The Elephant in the Room

The Australian managing Director of Rio Tinto, David Peever says that the Fair Work Act is the elephant in the room when it comes to the productivity debate in Australia.

Heather Ridout, who used to be the head of the Australian Industry Group and is now on the Reseve Bank board said on a recent Q & A programme that the “Fair Work Act gives 120 new rights to unions and nothing to employers”. On the same programme,  Judith Sloan, an economist and commentator suggested that it was ironic that the Act assumes that the right of unions is paramount when it comes to work place contracts but only 13% of the private work sector belong to unions.

Calls by industry leaders for a more flexible, productive and fair work place relations system are becoming more strident.

Perhaps the Government has heard the calls.  There are amendments proposed to the Fair Work Act involving an overhaul of the costs provisions.  Under the proposed changes, Fair Work Australia will have new powers to make cost orders against Applicants who bring “unreasonable claims”.

At the moment, it is most unlikely that, if an applicant fails in Fair Work Australia, he or she will have to pay the employer’s costs.  This is because the employer must make application for costs swiftly and, more importantly, must demonstrate that the applicant’s proceedings were manifestly untenable or brought vexatiously.

It is understood that, under the costs regime proposed, an employer will be able to recover its costs if the applicant’s claim is unreasonable.  This is still not the way things work in other litigation concerning breach of contract or statutory obligation, where costs  follow the event unless the circumstances are exceptional.

The commentators suggest that the proposed changes to the costs regime will provide some relief for small business.  It is hoped that it will enable litigation in Fair Work Australia to be conducted more efficiently and drive early resolution.

Costs aside, the best way for a small business to protect itself from unmeritorious claims is to implement fair and compliant dismissal processes.  The employment team at Everingham Solomons can help with dismissal issues because at Everingham Solomons Helping You is Our Business.

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