INDUSTRIAL RELATIONS AMENDMENT (UNFAIR CONTRACTS) BILL
Second Reading
Mr YEADON (Granville - Minister for Information Technology, Minister for Forestry, Minister for Ports, and Minister Assisting the Premier on Western Sydney) [1.35 a.m.]: I move:
That this bill be now read a second time.
This bill was introduced in the other place on 8 April and the second reading speech appears at page 3796 of Hansard. The bill is in the same form as introduced in the other place. I commend the bill to the House.
Mr FRASER (Coffs Harbour) [1.35 a.m.]: I do not lead for the Opposition on this bill, however, the Opposition supports the bill.
Mr HARTCHER (Gosford) [1.36 a.m.]: The Industrial Relations Amendment (Unfair Contracts) Bill has been hanging around for some time. It was
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introduced back in April 1998 into the Legislative Council and passed through that House without any problem. It has been stalled in this Chamber while the Government decided what to do with it. That is no surprise because the Government never knows what to do with controversial matters. Its initial tendency is to back off and not confront controversial issues, as was the case with this bill. On 13 May the New South Wales Bar Association wrote a letter about this bill as follows:
The Industrial Relations Amendment (Unfair Contracts) Bill 1998 purports to deny any remedy under the Industrial Relations Act, 1996 to a person who has been dismissed from employment whose annual remuneration is greater than $66,200 per annum and whose conditions of employment are not set by an industrial instrument. Persons dismissed from employment where the remuneration is below the arbitrary amount will generally continue to have a right to pursue remedies for unfair dismissal under Part 6 of the Act.
In the Association’s view, discrimination in the legal remedies available to members of the community who are dismissed from their employment, which are based upon the remuneration of the person concerned, is wrong in principle.
The amendment has the effect of depriving not merely high fliers of compensation formerly available to them. It also affects workers engaged under schemes designed to defeat award conditions. In the case of award employees it would restrict the level of compensation for unfair dismissal to six months remuneration irrespective of the duration of their employment, the terms of their contract or the circumstances of their termination. In the present industrial climate, in particular, the changes may cause great and unforeseen hardship.
Whilst the Association recognises the impetus for the amendment it queries whether, in truth, this is a case of throwing out the baby with the bathwater.
The Bar Association’s views are entitled to a certain degree of respect. The response of the Government to those views has been zero. The Government has encouraged the development of unfair dismissal laws because the Labor Council and the trade union movement somehow believe there is something to be gained from unfair dismissal laws. It is now caught with the fact that the Industrial Relations Commission has been swamped with applications that have been made not only by people under the statutory level of remuneration who complain under the Industrial Relations Act but also by people over the $66,200 prescribed limit who are now able to bring claims under this legislation.
Accordingly, Labor’s aim that a person earning under $66,200 can claim for unfair dismissal but anyone over that amount does not have that right is being defeated by lawyers using a different Act. This legislation reflects the Labor Party’s view that a person who earns more than $66,200 has no right to make a claim for unfair dismissal under the industrial relations law. The Labor Party considers that it is a sensible amendment. The real issue is whether unfair dismissal legislation is working, and working successfully.
The Opposition has no problem with people having the right to approach an arbiter, be it a court or some other dispute resolution mechanism, when they have been unfairly dismissed in their employment. The Opposition has a problem with the way the unfair dismissal laws are being used simply to extract a large settlement from employers under the threat of legal action. Small businesses complain that they do not have the expertise to deal with legal action because they lack human resources departments, access to lawyers, the capital to fund court cases and the time to devote to court cases. It is common practice for people whose positions have been terminated to claim they have been unfairly dismissed when they know full well that employers have the choice to either contest an expensive court action or settle out of court by paying them a sum of money over and above that to which they would otherwise be entitled under their award or industrial instrument.
Small businesses cannot afford the time or the money to fight cases and therefore have to succumb to industrial blackmail. This action is encouraged by the trade union movement and implicitly encouraged by the Government, which does nothing about it. The rush of claims against small business is completely contrary to the purpose of this legislation, that is, to protect people’s jobs. Those claims are causing a loss of jobs because small business is reluctant to employ people who may lodge a claim of unfair dismissal if their employment is later terminated. New South Wales has the lion’s share of some 700,000 small businesses but they do not hire as many employees as they could. Consequently, people are missing out on jobs.
The prime reason is the unfair dismissal legislation aided, encouraged and sponsored by the Labor Party. Small businesses are crying out to have the unfair dismissal laws changed. Big business can cope with the laws because it has human resources departments, bureaucratic structures to deal with issues, counselling services either on site or available and law firms either on site or available. Government departments have the same facility and can handle unfair dismissal claims which cause no problems other than a certain degree of budgeted cost, but small business cannot. If the Labor Party were serious it would do something to remedy this blight on small business.
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The Labor Government has introduced a bill that has been available since April 1998. It excludes people who earn more than $66,200 per year. The median wage in the community is approximately $35,000. The great bulk of people who are employed in small business earn considerably less than $66,200, so this legislation does nothing for them. This legislation affects only the high-fliers, as the Bar Association so correctly pointed out. The provisions of this bill would exclude Jana Wendt, who, invoking this legislation, brought a major claim against Channel 7 in the Industrial Relations Commission. The bill provides that such people do not have a remedy in the Industrial Relations Commission.
A breach of contract can be established in the Supreme Court - a claim under the Contracts Review Act for harsh and unconscionable conduct or a breach of contract under ordinary common law - but the IRC cannot be used if the person is earning more than $66,200 a year. The Labor Party’s response to every problem is to hit the high-fliers. It is not prepared to look at the interests of ordinary working men or women who want a job and yet cannot get a job because small business is frightened to employ them - mainly because of the unfair dismissal laws which have been used to terrorise thousands of small business.
The Opposition has no problem with people having the right to approach a dispute resolution mechanism in respect of genuine cases of unfair treatment in the administration of their work or in the termination of their employment, but it does not agree with the ongoing rorting of the unfair dismissal laws which is occurring under Labor. If the Minister has the slightest interest in this matter - I strongly suspect he does not - I invite him to address this issue in his reply. I suspect that he will say nothing because his bureaucrats have not written out anything for him. The Attorney General in the Legislative Council similarly was not prepared to address this issue and simply quoted court cases and argued learnedly as though he were counsel addressing a bench and not a Minister of State addressing the Parliament where laws are made.
The Opposition accepts that the flood of unfair dismissal claims which are clogging up the Industrial Relations Commission and which are affecting business needs to be curtailed. The decision of shadow cabinet is that it is prepared to wear this legislation, not with any great enthusiasm, because it really does not achieve much. The legislation affects about one half of one per cent of the unfair dismissal claims. The other 99½ per cent of unfair dismissal claims involving people earning under $66,200 a year will continue to be brought in the Industrial Relations Commission, continue to blight small business and continue to clog up the operation of the IRC.
There is no more significant cause of action now being determined by the Industrial Relations Commission than unfair dismissal. The Government’s response to the flood of claims is zero. Accordingly, the Opposition calls on the Government to develop some consistency with the Federal Government. Under the excellent Minister for Workplace Relations and Small Business, the Hon. Peter Reith, the Federal Government has pursued a policy of seeking to exempt small business, that is, businesses employing under 15 people, from the operation of unfair dismissal laws in certain circumstances. The Opposition has urged that exemption on this Government without success.
No reason has been given why small business should not be exempt in certain circumstances as defined by Mr Reith’s proposed legislation, stalled before the Senate when the Parliament was dissolved before the recent Federal election. The Government is simply unable and unwilling to act because it is beholden to the Labor Council and the trade union movement and not to the best interests of the economy or people of New South Wales. Accordingly, the Opposition urges that approach and urges a Federal-State symmetry in achieving a realistic industrial relations system in this State, one that will protect the interests of employees and ensure that employers are not unfairly victimised by misuse of the unfair dismissal system.
The Opposition rejects the present practice among a certain section of the legal fraternity to use the unfair contracts law for a purpose for which it was never intended. As honourable members of the House may recall, the unfair contracts law is based on the old section 88F of the Industrial Arbitration Act which allowed the court to set aside unfair contracts. Truck drivers and real estate salesmen employed on commissions simply could not realistically expect to make any sort of living wage under the commissions or under piecework available to them. The Industrial Relations Commission had the power to set those contracts aside and require the employee to be paid at a realistic rate either as determined by an award or by the court.
That is the genesis that we are all familiar with. Section 88F of the Industrial Arbitration Act was re-enacted in the Industrial Relations Act 1991 - legislation introduced by the Hon. John Fahey, the then Minister for Industrial Relations.
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That section has now been re-enacted as part 6. The Opposition believes the legislation should return to its original form, that it should apply to contracts that are generally unfair, and that it should not be simply a device whereby termination of employment for people earning more than $66,200 can be brought before the commission. For that reason the Opposition supports the bill.
However, the Opposition strongly argues the case for small business in New South Wales. Small business is suffering because of the malapplication of unfair dismissal laws because employees are able to use them for industrial blackmail. The Opposition urges the Government to take action to protect small business. We are not against unfair dismissal laws; we are against their misuse and small business not having any protection against them. The Opposition has clearly stated that its policy will be to exempt small business from the legislation in certain circumstances. The Opposition will not oppose the passage of the legislation but will continue to highlight the deficiencies in the Government’s approach to industrial relations in New South Wales.
Mr YEADON (Granville - Minister for Information Technology, Minister for Forestry, Minister for Ports, and Minister Assisting the Premier on Western Sydney) [1.52 a.m.], in reply: I thank the honourable member for Gosford for his contribution to the debate and his indication that the Opposition will not oppose the legislation. The Parliament has carefully laid down the test to be met by an applicant who claims unfair dismissal. There is an income test or a test as to whether the employee is covered by an award or an industrial instrument. The unfair contracts provisions have been used indirectly, in effect, to get around those criteria. The legislation seeks to ensure that where it is proper and appropriate for unfair dismissal provisions to be brought into play, they be used rather than unfair contracts law. I commend the bill to the House.
Motion agreed to.
Bill read a second time and passed through remaining stages.