Monday, May 30, 2005

Impressions on Mr Howard's Industrial Nirvana

LAWYER: Doctor, what is your impression of the accused?

PSYCHIATRIST: I’m sorry, sir, I don’t do impressions. My training is in psychiatry!

(from the slapstick comedy Flying High)

John Howard has been a favourite target of impressionists from Max Gillies to the crew on the Mike Carlton Breakfast Show. But in industrial relations law and policy, few have made such a big impression as our good PM.

And now after years of crusading for change, it seems that the PM will finally have his chance to implement industrial nirvana. But will it be as heavenly as Mr Howard and his supporters from employer organisations imagine?

Mr Howard’s policy looks absolutely superb on paper. It will be easier to sack workers, especially for smaller businesses with upto 100 employees. Unions will have less power as enterprise bargaining is phased out more quickly and individual and workplace contracts become the norm.

Labor premiers, of course, are up in arms. Premier Bob Carr, the man who slashed injured workers’ entitlements for the sake of appeasing insurers, has seen the light and will fight the Howard reforms. He will be joined by his colleagues from other states in what promises to be a legal showdown in the High Court.

Who will win? Will Mr Howard have his day of glory? Will unions and workers be saved? Who knows? Who cares? One thing is for certain – whoever wins, the lawyers always win.

And not just lawyers acting for either side of the High Court challenge. Howard’s reforms will simply not work because they, like everything else created in policy nirvana, do not take into account how industrial law works on the ground. Mr Howard has failed to take account of how litigants and their advisers will be looking at the system, and how judges and commissioners will be administering the system.

One would expect that having one of Australia’s premier industrial counsel as one’s deputy would have given Mr Howard some idea of which way his reform winds should be blowing. Then again, one would also expect Mr Howard to advocate on behalf of all Australian citizens caught up in a spot of legal bother overseas. Yeah, right.

Mr Howard’s reforms simply won’t work. Let’s look at unfair dismissal. Say my fictitious client Jasmine approached me and said she had been working somewhere for a decade before being shafted, would I first look at unfair dismissal? I might consider it as one option. But unfair dismissal has its disadvantages.

Jasmine could only get upto 6 months wages as compensation for unfair dismissal. She has to pay my fees out of that amount. If I take her matter to hearing, the fees might add upto $10,000. Her compensation might be 3 months wages. If she earns $800 per week, she will get $9,600 compensation. Tax would also have to be taken out.

If Jasmine loses the case and is found to have made a frivolous or vexatious application, she might have to pay the legal fees of her employer.

And all these factors have to be considered and an application lodged within 21 days of dismissal. Further, there must be a dismissal. Rarely will a resignation under pressure be regarded as a dismissal.

On the other hand, Jasmine may have resigned or been offered a redundancy package. She may even have been dismissed. She may well have a more lucrative option of an application under s106 of the NSW Industrial Relations Act for unfair contract. A similar provision also exists under Queensland law.

Jasmine could apply for a host of things. Her claim would not be limited to 6 months wages. Further, we could ask the Commission to make orders that her employer pay all or part of her legal fees. And we could couple it all with a claim for unpaid entitlements.

If employers realised how expensive a claim for unfair contract is (as opposed to an unfair dismissal claim), they would not be cheering Mr Howard on in his crusade against state unfair dismissal laws.

Next, let’s look at the focus on individual and workplace agreements. Who is going to advise on these agreements? Who will draft them? Will there be one standard agreement? Or will we see different agreements for different level staff? How will all this tie in with OH&S, anti-discrimination and other factors? And who will adjudicate in case of disputes?

If Mr Howard thinks employment law is just about agreement making and breaking, he clearly has not understood the ins and outs of employment law. Perhaps he could visit the websites of some of Australia’s most expensive lawyers and download some of their employment law client alerts. Perhaps next time he is in Sydney, he can walk a few doors down from his office and sit in on some matters in the NSW Industrial Relations Commission. Then he can jump in a cab and head down to what many IR lawyers affectionately call “the Fight Centre” (the IRC located in the Flight Centre Building) and see how litigants make their decisions.

I admire Mr Howard for trying to free up the industrial marketplace. It is badly in need of a shake-up. For too long, workers and employers have been hampered in their dealings by too much regulation and red tape. But me thinks the Howard reforms will achieve little for either side. Mr Howard has failed to consider litigation dollars and cents.

I am sure my colleagues will agree with me in saying that without considering litigation dollars and cents, the reforms will make little sense in the long run.

(The author is a Sydney lawyer practising in employment and industrial law. He can be contacted on