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Is go-away money back?

ExitIt’s the phone conference that no employer wants to be involved in – an unfair dismissal conciliation run by Fair Work Australia.

But as unfair dismissal claims rise conciliation conferences are becoming more commonplace.

The conciliation process, designed to sort out unfair dismissal cases before they need to go to the Fair Work Australia tribunal, appears to be working well, with Fair Work Australia reporting that 79% of unfair dismissal claims are settled at conciliation.

Lawyers say the process is fast, convenient and relatively inexpensive but there are concerns that employers are settling most cases by paying “go-away” money to claimants.

University of Adelaide Professor Andrew Stewart, who helped draft the Labor Government’s Fair Work Act, sums up the feelings of many, saying “if the point of the system is to resolve claims quickly and cheaply the new system is working extremely well”.

“But if the point of the system is to get rid of go away money it's not working,” he said.

How does it work?

Unfair dismissal cases soared by 35% in Fair Work’s first year (2009-10) and most recent figures showed there were 3219 applications for orders in the first three months of 2011, a slight increase on previous quarters.

Based on figures for the first nine months of the 2010-11 financial year claims are likely to top 12,500 – there were 11,116 in 2009-10.

The increase is hardly surprising because the Fair Work Act removed the exemption for businesses with fewer than 100 employees from unfair dismissal claims and brought together employees who had previously been covered by different systems.

Stewart says Fair Work has the “effect of restoring unfair dismissal rights of a large number of Australian workers”.

Under Fair Work Australia’s process for unfair dismissal cases all matters must go to conciliation to “try to have the parties resolve it among themselves”.

According to a group of IR experts contacted by SmartCompany conciliation is speedy and convenient, with hearings allowing people to call in from home or office, and most hearings scheduled to take 90 minutes.

It’s relatively affordable with self-representation an option, human resources professionals or union officials are able to assist, legal fees tend to average a couple of thousand dollars and some lawyers operate on a no-win, no-fee basis.

Remedies for unfair dismissal complaints are compensation or reinstatement and not surprisingly there are critics of both outcomes.

Compensation is capped at 26 weeks of pay or just under $60,000 and payouts rarely exceed $10,000.

Industrial relations lawyer and adviser Peter Vitale says conciliators will often call the parties prior to the formal conciliation to get a feel for the case and on the day will “typically ask the employee or advocate to give a brief outline of their version of events and then ask the employee to do the same”.

“And then typically the conference call will end and the conciliator will shuffle between the parties over the phone endeavouring to see whether some sort of resolution can be reached,” Vitale says.

“It’s a reflection of what the practice is in face-to-face conferences so they put you on extended hold or call you back.”

Vitale says the conciliator often puts the parties back on the phone together when a resolution is reached but might choose against that if the case is particularly emotional.

“After the matter is settled the conciliator will generally prepare a standard release agreement and will either fax or email that straight away so that it will be signed. There’s usually a period for the payment to be made,” he says.

Is go-away money back?

According to Stewart there is no evidence that reinstatements are up but there are clear concerns that go-away money has not disappeared.

Vitale says it’s rare for a case to settle without money being paid.

“If it happens enough to cause a statistical blip I’d be surprised,” he says. “The proposition that Fair Work will eliminate go-away money is a fallacy.”

According to Stewart because compensation payouts are so low it’s easy to see why you’d advise an applicant to accept a settlement.

He says “unless there's a point of principle at stake simple economics would compel an employer to go for a settlement”.

“The costs of defending a claim are usually far higher than the amount that can be paid in a negotiated settlement,” he said.

Joe Catanzariti, national practice head of Clayton Utz’s workplace relations, employment and safety practice group, say the amount of go-away money has not risen or fallen under the system.

Mark Dunphy, partner and head of Hall & Wilcox’s employment practice division, is not convinced that telephone conciliation is leading to more frequent or higher amounts, pointing to an increasing number of cases that have been withdrawn without money being paid.

Sense of closure

Industrial relations lawyer Andrew Douglas of Macpherson + Kelley, says there are problems with phone conciliation, saying the emotional issue of dismissal is better solved face-to-face than via the phone.

“If people want to run a complaint they should turn up and look the person in the eye,” he says. “Looking a person in the eye is an important part of justice.”

Douglas says it’s clear that phone conversations don’t deliver the “same sense of resolution” as face-to-face meetings.

And it’s not just aggrieved ex-employees who feel short-changed, with Douglas saying that the “sense of grievance also runs very deep for employers”.

“Dispute resolution processes are wonderful things and they are better face to face,” he says.

Catanzariti agrees that the inability to see a company representative face-to-face is a downside.

“Applicants quite like to eyeball someone,” Catanzariti says, adding that not everyone can express themselves well on the phone.

“I’m not sure they have their moment (on the phone).”

He says when a solution cannot be reached between two parties wherever practicable a face-to-face conciliation should occur.

Dunphy says participants are less likely to get into a “he said, she said” situation on the phone.

“It’s not a game of tennis where you end up arguing with each other to the same extent,” he says.

Dunphy says while he mainly acts for employers he can understand the argument that conciliation doesn’t provide closure for the both parties.

The great unanswerable

Vitale says conciliation is seen as an increasingly useful way to resolve unfair dismissal claims but whether people are satisfied with the results is the “great unanswerable”.

He says there are concerns that unmeritorious claims are slipping through the net because independent conciliators don’t have the authority to knock back claims.

“It’s rare for a conciliator to say to an applicant ‘you don’t have a case’,” Vitale says.

Stewart says he’s not concerned about go-away money because every system will have its compromises.

But his longer term concern is that people with good claims are in many cases walking away with not much more than those with weak claims.

“The system’s not doing much to deflect weak claims nor reward those with a really strong and legitimate sense of injustice,” Stewart says.

A concern raised by Douglas is the inability to pick up on someone’s physical cues, which makes it increasingly difficult for lawyers to predict how a case will turn out and therefore restricts them from testing the waters.

“Anecdotally they’re a little less predictable,” he says. “It’s hard to say to a client ‘this is the way it’s going to go’. It’s a bit of a pig and a poke.”

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