Monday, October 31, 2011

The 1% strikes back: QANTAS holds the economy to ransom

Last night, Fair Work Australia (FWA) ruled to terminate all industrial action in the QANTAS dispute. Undoubtedly there will be much written blaming the unions for this industrial chaos, but FWA makes it clear that it was the threatened action by QANTAS that was the deciding factor in terminating the action.

The issue arose because of an application by the Federal Government under s424 of the Fair Work Act (the Act). Section 424(1) states:

    424 FWA must suspend or terminate protected industrial action—endangering life etc. Suspension or termination of protected industrial action
  1. FWA must make an order suspending or terminating protected industrial action for a proposed enterprise agreement that:
    1. is being engaged in; or
    2. is threatened, impending or probable; if FWA is satisfied that the protected industrial action has threatened, is threatening, or would threaten:
    3. to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
    4. to cause significant damage to the Australian economy or an important part of it.”
FWA ruled that the criteria had been met under s424, particularly 424(1)(d) with respect to the aviation, tourism and associated industries.

However, it was not the protected action taken by unions that fulfilled the criteria but the threatened industrial action by QANTAS.

At [10], FWA ruled (emphasis mine):
"It is unlikely that the protected industrial action taken by the three unions, even taken together, is threatening to cause significant damage to the tourism and air transport industries. The response industrial action of which Qantas has given notice, if taken, threatens to cause significant damage to the tourism and air transport industries and indirectly to industry generally because of the effect on consumers of air passenger and cargo services."
In its ruling on making the order to terminate, rather than suspend protected industrial action, FWA further referenced the uncertainty cause by the employer strike:

At [15] (emphasis mine):
"...Suspension is necessarily temporary - it leaves open the possibility there may be a further lock out with its attendant risks for the relevant part of the economy. That is, a risk the situation we are now dealing with will recur."
In other words QANTAS' threats to the wider economy were the deciding factor in this order, not the union action.

The right to strike has been curtailed to such an extent that it is almost impossible for employees to withdraw their labour to obtain fair working conditions such as the 8-hour day, sick leave, holiday pay, maternity leave and many other conditions that we now take for granted. The justification for this curtailment of labour to take action has always been that industrial action by labour can have seriously detrimental effects on the economy.

The message from this, is that the 1% - the corporations- has unfettered power and is prepared to use it regardless of the detrimental effects to the economy or the country. The almost unfettered right to strike by capital, has held the Australian economy to ransom. FWA has made it clear that it was QANTAS' actions that were the threat, not the union that threatened the economy. The economy cannot be  held to ransom by the industrial action of capital, just as it cannot be held to ransom by labour.

It is time the the Government governs for the 99%  and curtails the rights of capital to strike as they have curtailed the rights of labour.

Saturday, October 29, 2011

QANTAS' potentially unlawful action: a brief analysis

Today, QANTAS has decided to ground all of its fleet, both domestic and international, in response to the continuing industrial dispute between QANTAS and unions.  In response the Government has intervened by applying to Fair Work Australia (FWA) to suspend all industrial action (both union and QANTAS) under s424 of the Fair Work Act - FWA will be hearing the matter of suspending action tonight.

Outside of this initial action in FWA, there are other issues arising from QANTAS' actions that may be scrutinised in further subsequent actions in FWA, some of which could find QANTAS in breach of the Act.

There are a few ways that this dispute could play out and QANTAS may actually be significantly worse off by taking this action. However, much of this law is yet to be tested and it is difficult to predict how it will turn out - particularly in regard to the action that QANTAS has taken.

Industrial action, which includes employer response action, is only protected if it meets the criteria in Part 3, Division 2 of the Act. Employer response action (such as lock-outs) is governed by s411 of the Act.

s411 states:

Employer response action for a proposed enterprise agreement means industrial action that:
  1. is organised or engaged in as a response to industrial action by:
    1. a bargaining representative of an employee who will be covered by the agreement; or
    2. an employee who will be covered by the agreement; and
  2. is organised or engaged in by an employer that will be covered by the agreement against one or more employees that will be covered by the agreement; and
  3. meets the common requirements set out in Subdivision B.
The action is indeed in response to industrial action by those  classes of people in s411(a)(i) and s411(a)(ii), however it is much broader than that with the potential to affect a much broader class of employees. The breadth of this action may not reasonably be seen to be action only in response to industrial action in 411(a) - if the action is too broad, it could be that the action is unprotected.

The "Common Requirements" referred to in s411(c) are defined in s414 of the Act. These too, may have been contravened by QANTAS.

S414(5) gives the notice requirements for employer response action:

Before an employer engages in employer response action for a proposed enterprise agreement, the employer must:
  1. give written notice of the action to each bargaining representative of an employee who will be covered by the agreement; and
  2. take all reasonable steps to notify the employees who will be covered by the agreement of the action.
Considering the extremely sudden nature of the lock out, it appears that the notice requirements in s414(5)(i) may not have been met (the AWU has claimed that they had no notice). It  also appears unlikely that the notice requirements in s414(5)(ii) would have been met either. If these notice requirements have not been met then QANTAS' action in grounding its entire fleet, would be unprotected.

Taking unprotected industrial action may make QANTAS liable for fines or civil action. Tests of these sections will undoubtedly require examination by higher courts than FWA, potentially even up to the High Court. Whatever the result, it is likely to change the industrial relations landscape in Australia by significantly curtailing or expanding an employer's ability to take industrial action against its own employees.

Monday, October 10, 2011

The procedural fairness of unfair dismissal

There has been considerable agitation by previous Howard Government Ministers to re-animate the corpse of WorkChoices with calls for the Liberal Party to consider further changes to the industrial relations system.  The current shadow minister for Industrial Relations, Senator Eric Abetz was quick to hose down the potential restoration of WorkChoices, however, he could not help but throw in the usual Liberal Party lines attacking the current Fair Work system. In particular Sen. Abetz alluded to a "burgeoning industry" of "go-away money" to settle unfair dismissal claims.

Unfair dismissal has been a particular focus of the Coalition, often stating that is is a brake on employment, despite evidence to the contrary. It is worthwhile to examine the Fair Work regime of unfair dismissal to see just how 'unfair' unfair dismissal actually is to the employer.

A person is protected from unfair dismissal if they have been employed for the minimum employment period (between six months and one year) and if they are covered by a modern award, enterprise agreement and are under the high-income threshold.

Unfair dismmissal comprises of the following elements:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

So, in the case of a small business, there is a simple way to avoid any claim, and one would imagine that if a larger business followed the Code and employee would have difficulty proving that the dismissal was unfair, unjust or unreasonable.

The fair dismissal code merely applies the principles of procedural fairness to dismissal situations. The principles of procedural fairness require that a person has a fair hearing, free from bias, a decision based on evidence and an ability for the person affected to respond.

So in the industrial context, a person who is to be dismissed should be dismissed on the basis of evidence and also allow a person who is affected by a decision to know the accusation against them and to respond.

At its most basic, the code requires that an employer makes the employee aware that there is a problem with their performance and give them a chance to respond an rectify the problem. It does not protect an employee who has committed serious misconduct such as theft, fraud or occupational health and safety breaches.

The ability of an employee to have the chance to be informed of and respond to any identified performance problems is consistent with the principles of procedural fairness, so it is not unreasonable to apply this administrative burden on business.

So one must question where this burgeoning industry of "go-away" money is coming from.

Firstly, it is likely that this "industry" is being fed by small businesses not following the code, preferring to summarily dismiss under-performing or disliked employees due to a disconnect between the employers perceptions of serious misconduct and those that are actually proscribed by the law.

Secondly,  it is likely that employers and employees are coming to a settlement outside of the remedies imposed by Fair Work Australia (FWA) rulings because the most frequent remedy for unfair dismissal is that of reinstatement rather than compensation (except where the relationship has soured to such an extent that it is impractical). If this is the case, then the employers themselves are choosing to "pay out" employees (something which they probably could have done before going down the dismissal route). This is not imposed by the Fair Work regime, it is created by employers who have not dismissed employees correctly.

Ultimately it is up to businesses to follow the law, and considering that the law only incorporates the principles of procedural fairness and natural justice, it is hardly onerous. Furthermore this only really relates to summary  dismissal, there is nothing that prevents an employer from dismissing an employee so long as the necessary notice is given (or pay in lieu of notice) and entitlements are paid out.

What businesses are really after is the ability to avoid their responsibilities for notice and entitlements as they do not see these as part of the total pay package to which employees are entitled - putting it under the guise of not being able to sack under-performing employees.

The media too, is rife with stories of seemingly outrageous conduct by employees successfully being appealed to Fair Work Australia. However, when one actually looks past the media reporting to the actual facts of the case, it is often the employer who has been unfair, unjust or unreasonable or merely has not provided evidence.

It is not an unreasonable burden on business that they treat their employees fairly, nor is it unreasonable to expect them to follow the law. What is unreasonable is that businesses expect that the law ought to be changed to allow them to sack at will for whatever reason and avoid paying entitlements - all under the guise of 'flexibility'.