Small Business Fair Dismissal Code: What You Need To Know
As a business owner, learn how to comply with the laws around employee dismissal.
The Small Business Fair Dismissal Code (“the SBFDC”) came into effect on 1 July 2009. In determining whether a dismissal was unfair, the Fair Work commission (FWC) will consider whether:
- the employee was employed by a small business
- the small business has complied with the SBFDC
1. What constitutes a Small Business?
A business is a small business employer if it employs fewer than 15 employees at the time of the dismissal of the employee for misconduct or poor performance. A small business employer will be required to provide evidence of compliance with the SBFDC if the employee makes a claim for unfair dismissal to the FWC. Employees cannot lodge an unfair dismissal application within the first 12 months of their employment. After this period, if an employer has complied with the requirements under the SBFDC whilst dismissing an employee, then it will be considered as fair.
Employees are unable to claim for unfair dismissal if they are dismissed during a business’ downturn or if their position is no longer required. Read our guide to learn about whether you may have been unfairly dismissed.
The SBFDC may be found on the Fair Work Commission website and consists of a checklist that must be followed by a small business to ensure that they comply with the unfair dismissal laws.
2. Types of dismissals
In accordance with the SBFDC there are two types of dismissals:
- Summary dismissals
- Other dismissals
This dismissal refers to an employee’s termination without providing notice or warning. The SBFDC deems it to be fair to dismiss an employee in this manner if the employer believes that the employee’s conduct is sufficiently serious to justify termination. These grounds are justifiable when for example an employee commits:
- serious breaches of work health and safety procedures
Whilst employers are not required to prove that the aforementioned conduct occurred, they are required to provide evidence that proves their belief to be true.
In most other cases, the employer must provide the employee with verbal or written warning that they may be dismissed. The reason must be valid and based on the employee’s conduct and/or capacity to their job. The employee must be given an opportunity to rectify the problem/issue, which may entail additional training and ensuring that the employee is fully aware of his/her job expectations. After a reasonable amount of time has lapsed, and the employer is not fully satisfied with the employee’s efforts in responding to or progressing, the employment contract may be fairly terminated.
In claiming a summary dismissal, the employer will be required to provide the following forms of evidence to show that they have successfully met all of elements to the SBFDC:
- A completed checklist
- Copies of written warnings (not including summary dismissals)
- Termination statements; and
- Signed witness statements
If you’re a small business employer or an employee, and would like advice regarding the SBFDC, do not hesitate to contact a LawPath consultant on 1800 529 728. Read here to learn what work policies you need for your business.
James is a Paralegal working in our content team which aims to provide free legal guides to facilitate public access to legal resources. With a passion for commercial law, his research focuses on small businesses, and how they can navigate convoluted legal procedures.