What is the Small Business Fair Dismissal Code?

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Introduction

See Fair Work Act 2009 s.385, s.388(1) and the Small Business Fair Dismissal Code

In the case of dismissal by a small business employer, a person has not been unfairly dismissed if the Fair Work Commission is satisfied that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

What is a small business employer?

See Fair Work Act 2009 s.23

An employer is a small business employer if it employs fewer than 15 employees (by head count) at the relevant time. All employees employed by the employer at the time (including the dismissed employee, any other employees dismissed at the same time and those employed by associated entities), are to be counted. Casual employees are not counted, unless they are employed on a regular and systematic basis.

For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.^[1]

The Code

A person's dismissal is consistent with the Code if:

immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happens first), the person's employer was a small business employer, and
the employer complied with the Code in relation to the dismissal.

Summary dismissal

The Code states that:

It is fair 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.^[2]

The Code defines serious misconduct as including 'theft, fraud, violence and serious breaches of occupational health and safety procedures'.^[3]

The Commission does not have to make a finding, on the evidence, whether the conduct occurred.^[4] The Commission needs to find whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal.^[5] It is not necessary for the Commission to determine whether the employer was correct in the belief that it held.^[6]

For an employer to believe on reasonable grounds that the conduct of the employee was serious enough to justify immediate dismissal, the employer must establish that they did in fact hold the belief that:

the conduct was by the employee
the conduct was serious, and
the conduct justified immediate dismissal.^[7]

The employer must establish that they had reasonable grounds to hold the belief, which could be established by providing evidence of inquiries or investigations the employer undertook to establish their belief.^[8]

Other dismissal

In non-summary dismissal cases, the employee must be warned that if there is no improvement to their conduct or capacity, they could be dismissed.^[9]

The employee must be given a reason as to why their employment is at risk and the reason must be a valid reason based on their conduct or capacity to do the job. ^[10]

The employer must give the employee 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.^[11]

Procedural matters

During discussions between the employer and employee about matters where dismissal is possible, the employer must allow the employee to have another person present to assist them. However, this person cannot be a lawyer acting in a professional capacity.^[12]

If an employee claims to the Commission that they have been unfairly dismissed, the employer will have to prove that they have complied with the Code.^[13]

Case examples

Small business complied with the Code

Summary dismissal

McKenna v Home Theatre Group Pty Ltd T/A Home Theatre Group [2012] FWA 9309 (Roe C, 30 October 2012).

The employee's employment was terminated by a small business employer for serious misconduct. The employer alleged that the employee sent emails that disparaged the Managing Director to another staff member and a business contact of her employer.

It was held that there was a reasonable basis to conclude the emails caused serious and imminent risk to the reputation of the employer's business and that this amounted to serious misconduct. It was further held that the employer had complied with the Code and the dismissal was not unfair.

Summary dismissal

Steri-Flow Filtration (Aust) Pty Ltd v Erskine [2013] FWAFB 1943 (Acton SDP, Smith DP, Roe C, 24 April 2013).

The employee's employment was terminated for serious misconduct. The employer alleged that the employee had used the employer's property for his own benefit and was not honest with his employer when confronted with the allegation.

At first instance the Commission concluded that the employer did not carry out a reasonable investigation into the employee's conduct and so did not comply with the Code. This decision was overturned on appeal and the Full Bench held that the employee's dismissal was consistent with the Code and so he had not been unfairly dismissed.

Other dismissal – warnings

Puri v Sydney Strata Pty Limited [2012] FWA 7317 (Watson VP, 27 August 2012).

The employer claimed that the employee had received a number of formal and informal warnings about poor performance. The employee disputed some of the warnings.

It was held that the employer had complied with the Code and that the dismissal was not unfair.

Summary dismissal – reasonable belief

Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012), [(2012) 219 IR 128].

The original decision that the employee was unfairly dismissed was appealed. The Full Bench held that the original decision did not consider whether the termination was consistent with the Code. It was found that where the Code is applicable, different considerations are to be taken into account.

In this case the employee had been dismissed because of his erratic behaviour and drug-taking outside of work. The Full Bench was satisfied that the employer's belief was based on reasonable grounds. It was found that due to the specific circumstances of this case, the termination was consistent with the Code.

Small business did NOT comply with the Code

Other dismissal – not warned

Shaw v Pat Thomas Memorial Community House Inc [2012] FWA 8303 (Williams C, 10 October 2012).

The employee was dismissed for contacting the Department of Child Protection contrary to a written direction and warning.

It was found that there was no evidence that there was a written direction. It also found that the warning letter the employee had received made no mention of this issue. It was also found that the employer failed in their obligations to afford the employee an opportunity to respond to the allegations and an opportunity to be heard on the employer's intention to dismiss her before the decision was final. It was held that the dismissal was not consistent with the Code.

References

^[1] See also s.50AAA of the Corporations Act 2001 (Cth).

^[2] Small Business Fair Dismissal Code.

^[3] ibid.

^[4] Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe [2010] FWA 7891 (Bartel DP, 14 October 2010) at para. 60, [(2010) 204 IR 39]; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 27, 29, [(2012) 219 IR 128]; Steri-Flow Filtration (Aust) Pty Ltd v Erskine [2013] FWCFB 1943 (Acton SDP, Smith DP, Roe C, 24 April 2013).

^[5] ibid.

^[6] Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at para. 29, [(2012) 219 IR 128];.

^[7] Harley v Rosecrest Asset Pty Ltd T/A Can Do International [2011] FWA 3922 (McCarthy DP, 21 June 2011) at para. 8; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 28–29, [(2012) 219 IR 128].

^[8] Harley v Rosecrest Asset Pty Ltd T/A Can Do International [2011] FWA 3922 (McCarthy DP, 21 June 2011) at para. 9; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 28–29, [(2012) 219 IR 128].

^[9] Small Business Fair Dismissal Code.

^[10] ibid.

^[11] ibid.

^[12] ibid.

^[13] ibid.

Updated time

Last updated

16 March 2021

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