Home > Economic policy, Economics - General > What about the workers ?: unfair dismissals

What about the workers ?: unfair dismissals

October 28th, 2004

If there’s one area where the Howard government’s Senate majority (or near-majority) seems likely to make a big difference, it’s in relation to our working lives. While the government’s commitment to free-market policies has waxed and waned, it has been absolutely consistent in representing the views of employers, whether they have demanded labour market deregulation (as in the stripping back of awards) or tighter regulation (as in anti-strike laws). The government and its supporters would, of course, claim that what is good for employers is good for employees, and there is clearly a good deal of truth in this claim. Still, there are plenty of occasions when employers and employees come into conflict (in such cases, it is more natural to refer to workers and bosses). I plan a series of posts looking at aspects of the government’s reform program, and the state of employment relationships more generally.

Of all the items on its agenda, the removal of unfair dismissal laws, at least for small businesses, is probably closest to the government’s heart. A contested dismissal is something like a contested divorce in the feelings it arouses on both sides, and the government hears all the time from the employer side of the dispute.

In economic terms, the problem starts with the fact that an employment contract has a lot of implicit or hard-to-verify terms. The worker promises to turn up on time, work diligently, be competent, and not cause trouble and dissension in the workplace. The boss promises to act fairly, not to harass or bully the workers and so on. Once both parties have committed to the relationship, they each have the opportunity to cheat on these commitments. How this works out depends on the institutional rules, the state of the labour market and so on. Whatever happens there are going to plenty of people who perceive the outcome as unfair, and plenty of cases where this perception is accurate.

The aim of unfair dismissal laws is to set up a clear procedure that employers must follow to dismiss underperforming employees. This is widely seen as acceptable for large employers with organised HR departments to keep track of such things. But for small businesses, it’s a burdensome process. On the other hand, anyone who’s dealt with small business employers knows that they vary a lot. The good ones are much better than big corporations, the bad ones a lot worse.

What about the empirical evidence? As with many things in economics, the literature on unfair dismissals starts out with a big publication finding clear-cut results, only to descend into a morass of agnosticism. A paper by Lazear in 1990 found strong negative correlations between the strength of employment protection laws, proxied by severance pay, and desirable labour market outcomes such as employment and participation rates, hours worked and so on. Jason Soon cited it in his paper on unfair dismissals. But Lazear’s results have not stood the test of time. Here’s the abstract of a recent paper What have we Learned About the Employment Effects of Severance Pay? Further Iterations of Lazear et al.

In this study we examine the contribution of severance pay to employment and unemployment development using data on industrialized OECD countries. Our starting point is Lazear’s (1990) empirical dictum that severance payment requirements adversely impact the labor market. We extend his sample period and add to his parsimonious specification a variety of fixed and time-varying labor market institutions. While the positive effect of severance pay on unemployment garners some support, there is no real indication of adverse effects for (the three) other employment outcomes identified here. Moreover, with the possible exception of collective bargaining coordination, the role of institutions is also more muted than suggested in the literature

This ILO study gets similarly unclear results. Generally speaking, employment protection laws lower the variance of employment and unemployment but have no clear effect on the average levels.

In political terms, it’s worth considering the relationship between unfair dismissals and unions. Legal protections for workers are, to some extent a substitute for unions. But one of the functions of unions is to help their members take advantage of legally available protections such as unfair dismissal laws. On the whole, I think the implementation of the government’s reform agenda is likely to be good for unions, by sharpening the perception that workers can’t rely on the goodwill of bosses.

  1. October 28th, 2004 at 21:16 | #1

    Well, we can all swap stories. I worked in i/r for the bosses in one of my distant past lives for a few years. Could fill this thread to midnight with stories about supervisors I had to turn up to defend, only to find they’d cocked everything up, and some poor bastard was being made to wear the fall-out.

    “Well, did you tell him what he had to do?” … err … “Well did you give him a clear warning?’… err … “Did you talk the issue through? … err … “What counselling did you offer?” … err.

    Yes, I also recall some notorious stories from the other side, but they were the small minority of cases, as clear-cut shockers usually don’t contest the sack. One of the most satisfying things was that the process would effectively substitute for proper management, and most reinstated workers had no further trouble.

    The key is the power imbalance, from which it seems somehow a common human failing to presume that, when things go wrong, it just has to be the fault of the weaker party.

    More broadly, I don’t know the facts, but my impression is that unions don’t have much self-interest in whether the unfair dismissal laws go, as very few small businesses are unionised. The union interest stems almost exclusivley from their wider concerns about the injustice of unfair process on any workers.

  2. Tony Healy
    October 28th, 2004 at 21:45 | #2

    derrida, certainly if someone isn’t doing or can’t do the job, they should be moved on. The law provides for that. The type of situations I’m referring to are where the employer wants to flout the law and thus has to create fictitious reasons for dismissal. For example, the employer might think his secretary is not pretty enough, or the employer’s brother might have been offended when she refused to laugh at his sexist joke.

  3. Scot Mcphee
    October 28th, 2004 at 21:45 | #3

    Well, there’s another side to this. I am a well paid and very highly skilled worker in the technology sector. Many companies who employ my type of skillset (ie advanced software development) are small or smallish companies. Now, there’s already a premium in working for a small technology company – many fail. But now there’s another one. Upon applying for a job by email or phone, my first question will be ‘how many full time employees do you have?’ If they answer is less than 20 either the interview will be immediately terminated or if the job is compelling (interest technology or problem space etc) then my premium as a highly skilled developer probably increased by 15% to 20%.

    The problem for small businesses competing for a share of the pool of highly skilled employees with these laws is that many of those with high skills will understand the risks they get themselves into when exposed to such an environment.

  4. Homer Paxton
    October 28th, 2004 at 22:01 | #4

    Geoff
    My anecdote is completely opposite.
    I worked for an organisation which deliberately sacked people with no reason.

    They were only taken to court rarely and of course backed down when evidence started coming out. They then ‘badmouthed’ those people.

    The last fulltime job I had I was sacked without any reason. Why because it could be done.

    In terms of unfair dismissal My thinking is it wil rarely be used against existing staff however it is likely to be used against new staff because the employer doesn’t check out the new employee properly.

  5. October 28th, 2004 at 22:31 | #5

    These unfair dismissal laws are an imediment to business if you are a real cunt of an employer.
    If one is a normal bloke-no problem.

  6. Geoff Honnor
    October 28th, 2004 at 22:52 | #6

    “For every case like Geoff Honnor’s, there are 1,000 where the employer goes to his or her suburban lawyer or industry association to learn the technique for lawfully dismissing a loyal worker, and then engineers the three warnings. Sometimes they let the rest of the staff in on the impending sacking too, resulting in ostracisation of the selected victim.

    Also, I am always suspicious of stories such as Geoff’s. It’s appalling if true. But usually there’s another side to the story too. Also, I am sceptical about the aspersion cast on the union. Unions are usually very worldly, and reluctant to risk their credibility on doubtful cases.”

    It’s true all right Tony, and actually not all that exceptionally “appalling” – where have some of you guys been? And while there isn’t another side to this particular story, I agree that the two sides aspect would generally be applicable.

    The union in question was the ASU and the workplace in question was very union-supportive.
    We were an NCOSS member. We had in fact received an ASU accolade around the time this occured for having one of the most effective joint staff consultative committees in the State and our longtime Organiser had retired shortly before this happened. I felt utterly let down by the ASU and thought that they played a fundamentally dishonest game. They knew exactly where the problem lay and tellingly, took no interest once the application had been filed.

    There are obviously cases where employers do seek legal advice with a view to achieving expedient unjustified termination. There are – in my experience – rather more cases where employers, uncertain of their ground, seek legal advice in desperation and in mortal dread of doing the wrong thing. Big corporates generally view Commission appearances as “black marks” against their HR/IR practitioners – regardless of circumstances. Resolution upstream of legal intervention is a consummation devoutly to be wished and relatively few human beings yearn for the often extended confrontation inherent in these circumstances.

    My Board was horrified when we were summoned to the Commission and I came under some pressure to settle up. Let’s be clear: it would have been cheaper in terms of time and resources if we had settled. We didn’t.

  7. Jill Rush
    October 28th, 2004 at 23:13 | #7

    The Accords negotiated between Labor and employers in the 80s and 90s resulted in workers believing that they no longer needed unions and have resulted in union membership declining.

    The increasing casualisation and contracting of work has also impacted on union membership.

    In the APS the increasing attacks on enterprises by the govt has resulted in increasing union membership. The same may well happen in workplaces where employees feel threatened by their bosses – if the unions can make contact with them. That is why the Howard govt wants to limit the rights of union leaders to enter workplaces.

    However the strength of workers will increase as the labour pool shrinks and as the example above shows employers will not be able to get skilled labour if they abuse their workers.

    Workers who are not valued will walk to get better pay or more friendly conditions.

    Now the Howard government has total control there may well be many unintended consequences arising from the legislation which they couldn’t introduce previously which probably helped their re-election as voters haven’t experienced the negatives resulting from lack of rights.

  8. Geoff Honnor
    October 28th, 2004 at 23:18 | #8

    “Do you have any good evidence, or is an anecdote the best you have.”

    25 years of experience both here and overseas.

    “If they did everything by the book, again, what do you conclude? That unfair dismissal should be allowed? Or is there actually a way to stop ruthless rorters like that, while preserving the spirit of the legislation?”

    I think, James, that the ‘fair and reasonable’ basis upon which employment law is based needs to be somehow given a paramountcy over and above the 3 process tick-offs which too often result in a set-piece minuet in woods where trees aren’t obvious.

    No-one should be sacked without good reason but we need to engender a much more transparent understanding of respective rights and obligations in respect of how we honour that.

  9. Tony Healy
    October 29th, 2004 at 00:50 | #9

    Geoff, I’m sorry to hear about that incident. That side of things should not occur either.

  10. Crusader
    October 29th, 2004 at 07:52 | #10

    Why are you concerned? As a lifelong academic you are free of the burden of ever getting a real job.

  11. Homer Paxton
    October 29th, 2004 at 08:23 | #11

    Can I offer another related issue.

    for a social conservative but economic liberal I am torn between two goals.

    I am convinced a less regulated labour market would lead to less unemployment ( let me tell anyone Unemployment and underemployment sucks bigtime even if you look after two sons) however I am a big supporter of a family friendly workplace. These two goals are incompatible.

    When you deregulate the workplace you give senior manangement more power.

    Christians would say this leads sinful people to bully their employees. douglas McGregor would say that employess are theory Y but when they get promoted to senior Management they go theory X big time. the AWIRS studies would back this up .This is proabably why Reithy stopped them.

    I don’t believe Asutralians overall will take a shine to this.

  12. Paul Norton
    October 29th, 2004 at 09:25 | #12

    Ten years ago this December, an organisation of which I was an executive member began to undergo an experience similar to the one Geoff describes, which ended messily and expensively eight months later and which had consequences for my health which I am still dealing with. The main difference from Geoff’s case was that the individual we had to dismiss was somewhat more egregious than the one Geoff describes. For legal and ethical reasons I can’t provide further detail.

    Nonetheless this experience did not lessen my support for unfair dismissal laws. Unaccountable power to dismiss employees will be knowingly and wilfully abused by a minority of employers, and will be resorted to under pressure by a larger proportion of employers, especially in straitened financial circumstances, cases of inter-personal conflict, love gone wrong, etc.

    The other issue that few if any commentators have picked up on is that exempting businesses with fewer than 20 employees from the unfair dismissal laws will not mean that employees of larger businesses will be safe.

    In the 1998 waterfront dispute and in the James Hardie affair, companies creatively reorganised their corporate structures in order to relieve themselves of inconvenient legal obligations to their employees.

    On a beach in south-east Asia, there is an environmentally disastrous complex of three 79-bed hotels joined by tunnels, each hotel having been approved as a separate project without an environmental impact assessment because the country’s development approval laws only required an EIA for hotels of 80 or more beds.

    Combining the logic of these corporate legal strategies, if the Coalition’s IR “reforms” are passed we may see medium-sized and large corporations with clever lawyers reinventing themselves in the legal form of networks of individual companies employing 19 workers or less, all thereby exempt from unfair dismissal laws.

  13. Tony Healy
    October 29th, 2004 at 09:53 | #13

    As Paul points out, the 20-staffer limit will lead to spurious arrangements that let large employers exploit these weaknesses too. The main way this will occur is to hire workers through multiple small labour hire companies. Labour hire is already a disgustingly filthy rort, which I will write about later.

    In terms of anecdotes, I’ve seen an executive sack a keen, hard working young secretary for, as near as I could tell, no good reason. I later found out the guy had been well known in previous companies for regularly sacking his secretaries, like a power trip. I think of that young girl returning to her Western suburbs home wondering what she had done wrong.

    I’ve seen an arrogant dot com manager ignore an Indian programmer on his last day to the extent the Indian guy was nearly crying, because he expected and was accustomed to acknowledgement, thanks or at least good wishes. This was not a sacking, but involved similar issue of workplace brutality.

    I’ve seen a technology company hire engineers from a rival purely to disrupt that rival’s business, and then sack those engineers as soon as the rival had been stuffed.

  14. Tony Healy
    October 29th, 2004 at 10:58 | #14

    Another one I won’t forget – the day a bank got rid of a floor of credit card services people. At 9:30 am, through our glass partition, we saw all the credit people milling around and standing, seemingly in shock. They had all just been sacked, without any warning. A crowd of security guards emerged from the lifts and 80 or so clerks were escorted away. Within ten minutes the lives of those people, with their ambitious mortgages and assorted other lives we used to hear discussed over the partition, were massively disrupted.

    A team from one of the accounting firms had supervised it all. You really have to ask what’s right about knee-capping people like that.

  15. Homer Paxton
    October 29th, 2004 at 11:14 | #15

    I had a mate whose wife worked in the IT section of a major bank.
    They ‘restructured’ the section by sacking peole by numbers ie 1,2,3,4 number 5 you are sacked.

    I kid you not. It isn’t what I learnt at business school!

  16. October 29th, 2004 at 11:18 | #16

    Homer, if they’re making people redundant (and that tends to be what “restructuring” means at a bank) then they are well within their rights to sack people by number. It’s more common to target, say, union members.

  17. October 29th, 2004 at 11:21 | #17

    the 20-staffer limit will lead to spurious arrangements … through multiple small labour hire companies.

    Tony, this will become an even bigger problem when the government legislates to prevent labour hire workers being considered employees of the company they actually work for. Huge loopholes will appear.

  18. Tony Healy
    October 29th, 2004 at 11:39 | #18

    Robert, that’s the way it is now, surely? I’m not familiar with WA or whether you have different state laws there. In the eastern states, labour hire is mostly about creating a fiction that employees aren’t really employees. A few court decisions have disturbed that fiction, but that’s still how it generally works.

  19. October 29th, 2004 at 12:16 | #19

    That’s generally how it works, yes, but there have been some important cases here (esp in the construction industry) that have improved the situation. But the Coalition will legislate those workers back into a dodgy, unprotected situation.

  20. Rob Graves
    October 29th, 2004 at 17:35 | #20

    The effect of legalising unfair dismissals will be that labour will sheild capital from the risks of economic downturn, and even management failure. Wages can be turned from fixed expensdses to variable expenses. This is the real threat.

    We will end up seeing workers employed to service a specific opportunity, and sacked if that opportunity is miscalculated in some way. The culture of employment will change, with everyone who is not highly skilled and sought after effectively casualised in terms of tenure.

    It could even effect banks credit policys and credit insurance rates for people who are less competitive in the job market.

    Oh well at least those 400 lumberjacks have got their jobs….. you know cause the coalition really cares about semi-skilled workers’ employment tenure, and symbolisnm is so important.

  21. Razor
    October 29th, 2004 at 18:29 | #21

    Why would you want to work for a crap boss anyway? If you get sacked for no good reason then you will have no trouble finding a new job and a new boss who appreciates you.

    As a Small Business Owner with one full-time and one part-time staff I pay well above the award to retain my exceptionally talented staff. If I sack either one of them I am up for big costs trying to hire and train new staff and that costs money that I’d rather split between the ATO and the mortgage.

  22. foo
    October 29th, 2004 at 18:59 | #22

    If there’s one area where the Howard government’s Senate majority (or near-majority) seems likely to make a big difference, it’s in relation to our working lives.

    I guess that the use of ‘our’ is poetic licence. Last time I checked, to fire a university professor is necessary to prove that s/he is a serial killer or leader of a pedophiles’ ring.

  23. derrida derider
    October 29th, 2004 at 19:29 | #23

    Razor’s right – sacking people and hiring a replacement costs a bomb, with all sorts of hidden costs (including the possibility that the replacement is no better). Rational bosses don’t do it lightly. My point, Tony, is that clumsy laws won’t prevent the many irrational ones from doing it; something your anecdotes seem to support rather than counter.

    No one seems to have picked up on the best argument against employment protection legislation (EPL in the jargon) – it massively increases the cost of taking on an iffy recruit. The argument is exactly analogous to that against restrictive landlord and tenant legislation; make it hard to evict a bad tenant and no landlord will take a chance on someone from a group with a higher than average risk of being a bad tenant. This increases ‘statistical’ discrimination, with the well-known effect of creating a self-reinforcing effect (if you’re in a group that’s discriminated against, the long run payoff to effort is less, so you tend to make less, so the discrimination against your group becomes more individually rational on the employer or landlord’s part, so the reward for your effort is less, and so on).

    As John’s post acknowledges, there is little evidence that EPL increases the overall rate of unemployment much, but plenty that says it decreases turnover amongst the unemployed. That is, instead of most people experiencing short spells of unemployment in their life a smaller minority experience long-term unemployment, with consequent risk of creating a self-reinforcing underclass.

  24. John Quiggin
    October 29th, 2004 at 20:44 | #24

    Maybe you should check again foo.

  25. Niall
    October 30th, 2004 at 08:52 | #25

    Having been the victim of an ‘unfair’ and very craftily constructed dismissal episode, one might imagine that I’m dead against any alteration of unfair dismissal laws. Not so. There is, however, no such animal as employer goodwill. A process of legal protections for workers against unscrupulous bosses who fire at the drop of a profit margin must remain in place. Equally, that process must allow for rightful and justified representation on behalf of the employers to remove unproductive workers when same can be proven beyond reasonable doubt to not be abiding by their employment terms and conditions.

    It’s a very fine line, and not one which can be clearly defined because there are cheaters on both sides of the worker-boss divide. However, simply negating the protections of one side in favour of the other will never solve the argument.

  26. October 30th, 2004 at 11:02 | #26

    Niall: I highly doubt that your dismissal was unfair. The unfair part was that you got hired over the competing candidates in the first place.

    All this talk of “unfair dismissal” seems to assume that you have some sort of entitlement or “right” to take money from someone else. I don’t see how you can justify forcing someone to keep giving you money if he no longer wants to do so.

  27. Tony Healy
    October 30th, 2004 at 11:49 | #27

    yobbo, this is not meant in an argumentative fashion, but just to point out the philosophy surrounding this issue.

    Employers don’t hire people out of the goodness of their heart; they do it to further their own interests either by increasing their profits or justifying the continuation of their management salary and bonuses. So workers don’t take money from anyone. In fact, employers take money from the labour of the workers.

    Opponents of regulation like to paint themselves as self-made men operating outside of government. Yet they’re the biggest beneficiaries of government. They rely on police to stop theft, expensive court systems to arbitrate business disputes, schools to train workers and ports and airports for transport.

  28. October 30th, 2004 at 17:11 | #28

    I’m in the throes of an unfair dismissal case myself. I’ll post more once it’s not sub judice, but for now people should look up what the same employer did to Leo Raffoul on the AIRC site. Bigger organisations are just working the system, using HR departments as tools to produce an appearance of due process by controlling the selection of evidence and avenues of internal redress to make it appear that a fair go is on offer. And it has become standard operating procedure.

    Meanwhile “reforms” from both sides of politics have just turned into sitting on the safety valve, e.g. capping possible payouts makes it impossible to negotiate settlements that actually do salvage the careers of the victims and so forces us into hearings rather than settling for less. It’s as counterproductive as rent controls ever were, a futile attempt at controlling the market.

  29. Wayne McMillan
    October 30th, 2004 at 20:30 | #29

    With the increase casualisation of the Australian workforce in small businesses and the growth of labour hire firms across Australia, ordinary Australian workers will have very little job protection if unfair dismissal laws are removed. Just look at the growing number of cases in the industrial commissions and the number of employers being prosecuted by state WorkCover authorities, the thin edge of the wedge!

  30. October 31st, 2004 at 17:23 | #30

    John, on the impact of unfair dismissals reform on unionisation, David Autor finds the opposite effect that you predict. His model is that more lax unfair dismissals regimes boost the temporary help sector, which is typically non-unionised. See http://www.nber.org/papers/w7557.

    Looking forward to your subsequent posts on the IR reforms.

  31. October 31st, 2004 at 17:59 | #31

    Looking forward to your subsequent posts on the IR reforms.

    Me too.

  32. Tony Healy
    October 31st, 2004 at 20:21 | #32

    Andrew, your conclusion does not necessarily flow from Autor’s findings. JQ’s point was that increased precariousness of work will prompt workers to see more value in unions. Even though more of the workforce will probably be engaged through labour hire arrangements (which Autor terms Temporary Help), that still leaves the remaining staffed workforce to see increased value in unions. That increased participation might or might not be greater than the reduction caused by labour hire.

    By the way, there have been some pointers to this effect already. The CPSU recently found dramatic upsurge of membership among professional people facing the threat of having their jobs offshored.

  33. October 31st, 2004 at 21:24 | #33

    Tony, David Autor’s findings relate to net employment – suggesting that, in the US at least, the “scared workers joining unions” effect was swamped by the “growing temporary help/labour hire sector” effect. I agree that the reverse could potentially be true in Australia, but based on the available empirical evidence, I’m going to stick with my original view, for the time being at least.

  34. November 8th, 2004 at 08:18 | #34

    I’ve just put an update on my own experiences with unfair dismissal in the Monday message board for 8.11.04. Please read it and reflect on what it means for the wider world as well as for people in the same boat as me – or who could easily be soon.

  35. Homer Paxton
    October 28th, 2004 at 15:26 | #35

    It is no coinicidence the most highly regulated part of the labour market is for senior Management. They are the greatest rentseekers yet they are the same people who believe everybody else need not have the same clauses in their contracts that make it impossible to be sacked even if they are duds!

    The consistency is lost on me.

  36. October 28th, 2004 at 15:57 | #36

    One thing (and I need to review some material I’ve printed to be sure) is that advocates of changes to unfair dimissal laws feel that managers of small businesses will operate in a way that is fair to employees (ie make sure morale is high etc).

    For example, small businesses understand that retaining employees is a good hence their management style will try and retain staff. Cynical as I may be, I am not sure that every manager understands that. As for the case of larger organisations, HR doesn’t always have a good handle on things in my experience. So in one sense I feel that the arguments for changes to the laws are based in utopian ideals of management.

  37. Martin Pike
    October 28th, 2004 at 16:09 | #37

    Given they’ve dropped the ball on global free trade this obsession is evidence of a personal vendetta against unions and lower-level workers.

    Homer is dead right, and i’ll take it further- anyone taking a senior management, or public service position, ought to accept that they live and die by their performance, and anything more than a modest month or so paid out is offensive. Such risk is part of what their 6-8 figure salary is all about.

  38. Fyodor
    October 28th, 2004 at 17:18 | #38

    Martin,

    That’s not the way it works. Those guys already have contracts protecting their rights. The people who lose out will be the people without negotiating power, i.e. the small fry.

  39. Michael Burgess
    October 28th, 2004 at 17:21 | #39

    I have suggested to certain public servants I work with, who are currently crawling at a rapid rate to the new minister, and singing the merits of unfair dimissal laws, that they work under a similar contract. This, though, was a somewhat naive statement to make as ass lickers don’t really have to worry too much about getting the push.

  40. Geoff Honnor
    October 28th, 2004 at 17:24 | #40

    I offer but one example: A worker in a Financial Assistant role in a small community based NGO working in equity and social justice, is performing poorly, is frequently absent and continually requests sick leave in dubious circumstances. Her manager continually attempts to performance manage her and she accuses him of harassment. She takes out an AVO against him. She falsely reports her colleague as an embezzler to the CEO. Then we learn that she is working for a temp employment agency during her periods of sickness absence. She is dismissed. We phone a temp agency, (unaware of the specific circumstances) for an interim replacement and are offered the sacked worker.

    Her Union, fully cognisant of this not insignificant litany of deficiency, supports her unfair dismissal application to the NSW Industrial Relations Commission. We duly turn up to the hearing. She seeks an adjournment because her lawyer is on holiday. Some weeks later we reconvene, her lawyer is still unable to join us. The Commission wonders if she understands the necessity to prepare a case. She confirms that she does and the Commission sets a third date. She phones us and says she’ll settle for $20,000.
    We decline. The Commission reconvenes and lo! Lawyer now unwell apparently. The Commission dismisses her application. There are thousands of unfair dismissal stories in the Naked City. This is altogether too emblematic of too many of them.

    BTW, the Union organiser subsequently allowed that she was “a bit of a problem.” You’ll understand if my endorsement of your position is less than wholehearted, John :)

  41. Factory
    October 28th, 2004 at 17:53 | #41

    “This is altogether too emblematic of too many of them.”
    Do you have any good evidence, or is an anecdote the best you have?

  42. Spiros
    October 28th, 2004 at 18:00 | #42

    Geoff, that’s a good story. I have observed similar cases. But for every story like that, there is a story about a boss sacking a worker on a whim, or because the worker was pregnant, or wouldn’t grant sexual favours.

    You can’t generalise about these things.

  43. Tony Healy
    October 28th, 2004 at 18:49 | #43

    Melbourne barrister Peter Holding addressed the problems well in an article in The Age. He points out that by removing the right to claim unfair dismissal, the laws change the power relationship between the employer and employees, diminish initiative and foster age and other discrimination. “The new law will be a recipe for bullying, harassment and exploitation. If a boss or supervisor gets angry and swears at a worker who then swears back, and on the spur of the moment the boss decides to sack the worker for misconduct, there will be no right to claim unfair dismissal.

    “Unpaid overtime will increase. An employer will be empowered to require an employee to work back for no extra pay, knowing that if they refuse they can be dismissed for no reason and with no questions asked. Rates of involuntary casualisation of the workforce are also likely to increase, so employers stay under the 20-employee limit that favours them.” The Age, 15 Oct 2004

    I think these laws will have a much bigger impact than would seem obvious. Some of the seemingly spontaneous adjustments and reasonable behaviours in current employment relationships are actually responses to our employment laws. Without those backstops, the definition of reasonable goes out the window. Another deleterious effect is that even well meaning employers will be compelled to the worst exploitation of these new laws by competition from their more ruthless fellow businesses. You can see this now in the labour hire business.

    Welcome to avaricious Australia.

  44. Tony Healy
    October 28th, 2004 at 18:52 | #44

    Minor correction – the following paragraph is my paraphrase of Holding and should not appear as quoted speech: “Rates of involuntary casualisation of the workforce are also likely to increase, so employers stay under the 20-employee limit that favours them.”

  45. James Farrell
    October 28th, 2004 at 18:52 | #45

    We all have first or second-hand knowledge of cases like that, Geoff. And I agree, a maniac like that is enough to turn a grown man into a libertarian.

    One thing wasn’t clear from the anecdote: did the company open the door to the unfair dismissal application by not following the protocols? If so, then what do you conclude? That the procedure needs to be simplified? Employers need better information?

    If they did everything by the book, again, what do you conclude? That unfair dismissal should be allowed? Or is there actually a way to stop ruthless rorters like that, while preserving the spirit of the legislation?

  46. Tony Healy
    October 28th, 2004 at 19:13 | #46

    For every case like Geoff Honnor’s, there are 1,000 where the employer goes to his or her suburban lawyer or industry association to learn the technique for lawfully dismissing a loyal worker, and then engineers the three warnings. Sometimes they let the rest of the staff in on the impending sacking too, resulting in ostracisation of the selected victim.

    Also, I am always suspicious of stories such as Geoff’s. It’s appalling if true. But usually there’s another side to the story too. Also, I am sceptical about the aspersion cast on the union. Unions are usually very worldly, and reluctant to risk their credibility on doubtful cases.

  47. derrida derider
    October 28th, 2004 at 20:23 | #47

    You’re kidding Tony. What would prompt an employer to go to those lengths unless she was genuinely unhappy with the employee? And if she is, why shouldn’t she sack him? Surely what your 1,000 cases argue is that the laws are just adding to everyone’s hassle without affecting the final outcome.

    Yes, there are some truly appalling bosses out there (they’re often found in small business because people who say they want to ‘be their own boss’ sometimes really mean that they can’t get on with others). But no law is going to make them into good ones.

    I’m some sympathy for the view that sacking someone creates a social cost that is not fully borne by the employer, but the solution there is a tax in the form of seperation pay, not a clumsy attempt to regulate ‘fairness’ (and yes, I know that both theory and evidence suggests this will worsen long-term unemployment by making employers loathe to take a chance on applicants from disadvantaged groups). Divorce is the appropriate model; basing settlements on ‘fault’ makes for bitterness, perverse behaviour and lawyers picnics – better just to have some simple guidelines (length of service, income etc) to divvy up the losses.

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