Table of Contents
When dismissing an employee, you want to ensure that the dismissal is lawful. If you unfairly dismiss an employee, you could be liable to pay them compensation. As an employer running a small business, the Small Business Fair Dismissal Code (“the SBFDC”) is a guideline you can follow during the dismissal process. If you comply with the SBFDC, the Fair Work Commission (FWC) will likely deem the dismissal fair. For this reason, it is in your best interests to understand who can use the SBFDC and the types of dismissal procedures in the SBFDC, as outlined in this article.
Who Can Use The SBFDC?
The SBFDC applies to all small business employers with fewer than 15 employees at the time of dismissal. The FWC will determine the number of employees in your business by taking a headcount of all full and part-time employees. You should note that this may include the casual employees you have employed regularly and systematically. You should also include any employees of associated entities.
If you are a small business employer, your employee cannot lodge an unfair dismissal application within the first 12 months of employment. If you dismiss them after this period, the dismissal will be fair if you comply with the requirements under the SBFDC. For this reason, it is essential to consider what dismissal procedures the SBFDC permits.
Types of Dismissal
The SBFDC provides for two types of dismissal which, if you use it in the right circumstances, can be considered fair. These are:
- summary dismissals; and
- ‘other’ dismissals.
Each type of dismissal will apply in different circumstances, as outlined below.
Summary Dismissal
It is fair to dismiss an employee without notice or warning when you have reasonable grounds to believe that your employee’s conduct is sufficiently serious to justify immediate dismissal. In other words, you can undertake summary dismissal when an employee commits serious misconduct. Serious misconduct includes:
- theft;
- violence;
- fraud; and
- serious breaches of workplace health and safety procedures.
However, you should remember that the FWC will view the severity of your employee’s actions in light of other factors to determine whether you had reasonable grounds to dismiss your employee without notice.
For the dismissal to be fair, it is sufficient (although not essential) that you report an allegation of theft, fraud or violence to the police. You should base this report on reasonable grounds, meaning you conducted a thorough investigation into the instance of serious misconduct.
Other Cases of Dismissal
In all other dismissal cases, you must provide reasons for your employee’s dismissal. It must be a valid reason based on an employee’s conduct or capacity to do the job. In this instance, you must warn your employee verbally or in writing of the pending dismissal.
You must also allow your employee to rectify the problem. In some instances, this might mean providing your employee with additional training.
Since there can be a lot of ambiguity when dismissing employees, it may be worth seeking legal advice before you follow the SBFDC. This way, you can have greater certainty that the dismissal is fair in the circumstances.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Evidence
If you have to provide evidence that you complied with the SBFDC, you should be ready to show the FWC:
- the warning you gave your employee (except for a summary dismissal)
- a completed SBFDC checklist which helps you assess and record your reasons for the dismissal;
- termination statements; and
- signed witness statements.
By keeping this evidence on record, you can prove your compliance with the SBFDC when an employee lodges an unfair dismissal claim against you.
Key Takeaways
The Small Business Fair Dismissal Code (SBFDC) applies to employers who run a small business with 15 or fewer employees. Ultimately, the SBFDC can protect you from a claim of unfair dismissal where you dismiss an employee who has worked for your business for over 12 months and follows the dismissal procedures in the SBFDC. Where your employee commits serious misconduct such as theft or fraud, the SBFDC allows you to dismiss them without notice.
If you are unsure how the SBFDC changes your obligations to your employees, our experienced employment lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
The Small Business Fair Dismissal Code provides a guideline for small business employers when they dismiss an employee. It only applies to businesses with 15 or fewer employees.
Summary dismissal is an ‘on-the-spot’ dismissal without notice. Given this is the harshest form of dismissal, you should reserve this form of dismissal for instances where employees commit serious misconduct.
We appreciate your feedback – your submission has been successfully received.
