'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

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Andrews plans new wave of attacks on unions

Lisbeth Latham

On November 6, federal Coalition workplace relations minister Neil Andrews introduced a new raft of anti-union legislation in federal parliament.

The federal government's Building and Construction Industry Improvement Bill 2003, and its associated Building and Construction Industry Improvement (Consequential and Transitional) Bill 2003 were both read for a second time. In addition, the Workplace Relations Amendment (Choice of Award Coverage) Bill and a revised version of the Workplace Relations Amendment (Termination of Employment) Bill 2002 were reintroduced into parliament. The new Workplace Relations Amendment (Better Bargaining) Bill was introduced into parliament for the first time.


These new pieces of legislation are central to the Howard government's new assault on the ability of workers and their unions to organise to defend their existing wages and working conditions and to fight for improvements.

The employment termination bill has three aims. The first is to continue the government's attempt to exempt “small business” from unfair dismissal legislation, reducing job security and protection for workers employed by businesses that have fewer than 20 employees. Under the bill, such workers will need to have been employed for six months before having access to any unfair dismissal provisions.

The bill will allow the Australian Industrial Relations Commission (AIRC) to deal with cases without a hearing, and to halve the maximum compensation that can be awarded to unfairly dismissed workers.

The bill also limits access to unfair dismissal entitlements for all workers — where redundancies are occurring in a workplace, there will be no access to unfair dismissal provisions. If workers find alternative work after being unfairly dismissed, the amount of compensation will be deducted from any back-pay order by the commission.

Most significantly, if passed, the bill will expand the number of workers covered by federal legislation, using the federal government's corporations' power, to include all those workers who are employed by incorporated companies. This represents approximately 85% of Australian workers, up from the 50% or four million workers currently covered.

Workers shifted to the federal system will lose their access to state legislation. If passed, the bill will strengthen the federal government's plan to create a single nation-wide industrial relations system.

The Choice of Award Coverage Bill is aimed at reducing the access of workers in small business to award coverage. When unions attempt to “rope in” workers into the award using a log of claims, it must be demonstrated that the union has at least one member in the workplace.

The Workplace Relations Amendment (Better Bargaining) Bill is aimed at building on the restrictions on protected industrial action passed in 2002. The legislation would ban all industrial action that occurs prior to the expiration of an enterprise agreement. Currently, industrial action taken to resolve issues not covered in an agreement prior to its expiration, is still protected action.

The bill will also empower the AIRC to impose “cooling off” periods during bargaining, which will make any form of normally protected action taken during this period illegal. A “cooling off” period can be imposed where protected action threatens to cause significant harm to any person (in reality, to the profits of an employer) and where suspension of bargaining would not be against the “public interest”.

Application for a “cooling off” period could be made on behalf of, or by, persons directly affected by industrial action or by the relevant federal government minister. The effect of this provision for workers in education, health and the fire services, is that the government can move to revoke access to protected action, greatly reducing their ability to win decent agreements.

The government has also identified the vehicle manufacturing industry — in which the use by employers of “just in time” work practices means industrial action at a single components manufacturer can bring the entire industry to a immediate halt — as a key target for the legislation.

Furthermore, any industrial action that affects parties not directly involved in the dispute will not be considered protected action.

In his speech introducing the legislation to parliament, Andrews made it clear that this section of the legislation is aimed directly at blocking the use of pattern bargaining. However, its effect would be much greater, as any picket line that involved workers not directly involved in the dispute would also lose its protected action status.

The legislation would mean that establishing a community protest line such as at Morris McMahon in Sydney earlier this year would open workers and their unions to AIRC fines and civil suits by the employer.

Labor and the Greens have stated they are opposed to the legislation, and the Democrats have indicated they do not support some provisions in the Better Bargaining Bill.

Originally published in Green Left Weekly #562

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