'Operational Reasons': The New Excuse for Sackings

Lisbeth Latham

Less than a week after Work Choices came into effect on March 27, the Cowra Abattoir in NSW hit the headlines when it announced plans to sack 29 workers and re-hire 20 on worse conditions and with a $200 pay cut.


PM John Howard rushed to defend the abattoir management, telling parliament on March 31: “To suggest that when a firm is operating uneconomically that it has no right to alter the structure of its work force ... with the inevitable consequence that the firm is going to go out of business, defies rationality.”

Media attention forced management to withdraw the workers’ termination notices in early April, and the Howard government asked the new Office of Workplace Services to determine whether the sackings were legal. Predictably, it found that the primary reason for the sackings was to return the company to profitability, not to shift workers from a collective to an individual agreement with worse conditions.

Before Work Choices, workers were protected by unfair dismissal laws that prohibited workers being sacked and re-hired on lower pay. Section 792 (4) of Work Choices makes these protections available only where it can be proven that the “sole” or “dominant” reason for a dismissal was that the worker was entitled to certain pay and conditions under an industrial award or agreement. Clause 643 (8) of the new law introduces protection for big businesses against any unfair dismissal claim when a worker is sacked for so-called “operational reasons”.

Who decides when sackings are for “operational purposes”? The US multinational Enron posted profits of US$140 billion just nine months before it declared bankruptcy on December 2, 2001. Similarly, any company prepared to doctor its books can make itself appear unprofitable if it means real profits can be increased by slashing employees’ wages and conditions.

Howard said that Cowra Abattoir management’s letter to workers in February saying that it was in financial difficulties shows that the job cuts were for “operational purposes”. But the boss crying poor can be just an excuse, as Leigh Vanroon’s experience shows.

Vanroon, a Queensland print worker, was sacked after he approached his union regarding his work roster. According to the June 16 Age, despite Vanroon’s willingness to work the new hours, which would have lost him $160 a week, when he told his manager that the roster change needed to be inserted into his contract, the manager told him to “fuck off”.

Management then sent Vanroon a letter informing him that he had been sacked for “operational reasons”. Vanroon told the Age, “Up until that point in time, I thought my job was safe. I was a good operator. I’d been promoted to shift supervisor so they obviously thought I was a valuable employee. And in 24 hours I was out the door.”

In Vanroon’s case, “operational reasons” was a thinly veiled excuse for his termination that was used to deny him access to unfair dismissal provisions.

If a company is not profitable, why should workers suffer the consequences, given that they do not generally receive the benefit when large profits are made? If workers accept pay cuts to help rebuild the company’s profitability, there is no guarantee that their conditions will improve when profit margins rise.

This was the experience of workers in the US auto-parts company Delphi, which declared bankruptcy in October 2005 and sought to sack two-thirds of its 33,000-strong work force and reduce by 65% the hourly wages of those who remained. At the same time, Delphi CEO Steve Miller promised to pay US$500 million in bonuses to senior managers if the company was made profitable again. He didn’t promise a better deal to the rest of the company’s work force.
We can expect to hear a lot more of the “operational reasons” excuse for unfair sackings under the new industrial relations regime — another reason why workers and our unions need a concerted political and industrial campaign to overturn Work Choices entirely.

Originally published in Green Left Weekly #673