The fundamental right to bring a personal grievance for unjustified dismissal could be stripped away. The National – ACT coalition have announced that they will introduce an amendment to the Employment Relations Act in 2025 to remove the ability of employees earning $180 000 or more to pursue an unjustified dismissal claim.
Alongside this ACT Small Business spokesperson Laura Trask has introduced a member’s Bill which would allow an employer to negotiate an “exit package” with an employee that cannot later be challenged in Court.
These are highly significant changes to important employment rights and the lack of public debate and engagement makes this feel like a sleight of hand. To be fair ACT and National campaigned on introducing an income threshold to personal grievance claims, but what this will actually mean in practice may not be well understood.
Workplace Relations and Safety Minister Brooke van Velden said, in announcing this reform; “Workers who are wanting to move up the career ladder and be considered for more challenging positions will benefit from this policy. This policy allows employers to give workers a go in these high impact positions, without having to risk a costly and disruptive dismissal process if things don’t work out”.
This statement seems to be a valiant attempt to paint this policy as mutually beneficial for employers and employees. In reality this cannot be the case – employees can be fired at will with no legal recourse.
The justification that employees will be given opportunities that they may not otherwise have had is questionable given that employers can already impose trial periods of up to 90 days on new employees. Therefore, the new policy, and the “opportunities” for new employees described, must be aimed at existing employees. In most cases, though, an employer would have a good idea of the abilities of their existing employees and therefore would not need a mechanism such as this to “test” them in new roles.
It is not clear yet how the policy will apply, but the Minister’s press release refers to the ability of the parties to “opt back into unjustified dismissal protection if they choose to or negotiate their own dismissal procedures that work for them”. This will presumably occur when entering into an employment relationship because an employee is unlikely to agree to a variation or new term which enables their employer to dismiss them, at the time of termination.
The parties to an employment relationship can already engage in “without prejudice” negotiations to seek to reach agreement on the terms of an exit, but this generally occurs when the relationship has broken down.
This is quite a different scenario to where an agreement is entered into at the start of employment providing that the employer may dismiss the employee, and that they cannot raise a personal grievance. There will be a significant risk that applicants for employment, however senior, will be compelled to agree to these terms because they have no other options and little bargaining leverage.
Laura Trask’s Termination of Employment Agreement Bill is equally extreme and will likely impact low paid and vulnerable workers who have even less negotiating power. The Bill provides for an employer to make an offer to an employee, including payment of a specified sum, for the purpose of terminating the employment by “mutual consent”.
This may have seemed reasonable if the negotiations were occurring at a point in the relationship where the wheels had fallen off and both parties could evaluate what, if any, grounds the employer may have for dismissal. But this is not necessarily the case. The Bill is broad enough to allow for any pre-termination negotiations which again means that an agreement of this nature could be entered into at the outset of the employment and in circumstances where the employee is compelled to accept whatever they are offered.
Trask has said publicly “Some employers would happily offer an employee money to leave, and in many cases the employee would happily accept. But this is not an option under current law”.
This statement is incorrect. The existing law allows for parties to an employment relationship to agree the terms of an exit, but it does provide for certain protections including that there must be an employment relationship problem and both parties must agree to explore resolution on a “without prejudice” basis.
In this situation the employee would have the right to say no and would have a clearer understanding of their other options, including the strength of any potential legal claim. This is very different from being compelled to agree to a pre-ordained arrangement at the commencement of employment and then having this held over them throughout.
The Explanatory Note to the Bill says that the termination may occur if, for example, “the demands of the business mean that it is imperative to dismiss the employee”. Despite this statement, there is nothing in the Bill itself which restricts or qualifies when an employer can terminate the employment – it is wide enough to enable the dismissal of an employee at any time and for no good reason.
Nor is there any “carve out” in the Bill for terminations which may be based on discriminatory grounds, as there is in the case of trial periods.
It is, essentially, a free for all – termination at will, provided the employer pays a pre negotiated “price”.
These intended legislative reforms are an attack on worker’s rights and need to be subject to public scrutiny and debate. I sniff a wolf in sheep’s clothing.
Originally published in The Post
