URGENT UPDATE: The Fair Work Commission has just announced significant reforms to tackle a staggering rise in unlawful dismissal claims, with settlements now exceeding $10,000 in 40% of cases. This surge, attributed in part to artificial intelligence and aggressive paid agents, has raised alarms about the sustainability of the system.
President Justice Adam Hatcher revealed these sweeping changes late Thursday, revealing that the number of general protections claims has skyrocketed. From July to September alone, 2,120 claims were lodged, marking a jaw-dropping 57% increase compared to the three-year average for that quarter. Hatcher stated, “This continuing rate of growth in the commission’s workload is unsustainable.”
The newly implemented reforms eliminate the previous “tick the box” application process, demanding more rigorous arguments from workers. They also enhance the commission’s ability to screen paid agents early and simplify the rejection of late applications. Hatcher emphasized that these claims now represent the largest growth area for the commission, compromising its ability to handle critical issues like enterprise bargaining and gender pay equity.
In the past financial year, 40% of settled general protections cases ended with payouts over $10,000, a stark contrast to the long-term average of just 25%. The median settlement is now between $4,000 and $6,000, with 33% of cases settling for less than $4,000.
Hatcher noted that over half of the applications did not meet the six to twelve-month employment requirement for unfair dismissal claims, indicating a trend of using these claims as substitutes rather than addressing genuine unlawful dismissal allegations.
In a rare consensus, both unions and employers agree on the need for reforms to mitigate unmeritorious claims. However, some employer groups are advocating for extensive legislative changes, such as limiting eligibility and capping damages. Workplace Relations Minister Amanda Rishworth has stated she is exploring “all options.”
Hatcher further highlighted the significant role of paid agents, revealing that a mere eight agents represented 25% of applicants from July 2022 to September 2023. He called for better regulation of these agents, noting, “There is no federal scheme for the regulation of paid agents.”
The commission’s procedural reforms now allow for the approval or rejection of representatives based on submitted documents. Agents are also required to disclose their cost agreements with clients. Stage two of the reforms will introduce trials for new mediation methods, including expedited settlement-focused conferences, expected to roll out by the end of the year.
Looking ahead, stage three will review general protection claims that do not involve dismissal, which have surged 142% above their three-year quarterly average. Unfair dismissal claims are also up 45% during this period.
These urgent reforms are a crucial step in addressing the overwhelming influx of claims, ensuring that the Fair Work Commission can refocus its resources on matters of substantial public value. As the landscape of workplace rights evolves, all eyes will be on how these changes will reshape the future of employment law in Australia.
