General Protections Claims on the Rise

The Fair Work Commission’s latest Annual Report for 2016/2017, released last week, shows that general protections claims are on the rise. There has been a 12.3 per cent increase in general protections claims involving dismissals over the last year.

In 2015/2016 there were 3,270 general protections claims involving dismissals. In 2016/2017 this went up to 3,729 such claims.

What are the reasons for this increase, how many matters resolve at conciliation and is settlement always the best option? These aspects of general protection claims are explored below.

Reasons for the Trend

This trend towards employees favouring general protections claims over other types of legal claims is occurring for a number of reasons, including:

  • General protections applications are cheap to file, costing only $70.60;
  • The application form is easy to prepare and legal advice is not necessarily required;
  • There is little commitment required from individuals lodging an application in the early stages, as the matter goes straight to a telephone conciliation (rather than a face to face conference with a commission members as use to be the case);
  • If an employee cannot bring an unfair dismissal claim (because they earn above the high income threshold of $142,000 and are not covered by a modern award or enterprise agreement) this is often seen as the next best claim to lodge to try to put pressure on an employer to pay the employee some monetary compensation;
  • Pinpointing a workplace right that was exercised or was proposed to be exercised by the former employee is not that hard, it is connecting the workplace right to the dismissal that is more difficult and often overlooked;
  • There is a reverse onus of proof place on employers meaning employees do not have to prove the connection between the adverse action and the dismissal, rather the employer has to disprove this;
  • Unlike discrimination claims in the Australian Human Rights Commission conciliation is compulsory and takes place quickly within a month or two; and
  • It is a non-costs jurisdiction so employees have protection from being ordered to pay costs (except in limited circumstances).

Legislative Operation

Under the Fair Work Act 2009 (Cth), an employer must not take adverse action (including dismissal) against an employee because they exercised or proposed to exercise a workplace right (section 340).

Workplace rights are defined by section 341 of the Fair Work Act as:

  1. An entitlement to a benefit of, or role or responsibility under a workplace law or instrument or order made by an industrial body;
  2. An ability to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; and
  3. An ability to make a complaint or inquiry.

Some of the most commonly raised workplace rights include employees claiming to have been dismissed for complaining about their managers or colleagues or for seeking to exercise their right to a benefit under the Fair Work Act or a Modern Award such as payment of their salary or overtime.

In addition to the above, employers are also prohibited, under section 351 of the Fair Work Act, from dismissing an employee because of any protected attribute identified in state, territory or commonwealth discrimination law. This includes, but is not limited to, an employee’s race, colour, sex, age, disability, carer’s responsibility and martial status.

A reverse onus of proof rests on employers in general protections cases, to show that they did not dismiss the former employee for a prohibited reason. Accordingly, there is a evidentiary burden on employers to show that the real reason for dismissing an employee had nothing to do with the exercise or proposed exercise of a workplace right or a protected attribute, but was instead for another lawful reason.

Due to this reverse onus it is vital that employers ensure that they have lawful reasons for terminating employees. Notably, even if only one of a few reasons that a person’s employment is terminated is unlawful, the dismissal will still be found to fall foul of the legislative provisions. Clearly documenting what the reasons are, including having an internal paper trail setting this out, is essential. Following a fair process, even though the procedural fairness tests involved in an unfair dismissal case are not relevant here, is an important practice to try to ensure that the lawful reasons for dismissal are properly communicated and not lost in amongst the implementation of the decision to fire an employee.

Resolving Claims or Holding Out 

According to the Fair Work Commission’s Annual Report, of the 3,729 general protections claims involving dismissal, 73 per cent were resolved at conciliation, withdrawn or were refused an extension of time. This means that only 27 per cent may have been pursued to the next stage of potentially filing their claim in the Federal Courts.

77 per cent of the general protections matters involving a dismissal which did end up in conciliation resolved with either a monetary payment or both a monetary payment and some other non-monetary terms of settlement.

These settlement rates are high and show that employers are deciding, for the most part, to resolve these matters early on.

Despite the potential costs of defending a general protections claim involving a dismissal and the reverse onus of proof, employers should be cautious when dealing with dubious general protections claims. Paying a settlement amount for such a claim could lead to more problems. It could create a well trodden path for employees dismissed in the future to also expect a payout if they bring a claim (regardless of the merits).

While bringing a Fair Work Commission claim is relatively easy for former employees, the next stage of the process, taking the matter to the Federal Courts, is tougher and there are a number of disincentives to this process. The time involved to get to hearing, which is likely to be 12 to 18 months at a minimum, the legal costs if the former employee is represented, and the public nature of any decision are significant barriers to many former employees.

If a company is confident that its internal decision maker did not dismiss a former employee for a prohibited reason, and the employee is just trying on a claim to see where it gets them, holding firm and not making an offer to resolve it may be the most sensible strategy to deploy.