Cut pay for unfair sackings, says Kate Carnell

Small Business Ombudsman calls for maximum compensation awarded to unfairly sacked workers to be halved.

Small Business Ombudsman Kate Carnell. Picture: Kym Smith

Maximum compensation awarded to unfairly sacked workers would be halved and small businesses would be able to more easily dismiss employees they deem a “bad fit” under controversial changes proposed by Small Business Ombudsman Kate Carnell.

Ms Carnell also proposed increasing the hurdles for workers pursuing unfair dismissal claims, creating a small business enterprise agreement stream, and inserting an award provision allowing small employers to trade off penalty rates and other entitlements for a higher hourly rate of pay.

Acknowledging many of the proposals, to be released in a position paper today, would not be liked by unions, Ms Carnell told The Australian that the maximum amount of compensation available to sacked workers was “too high”.

She said the maximum compensation granted against a small business in dismissal cases should be cut from six months to three months’ pay. Where a case is settled, maximum compensation should be cut from 26 weeks to 13 weeks’ pay.

“At the moment, it could be just way out of kilter with the severity of the issue,’’ she said. “There should be much greater proportionality here.”

The paper calls for law changes to allow small businesses to pay out an employee deemed “no longer a good fit for the business”. Under the change, the workers would receive a payout based on the redundancy provisions contained in a relevant award.

“An employee who is a ‘bad fit’ in a small workplace can be a huge problem for all staff members,’’ the paper says.

“Currently the only options are a manufactured redundancy or a performance-based exit. Both options are bad for the business and the employee.”

Ms Carnell cited the example of a “staff member who just doesn’t fit into the new direction that the business is going in and isn’t interested in being trained to fit into the new approach”.

The ACTU said last night Ms Carnell was “proposing a licence for business owners to fire any person at any time for any reason or no reason”.

“When we need meaningful penalties and strong deterrents against wage theft, these proposals are offering a free-for-all where employers can steal wages with no fear of consequences,’’ a spokesman said

Ms Carnell, a former Australian Chamber of Commerce and Industry chief executive, said some industry associations believed the proposal to pay a redundancy to “bad fit” employees was “far too generous”.

“This a straight commonsense scenario. If you have got a person in a small business that doesn’t fit, you have got to get rid of them — you have just got to, because they impact on your other staff members and your business,’’ she said.

The paper proposes a “safe harbour” for small businesses that would see them not prosecuted for inadvertent underpayment of wages.

It calls for the Fair Work Ombudsman to implement an online decision-making and pay calculation tool that would be used for evidence of compliance. Where a breach occurs and a small business has complied with the decision-making tool, or advice by an industry association, the small business would repay the wages but not be prosecuted, penalised or fined.

The paper says the commission should set up a “triage process” to stop unfounded, out of time, and deficient claims being further considered by the commission.

Ms Carnell said the government should consider creating a dedicated small business enterprise bargaining agreement stream and insert into awards the option of “loaded rates”, where penalty rates and other benefits are replaced with higher flat hourly rates.

She said a forum she held with 27 industry associations last year “confirmed the complexity in the Australian workplace relations system remains a key issue as it is stifling business confidence to ­employ”.