01.05.2010

Small Business Fair Dismissal Code

Small Business Fair Dismissal Code applies to small business employers with fewer than 15 full-time equivalent employees

BDAV Members who employ staff should ensure they are aware of the Small Business Fair Dismissal Code which came into operation on 1 July 2009.

The Code applies to small business employers with fewer than 15 full-time equivalent employees.

Small business employees cannot make a claim for unfair dismissal in the first
12 months following their engagement. If an employee is dismissed after this period and the employer has followed the Code, then the dismissal will be deemed to be fair.

Employees who have been dismissed because of a business downturn to their position or their position is no longer needed cannot bring a claim for unfair dismissal. However, the redundancy needs to be genuine.

Re-filling the position with a new employee is not a genuine redundancy.

When is a dismissal unfair?

An employee has been unfairly dismissed if Fair Work Australia finds that:

  • they were dismissed, and
  • the dismissal was harsh, unjust or unreasonable, and
  • the dismissal was not a case of genuine redundancy.

A Small Business Fair Dismissal Code Checklist can be downloaded from Fair Work Australia’s website at www.fairwork.gov.au. The Code Checklist sets out eight questions and, although it is not a requirement of the Code that the checklist be completed, the BDAV recommends that you consider the eight questions and sign off accordingly.

The Code states the following –

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For such a dismissal to be deemed fair, it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. However, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.