Employees being paid to go away
SMALL businesses have accused the Fair Work Commission of pressuring them to pay millions of dollars a year in "go away" money to rogue employees who have been lawfully dismissed for poor performance or theft.
Fed-up Queensland business and industry groups are demanding the Morrison Government overhaul the Small Business Fair Dismissal Code, which they say is being exploited by no-win no-fee lawyers, opportunistic former staff and mediators who push parties into a settlement.
Industry groups have revealed already stretched mum-and-dad businesses are paying thousands of dollars to sacked staff for their unworthy unfair dismissal applications because it is cheaper than the threat of going to court.
In a direct signal the Government is considering reform, Attorney-General Christian Porter told The Courier-Mail there was a "very widespread view that the code is not achieving … objectives".
"When Labor introduced this code in 2009 it said that the code would be a clear and concise reference to help small business employers meet their obligations."
However, some within the Coalition are nervous about potential reform, raising the prospect of Labor reviving its potent industrial relations fight against the then Howard government's WorkChoices legislation.
The Motor Trades Association of Queensland said it had represented many small business members in unfair dismissal claims.
"While some of the claims have had merit as a result of a dismissal carried out without due regard to process, many of the claims are purely speculative and with little or no merit, with the claimant often represented by organisations which see these matters as a lucrative source of income and for whom the facts are not allowed to stand in the way of a potential fee,'' a MTA spokesman told The Courier-Mail.
"Many small businesses cannot devote the resources necessary to challenge a claim and hence often chose the lesser of two evils. This is particularly true for small country-based businesses for whom the bad publicity of a formal claim is enough to ensure that settling without a court appearance is left as the only option.
"This can apply even where dishonesty or theft were the motivating factors in the dismissal.
"This encourages participants to consider the not inconsiderable costs, time and effort involved in taking on a formal hearing against the hopefully lesser cost of making some form of compensation offer, go away money."
Queensland's Chamber of Commerce and Industry spokesman Dan Petrie said the matter was a constant challenge for small business.
"There is an uncomfortable truth politicians don't want to hear but the frustrations expressed by small business operators in hiring good staff is deafening and sadly paying go away money is a fact of life for many proprietors,'' Mr Petrie said.
"Many business owners deal with people with questionable morals who are not averse to intimidation, theft and making life hell for many medium sized enterprises with vexatious claims that cause untold stress for proprietors and their families."
The exact amount small businesses have paid in "go away money" is not known because it is not revealed by the Fair Work Commission (FWC). Small businesses are those with fewer than 15 staff.
By law, The Courier-Mail cannot reveal what occurs during a dispute resolution processes. However, advocates for small business have privately revealed cases where staff who had been legitimately dismissed - including for repeatedly ignoring safety rules and lying about time worked - took their matter to the FWC because it was almost a certainty they would squeeze cash out of their former employer.
Ambit claims by former staff include demands of payments for $60,000 - although it is believed most employers offer "go away money" of between $1000 and $8000 because they want the stress to go away and believe the process - including hiring lawyers - could be much higher.
One employer, whose identity cannot be revealed, accused the system of being flawed because former staff can make up anything they like.
"They don't have to swear on a bible, (during mediation) their character or evidence isn't tested."
Employees who claim they have been unfairly dismissed can make application to the FWC within 21 days of their termination, and three steps usually follow.
The first step is mediation, an informal process where both parties are encouraged to find the "best solution for everyone". Next is conciliation, "a semi-formal process" where FWC helps parties come to a solution. Arbitration is the formal process where FWC determines the outcome.
The FWC's most recent annual report reveals there were 13,595 unfair dismissal applications (impacting big and small business) lodged. Almost one in eight were finalised through conciliation.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the code needed to be simplified and the exact amount of "go away money" being paid needed to be known.
Ms Carnell, who has recommended sweeping changes to the code, said it should not be easier to fire staff however the system needed to be tightened because it was ambiguous, complex and open to challenge.
She said small business could not afford go away money but were paying it, which impacted on their bottom line.
She said the current industrial relations framework was an incentive not to hire for some businesses.
"There is a real problem here,'' she said.
Labor's industrial relations spokesman Tony Burke dismissed Ms Carnell's recommendations as being partisan.
"These are views that Kate Carnell has held since she was a Liberal Party chief minister in the ACT,'' Mr Burke said.
"The Government may have given her a job that is ostensibly independent - but I don't see her espouse many views that are different from those of the Liberal Party.
"The Fair Work Commission conducts unfair dismissal conciliation by phone, doesn't require employers to have legal representation and takes a practical approach that already includes easier rules for small business.
"It's concerning that in her effort to water down unfair dismissal rules Ms Carnell has been giving inaccurate advice to Australia's small businesses."
The ACTU did not comment.