Workplace Relations Amendment (Termination of Employment) Act 2001

The Workplace Relations Amendment (Termination of Employment) Act 2001 was an amending Act. Its purpose was to change parts of the Workplace Relations Act 1996 dealing with termination of employment and related procedures.

That distinction matters. This page is about a historical set of amendments to the Workplace Relations Act 1996, not the later Fair Work Act 2009. If you are dealing with a current dismissal issue, you should not assume the same rules still apply in the same form.

The Act received Royal Assent on 22 August 2001. Its commencement was staged. Sections 1 to 3 commenced on Royal Assent, while the remaining provisions were to commence by Proclamation or, if not proclaimed within 6 months, on the first day after that 6 month period. The compilation also shows a special commencement rule for item 3.

In practical terms, these amendments were aimed at federal unfair termination processes under the Workplace Relations Act 1996. They were most relevant to private sector employers and employees who fell within that federal system at the time.

Many businesses will read this as mainly affecting private employers, but not every employer or employee was necessarily covered in the same way. The legislation itself amended definitions and procedures within the federal Act, including references to federal award employees, Australian Workplace Agreements and old IR agreements. That means coverage depended on the federal framework then in force.

Businesses should be cautious if they are looking at this Act for historical advice about state public sector employment, state-based systems, or categories of workers who may not have been within the relevant federal unfair termination provisions. Before relying on this page, check whether the employment relationship in question was actually governed by the Workplace Relations Act 1996 and the relevant Division dealing with termination of employment.

The amendments become practically important when a business is hiring staff, setting employment terms, demoting an employee, terminating employment, responding to an unfair termination application, or using an external representative in Commission proceedings.

The main trigger points are straightforward:

First, when a new employee starts, the business should decide whether the standard 3 month qualifying period will apply or whether a different period will be agreed in writing before employment begins.

Second, when changing an employee's role, the business should assess whether the change is merely a demotion that falls outside the statutory concept of termination, or whether it may still be treated as a termination.

Third, when an unfair termination application is filed, the respondent should immediately consider whether there is a jurisdictional objection, including whether the employee had completed the qualifying period.

Fourth, if the business uses a lawyer, consultant or other representative whose fees depend on the outcome, disclosure obligations may arise in the Commission.

Fifth, if a claim or defence is weak, both the party and its adviser need to think carefully about costs exposure and adviser penalties.

One of the clearest changes was the insertion of a qualifying period rule for applications under section 170CE made on the harsh, unjust or unreasonable termination ground.

The Act provided that an application could not be made on that ground unless the employee had completed the qualifying period of employment with the employer at the earlier of these times:

the time when the employer gave notice of termination, or the time when the employer terminated the employment.

The qualifying period was:

3 months, or a shorter period or no period if determined by written agreement between employer and employee before employment commenced, or a longer period determined by written agreement before employment commenced, provided the longer period was reasonable having regard to the nature and circumstances of the employment.

For businesses, the practical message is that any departure from the standard 3 month period needed to be agreed before the employee started. A longer period was not automatically valid just because it was written down. The legislation required it to be reasonable in light of the job and surrounding circumstances.

If you are reviewing an old contract or historical dispute, check the start date of employment, whether there was a written pre-commencement agreement about the qualifying period, and whether any longer period was likely to be reasonable.

The Act also clarified that termination or termination of employment did not include every demotion.

A demotion was not treated as termination if both of the following were true:

there was no significant reduction in the employee's remuneration or duties, and the employee remained employed with the same employer.

This is a practical point for businesses managing restructures or performance issues. A role change may not trigger the unfair termination provisions if the employee stays employed and the reduction in pay or duties is not significant. But if the change involves a significant reduction, or the employee does not remain employed, the position may be different.

Because the statutory test used the words significant reduction, businesses should keep records showing what changed and what did not. That includes remuneration, title, reporting lines, core duties and whether the employment relationship continued.

The Act strengthened the Commission's ability to deal with applications that were outside jurisdiction or had no reasonable prospect of success.

A respondent could move for dismissal of an application on the ground that it was outside the Commission's jurisdiction at any time, including before the Commission had begun dealing with the application. If the respondent made that motion before the matter was referred for conciliation, the Commission had to deal with the motion before taking further action, unless the respondent indicated it could be dealt with later.

The Act also required the Commission, if it considered from the materials before it that the application had no reasonable prospect of success, to advise the parties accordingly. Where the harsh, unjust or unreasonable termination ground was involved, the Commission then had to invite the applicant to provide further information within a specified period. If the applicant did not provide further information, or if the Commission still concluded the application had no reasonable prospect of success at arbitration, it had to issue a certificate to that effect and dismiss the application so far as it related to that ground.

For employers, this meant there was a clearer early pathway to challenge claims that should not proceed. It also meant applicants and respondents needed to take Commission warnings seriously, because those warnings could later matter on costs.

The Act replaced the earlier costs provisions with a more detailed framework for costs orders in proceedings relating to section 170CE applications.

The Commission could make a costs order if a party made an application or began proceedings in circumstances where it should reasonably have been apparent that there was no reasonable prospect of success. It could also make a costs order where a party acted unreasonably by failing to discontinue a proceeding or failing to agree to settlement terms that could lead to discontinuance. It could also order costs where one party caused the other to incur costs because of an unreasonable act or omission in the conduct of the proceeding.

Importantly, the Commission could have regard to any certificate issued or advice given under section 170CF and whether a party pursued a course of action contrary to that certificate or advice.

The Act also created a separate regime for adviser misconduct in unmeritorious or speculative proceedings. An adviser was defined broadly. It included a person or body engaged for fee or reward to represent an applicant or respondent in an unfair termination application, including under a contingency fee agreement or relevant costs arrangement, and also certain employee organisation representatives. That means the rules were not limited to lawyers.

An adviser was prohibited from encouraging an employee to make or pursue an unfair termination application, or encouraging an employer to continue to oppose one, where on the disclosed facts or facts that ought reasonably to have been apparent there was no reasonable prospect of success for the application or defence. After the underlying unfair termination application had been determined, dismissed or discontinued, an application could be made to the Court for a penalty order. The maximum penalty stated in the Act was up to $10,000 for a body corporate adviser and up to $2,000 for a non-corporate adviser.

For businesses, the practical point is that both the party and the adviser needed to think about merits early. A weak defence could create exposure just as much as a weak claim.

The Act introduced a specific disclosure rule for representatives appearing in relevant Commission proceedings.

The Commission had to ask a representative other than a legal practitioner whether the representative had been retained under a costs arrangement tied to the outcome. It also had to ask a legal practitioner whether the practitioner had been retained under a contingency fee agreement. If such an arrangement existed, the representative or practitioner had to inform the Commission of that fact.

The legislation defined these arrangements separately for legal practitioners and non-legal representatives, but the practical effect was similar: both legal and non-legal representatives had disclosure obligations where payment of all or a substantial proportion of their costs depended on the outcome.

This applied in proceedings before the Commission relating to section 170CE applications, including jurisdictional dismissal proceedings, conciliation and arbitration. The section also stated that it did not affect the law relating to legal professional privilege.

If a business used an external lawyer, consultant or other paid advocate in one of these matters, it needed to understand whether the fee arrangement triggered disclosure.

The Act made several other procedural changes that can matter in historical disputes.

It allowed the Commission to extend the time for certain section 170CE applications on an application made during or after the 21 day period. It inserted a rule preventing second applications under section 170CE concerning the same termination unless the second application corrected an error in the previous application or the Commission considered it fair to accept it.

It also inserted a power allowing the Commission to dismiss an application if the applicant failed to attend a proceeding, after reasonable notice and a reasonable opportunity to be heard.

In addition, the Act amended the factors relevant to arbitration by requiring the Commission to consider the degree to which the size of the employer's undertaking and the absence of dedicated human resource management specialists or expertise would be likely to impact the procedures followed in effecting the termination. This did not excuse poor conduct, but it did mean the legislation expressly recognised that smaller employers may not have the same HR infrastructure as larger organisations.

The Act also changed the notice requirement for intended terminations under section 170CL so that notice had to be given to a body prescribed by regulations or, if none was prescribed, to the Secretary of the Department, in the prescribed form.

The Act was assented to on 22 August 2001. The compilation identifies 30 August 2001 as the commencement date for the compilation version and notes that the Act was in force. The commencement section itself says that sections 1 to 3 commenced on Royal Assent and the remaining provisions commenced by Proclamation or, if not proclaimed within 6 months, on the first day after that period, subject to a special rule affecting item 3.

The application provisions in Schedule 1 are also important. Different amendments applied only to applications made on or after the commencement of the relevant item, and in some cases only where the employment itself commenced on or after commencement. That means historical disputes may turn not just on the date of dismissal, but also on the date employment began and the date the application was filed.

This page is based on the Federal Register of Legislation compilation of the Workplace Relations Amendment (Termination of Employment) Act 2001. For the full text and any historical compilation details, see the official legislation record.