits in pushing the barrow for a new appeals process.

In this week’s AMMA Weekly News Update to members, I have taken the opportunity to further explain and explore the key elements of AMMA’s advocacy in favour for this new IR appeals jurisdiction.

This is about best practice IR decision making, and reduced costs for users of Australia’s IR system.

AMMA’s call for a specialist IR appeals body is about applying international best practice to workplace relations decision making.

Such a change would improve decision making, provide consistency and certainty to users of Australia’s workplace system and ultimately reduce unnecessary IR transaction costs for all.

In its commentary of AMMA’s position, the Law Council of Australia has instead suggested broadening the Federal Court’s jurisdiction. This suggestion is overly legalistic and impractical and will entrench the high IR transactional costs of the existing system. It is not uncommon for an appeal before the Federal Court from a decision of the Fair Work Commission to cost between $100,000 and $300,000. AMMA has a vested interest in reducing these costs for our members in the resource industry.

The current system is resulting too often in unnecessary, expensive appeals through the Commission and judicial system. AMMA’s intentions are to make sure the existing appeal process works as effectively as possible and is based on international best practice.

Under our proposed model, the Federal Court and High Court would remain superior legal decision making bodies for employment matters of great significance. But AMMA’s view is that there must be a viable alternative to the status quo for businesses and particularly smaller firms.
80 per cent of AMMA’s members employ less than 500 people and such unnecessary business costs can hinder investment in employment generating activities. Many of the matters coming before the Commission should be struck out at first instance, but the ‘liquorice allsorts’ approach to current Fair Work Commission decision making and appeal mechanisms encourages claims without merit.

A new separate and independent appellate panel modelled on international best practice approaches will assist in this regard. Such a mechanism will act as a crucial filter on various matters and be able to set general principles and guidelines to the Fair Work Commission.

Inconsistent, anti-employer decisions are plaguing our system

Another significant argument for a new separate, independent IR appeals jurisdiction is that inconsistent decision making from the Commission, including an array of Full Benches arriving at essentially different decisions on the same subject matter, has created uncertainty for users of Australia’s workplace system.

Drug and alcohol testing policies and unfair dismissal cases are two of the primary areas where this inconsistency has been rife. On the former, the right of management to implement a drug and alcohol testing policy that best meets the strict safety obligations of a particular worksite has been undermined again and again.

On the latter, we are seeing valid reasons for dismissal being increasingly subjected to the discretionary whims of tribunal members, most of whom have little or no experience in running a business, seeking to substitute their decision for that of qualified business managers.

In late August, a transport company was ordered to pay $16,000 compensation to a former employee sacked for urinating on a client’s property, despite the Commissioner finding the former employee’s conduct was ‘unacceptable’, ‘unprofessional’ and his termination valid.

This decision is just the latest example of the Fair Work Commission complicating and confusing matters involving clear breaches of community standards and company policies. Other examples include:

  • Employer DP World being ordered to reinstate an employee who engaged in a serious assault captured on CCTV footage.
  • A ferry master being reinstated after crashing a passenger vessel and then failing a drug test.
  • Australia Post employees ruled to have dismissed unfairly after distributing porn to co-workers.

While some of these matters may or may not be overturned on appeal, the very real question of how these matters advance to hearing stage and adverse determination raises serious issues for IR system users.

Introducing a separate independent body to hear appeals of FWC decisions would deliver greater certainty and consistency in tribunal decisions. It would see far less unmeritorious cases being brought before the Commission and fewer costly appeals.

Politicisation of Tribunal appointments and its structure

A third consideration for the creation of a separate IR appeals jurisdiction is the very concerning politicisation of the Fair Work Commission, through both ALP and union-affiliated appointments and its leadership restructure, all under the Rudd/Gillard governments.

Prior to the 2007 federal election the ALP made several pre-election commitments that Australia’s industrial relations system would not be a return to the old industrial relations club.

Disappointingly, the promises of the Rudd/Gillard Governments were not kept. The majority of appointments to the Fair Work Commission (initially called Fair Work Australia) has been clearly imbalanced towards persons who possessed an affiliation with the ALP and/or a trade union. This has not had a theoretical or academic impact on resource companies, but rather, this has had a direct, real and practical impact on the decisions that they are able to make in managing their business operations.

There are concerns by some employers and IR professionals about certain tribunal members in some instances appearing to apply their statutory discretion in a manner sympathetic to union representations absent of any real life business experience and analysis.

A disturbing trend involves members substituting their decisions for that of management despite managers being found to have had a valid reason to act in the manner they did. While members of the tribunal have a longstanding obligation when performing functions or exercising their powers to take into account the “equity, good conscience and the merits of the matter” (s.578), it is, nonetheless, human to err.

The new structure is also a problem. Currently, the Fair Work Commission has 45 members, 23 of which are Presidential members (in 1999, there were 14 Presidential members vs 29 Commissioners). All members can be assigned to a Full Bench to review a decision of a Commission member.

Put bluntly, employers are concerned that there are ‘too many Chiefs and not enough Indians’ at the Fair Work Commission.

This is a system that is supposed to minimise industrial disputes but the former Labor government appeared determined to load up on senior members in anticipation of a much busier and more activist tribunal. This is inconsistent with allowing employers and employees to agree on their own workplace priorities.

It should be noted that the Law Council and AMMA both highlighted concerns about the former Labor Government’s restructuring of the Fair Work Commission, particularly the ALP’s appointment of two new Vice Presidents to effectively demote two long-standing Howard-appointed VPs.

In order to restore balance to the Fair Work Commission, future appointees should not only be based on merit, but ideally have experience within the private sector. If proceeded with, the appeals panel appointment process must by subject to a merit-based appointment process, unlike the heavily skewed process which resulted in 19 of 27 appointees made to the Fair Work Commission during the Rudd/Gillard/Rudd years being aligned with the ALP or trade unions and despite promises to the contrary.

Get the full story with AMMA’s comprehensive Fair Work research briefing paper for AMMA members

Understanding the backgrounds of Fair Work Commissioners appointed during the Rudd/Gillard administrations, tribunal restructuring and the business impacts of recent case decisions is critical to appreciating AMMA’s sound reasons for advocating a new appeals process.

Such an understanding has become increasingly important to address completely erroneous suggestions that AMMA’s position is somehow politically motivated.

As a result, AMMA’s policy team has put together a detailed research briefing paper that summarises the appointment process under the former Labor government, the Fair Work Commission restructure and recent anti-business case decisions. This is all objective information already on the public record. This briefing paper builds on AMMA’s previous publication series titled “Fair For Who?: The rhetoric versus the reality of the Fair Work Act“, of which the most recent edition is available here.

This AMMA research briefing paper has been prepared for the strictly confidential use of AMMA staff members and IR professionals of AMMA member companies.

This document further validates the significant policy positions AMMA is taking (both publicly and privately) and why it is necessary to continue to advocate in the interests of structural reform to Australia’s industrial relations system.

For a copy of this confidential AMMA research briefing paper, contact AMMA’s Policy Team via [email protected]