Freedom to fire: economic dismissals under Work Choices

Economics Australia

This report concludes that the new 'genuine operational reasons' exclusion, and other aspects of the regulation of economic dismissals introduced by the Work Choices legislation, have significantly reduced many long-standing legal protections of job security for Australian workers.

These changes, along with others such as the 100 employees conclusion, have left many workers exposed to unfair or arbitrary dismissal – without any legal remedy (unless, for example, the termination is based on a discriminatory ground). The Work Choices laws have therefore significantly enhanced the freedom of employers to ‘hire and fire’ staff.

To date, many of the concerns raised about the potential unfairness of the genuine operational reasons exclusion have been realised. The case law between March 2006 and July 2007 demonstrates the many dimensions of the unfairness of the exclusion.

The Australian Industrial Relations Commission’s broad interpretation of the operational reasons exclusion has left employers largely free to restructure their operations and staffing arrangements, and implement redundancies, without the need to point to a valid reason for dismissal or to treat employees fairly and reasonably in the process leading to dismissal.

Even more alarmingly, the exclusion has also opened the door for employers to dismiss employees with the express purpose of engaging other workers to do the same jobs for lower wages and conditions – as long as some kind of ‘operational reason’ can also be shown.

The genuine operational reasons exclusion is also inappropriate, having regard to the protections provided to Australian workers in the context of economic dismissals in the 1984 TCR Case and the 2004 Redundancy Test Case; under Federal legislation between 1993 and 2005; and under the various state unfair dismissal jurisdictions over a much longer period.

The exclusion also takes Australia further away from compliance with the ILO Termination of Employment Convention.

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