Select committee backs bill to terminate employees by consent without triggering a personal grievance

Neil Sands

A bill that allows an employer to offer an exit inducement to an employee who is not fitting in has won majority backing from a parliamentary select committee, with amendments designed to give additional protections to both sides.

The private member’s bill from ACT MP Laura McClure allows for “pre-termination negotiations” with a view to ending an employment relationship by mutual consent, without the prospect of triggering a personal grievance claim.

“This bill fosters a collaborative approach, empowering employees and employers to approach the sensitive issue of employment termination not as adversaries but as partners,” McClure told Parliament during the bill’s first reading in April.

“It’s about making sure… there is no unnecessary stress placed on both the employee and the employer. Instead, this allows for them to deal with these situations quickly and fairly.”

The bill allows for negotiation of a settlement agreement, which could include a payment for the employee.

Government members of the Education & Workforce Select Committee backed McClure’s intent but suggested a series of changes, saying the bill as drafted “could risk future legal challenges, undermine certainty and make employee protections less clear”.

The changes include ensuring pre-termination negotiations can begin only with agreement from the employee, procedural safeguard to prevent unfair bargaining and limiting requests for pre-termination bargaining to once every six months.

However, Labour and Green MPs on the committee presented a dissenting view, saying the bill would increase the power imbalance between employer and employee, even with the changes.

“We believe this bill will allow employers to dismiss people without cause and without fair process. It is contrary to good faith, access to justice and the principles of fair and equitable treatment,” they said.

McClure’s bill – the Employment Relations (Termination of Employment by Agreement) Amendment Bill – is separate to the Employment Relations Amendment Bill, which is a government bill still before the select committee.

That bill includes a “gateway test” to determine if workers should be classed as contractors or employees, a ban on high earners claiming unfair dismissal and restrictions on personal grievance claims.

The select committee is due to report on the government bill by November 17. Read the select committee report on McClure’s bill here.