Business owners still struggle to understand the impacts of the changes brought on by the Fair Work Act
Do jewellers really understand the Fair Work Act?
Posted April 05, 2011 | By Sonia Nair
Small and medium enterprises (SMEs) are still struggling to understand the impacts of the changes brought on by the Fair Work Act, despite 20 months having passed since its introduction in July 2009.
According to industrial relations lawyer Patricia Ryan, SMEs are having trouble coming to grips with changes in four key areas: unfair dismissal laws, key issues surrounding the National Employment Standards (NES), modern award challenges and adverse action.
Although the Fair Work Act came into force on July 1, 2009, two significant components of the new Act – the modern awards and the NES – came into effect on January 1, 2010.
“Despite the Act coming up to its second birthday, we are starting to see these [uncertainties] come up now,” Ryan said.
Unfair dismissal laws
Ryan said “the most significant change” to unfair dismissal laws was that employees who work for a company with less than 100 employees could now lodge unfair dismissal claims.
The change is especially poignant to independent jewellery retailers who often operate stores with a small number of employees.
Ryan said employers have to be mindful of substantive and procedural fairness when dismissing an employee.
“A dismissal may be for a good reason but the process can be unfair if the procedural aspects were not followed, such as giving an employee a chance to respond to issues put forward,” Ryan said.
“[On the contrary], the process may be sound but reasons may not warrant dismissal. Reasons may be harsh, unreasonable or unjust such as dismissing a long-serving employee with a previously unblemished record,” Ryan added.
Employers are required to clearly articulate issues about an employee’s performance and allow the employee a chance to respond, according to Ryan.
In her recent webinar entitled ‘The Fair Work Act – Key Challenges for SMEs’, Ryan encountered many queries from SME owners who were unsure on whether apprentices, trainees and employees serving their trials and probation periods are able to lodge unfair dismissal claims.
Ryan explained that all of them were precluded from lodging fair dismissal claims, although employees serving their trials and probationary periods could make adverse action claims while apprentices and trainees could lodge claims after completing their training arrangements.
Modern Award and NES
Jewellery retailers’ lack of understanding concerning the new Modern Award and NES laws was exposed at last year’s International Jewellery Fair in Sydney, when many of them raised concerns about the distinction between casual staff and part-time staff and overtime penalties.
Ryan admitted that, even now, many SMEs still remain unclear on the maximum weekly hours of work in a week.
“I suggest employers who experience fluctuation in business demand utilise the averaging of hours provision to minimise overtime payments,” Ryan said.
This provision allows employers to average hours of work over a period of 26 weeks and would be highly useful to retailers who experience inconsistent trading.
How SMEs should deal with changes
Ryan urged all SMEs to keep decisions transparent, give employees reasons for decisions that affect them and keep records of any decision-making process.
“Some employers are frightened of documenting things because they think it’ll come back and bite them but in 99.9 per cent of cases, documentation will support employers and what they have done,” Ryan said.
Patricia Ryan is a practice manager at EI Legal and a solicitor with over 30 years’ experience. She has qualifications in law, human resource management and industrial relations.
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