Only two per cent of unfair dismissal applications go through to a hearing, new research finds. And, surprisingly, the reasons for proceeding aren’t usually about the money.

Every year in Australia around 15,000 dismissed employees make unfair dismissal applications to the Fair Work Commission (FWC), yet only approximately 300 of those will go to a hearing – that’s two per cent.

To understand what happens during conciliation and why so many cases resolve before a hearing, a Griffith University study I authored interviewed 50 stakeholders involved in the unfair dismissal applications in 2015-2016 (including legal and union representatives, applicants, employers and FWC staff).

In a finding that may surprise people, the study concluded an arbitrated unfair dismissal is, for the most part, pursued for reasons other than money. It also revealed what factors prevent an application reaching full arbitration.

Understanding the process

Before we get into the details of where dismissal claims are most likely to proceed to arbitration, it’s worth understanding the stages a claim will go through. They include:

(Phase 1) An applicant is terminated from employment and considers whether to contest the dismissal decision.
(Phase 2) If the decision is made to pursue an unfair dismissal remedy within the FWC, this is commenced by the filing of a ‘Form F2’ application. 
(Phase 3) The employer is notified by the FWC and required to respond to the application within seven days by the filing of a ‘Form F3’.
(Phase 4) Registry staff manage the process, answering queries and providing information to parties preparing for conference.
(Phase 5) The matter is listed for a voluntary telephone conciliation conducted by a FWC Staff Conciliator.
(Phase 6) If a matter is not resolved, the file is referred to a FWC Member. They may encourage the parties to submit to a further conciliation process known as Member Assisted Conciliation (MAC).
(Phase 7) Where further conciliation is unsuccessful, the matter is heard and determined by arbitration.

The deciding factors

After the application process is over and the employer has responded to the FWC, the first step that actually attempts a resolution is a voluntary telephone conciliation mediated by FWC staff (phase 5). In the 2015-16 period examined, 57 per cent of all applications were resolved at this stage. Only 19 per cent went beyond it (the remainder had stopped during the application process). 

So what’s happening that the majority of applications stop at staff conciliation? As one employer put it, this is where “the rubber meets the road” and “the mountain that you have to climb from that point is really quite steep”.

Whereas up to now the employee has likely already been bearing some monetary cost (legal counsel, etc), at staff conciliation both they and the employer have a clearer picture of how expensive it would be to continue. So, particularly if both parties are not far apart in terms of an outcome they can live with, it’s often seen as worthwhile to resolve the matter here. 

Another factor is that at this stage more black and white issues become apparent. For example, it becomes clear if there are no grounds to the application in the first place or if the dismissal was patently unfair according to the law. The conciliators interviewed also cited redundancy and cases of serious misconduct (personal aggression and dishonesty) as being more likely to be resolved here.

They just want to be heard

What factors mean the case will continue beyond staff conciliation? A case where the issues at play are complex is one factor. Another is if the employee desires reinstatement. When someone is dismissed there are few employers who are willing to take them back, but some employees are very keen to be returned to their old job, particularly if they are an older worker or they work in an industry with high unemployment.

Perhaps the most interesting factor is the desire for the employee to be heard, or for the employer to make a point. In these cases parties are willing to bear any cost to see the case through to arbitration because for them it is a matter of principle or because the acrimony is that deep. One applicant I spoke to even forgot how much money she had received in compensation – for her it was about the “next person who went in there”.

You can see where HR can do a lot of good here. Two-sided, reasonable communication, recognition of an employee’s views and experiences, and a genuine desire to reach conciliation will go a long way to preventing unfair dismissal applications, and resolving them earlier if they do occur. 

People often just want to be heard. If they feel the conciliation process does not provide that, they’re more likely to keep going until they feel vindicated.

Andrew See is a barrister at Kilkenny Chambers.

Make sure your managers are skilled to defuse a situation or engage in effective communication with a disgruntled staff member with AHRI’s short course on conflict and mediation. Sign up to the next course on 17 November 2021. AHRI members receive a discounted rate.