Kate Carnell has called for a new small business division within the Fair Work Commission

Kate Carnell has called for a new small business division within the Fair Work Commission.

Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, in Canberra. Picture: Kym Smith

Small Business Ombudsman Kate Carnell has called for a new small business division within the Fair Work Commission, but backed off a push to cut the maximum compensation paid to unfairly sacked workers.

Ms Carnell today unveiled a series of proposed changes to the Small Business Fair Dismissal Code, explicitly denying they were designed to make it easier for small employers to sack workers.

“Put simply, the Small Business Fair Dismissal Code in its current form, is not working in the way it was originally intended,” she said.

“It is ambiguous and open to interpretation, particularly by lawyers, which means too many small businesses are being pulled into unfair dismissal hearings which are costly and impact productivity.”

Ms Carnell released a review of the code which said a small business division within the commission would help make the management of claims against employers “less resource intensive, less costly and able to be navigated without having to seek out legal advice”.

After Attorney-General and Industrial Relations Minister Christian Porter announced a review of the workplace relations system in June, Ms Carnell said she would urge him to back cutting the maximum compensation granted against a small business in dismissal cases from six to three months’ pay.

“The issue with compensation is to ensure the amount is reasonable for the size of the business,” she told The Australian in June. But her review released today says the compensation cap cut should only be explored once an amended code is subject to a further review within 12 months and “if problems persist”.

The review calls for changes to the code including the removal of “qualifying language that is open to contest and interpretation”, such as where the commission needs to establish if an employer had a ‘reasonable belief’ that conduct was serious enough to warrant immediate dismissal.

Figures released by the commission show the tribunal received 3583 unfair dismissal applications in the first three months of this year. “Most were settled during mediation but for the 172 cases that were presented to the commission, 111 were dismissed because they were without merit or deemed legally invalid, meaning they should not have gone to the Commission in the first place,’’ Ms Carnell said. “By taking the ambiguous language out of the code such as ‘reasonable grounds,’ ‘valid reason,’ and ‘reasonable chance’ and improving the checklist questions, small businesses will be in a much better position to comply.”

ACTU secretary Sally McManus said the recommendations were a blueprint for undermining the rights of workers and “letting bosses fire them for any reason or no reason”.

“It suggests that the independent umpire should help bosses who want to do this — this is a dangerous and irresponsible suggestion,’’ she said.

“The proposals this report contains would make jobs even more insecure

than they currently are.

“Christian Porter should reject these recommendations and instead act to stop the spread of insecure work.”

Australian Chamber of Commerce and Industry chief executive James Pearson said the code had been in place for a decade “yet reports from our members of inadequacy, misapplication and a failure to deliver balanced outcomes continue”.

“Small business owners value retaining their staff and do not make decisions to terminate lightly,’’ he said.

“We were promised years ago the Code would be ‘tailored to the needs of small business and be reduced to a clear and concise reference to help these employers meet their obligations under a simpler unfair dismissal system’ — but it never was.

“Instead too many small business owners, the people who are the lifeblood of local communities, who are working hard to keep their doors open and who are doing the right thing by employees and customers, are getting caught out by the code and dragged into unfair dismissal claims.

“It’s time-consuming and it’s costly. Too many small businesses are forced to pay ‘go away’ money they cannot afford in order to settle these claims, regardless of the rights or wrongs.”

Mr Pearson said one of the problems with the code was that it remained far too open to interpretation.

“We need better, clearer, simpler and genuinely reliable guidelines for small business owners to ensure they meet their responsibilities and workers are given a fair go,’’ he said.