The Small Business Fair Dismissal Code (“the SBFDC”) came into effect on 1 July 2009. Two of the factors that the Fair Work Commission (“FWC”) will take into account when determining whether an unfair dismissal has occurred are:

  • Whether the employee was employed by a small business; and
  • If so, whether the small business has complied with the SBFDC?

Definition of Small Business 

The SBFDC applies to all small business employees with fewer than 15 employees (including casual employees).

Employees cannot lodge an unfair dismissal application within the first 12 months of their employment. After this period, if an employee is dismissed and the employer has complied with the requirements under the SBFDC, then the dismissal will be considered ‘fair.’

Situations such as a business experiencing a ‘downturn’ or an employee’s position no longer being required will not constitute a claim for unfair dismissal. If redundancy is cited by the employer, the redundancy needs to be genuine under Fair Work legislation.

Types of Dismissal

Subject to the SBFDC, there are 2 types of dismissals:

  • A summary dismissal; and
  • ‘Other’ dismissals.

Summary Dismissal 

If an employee’s conduct is deemed serious enough to justify dismissal, an employer can dismiss an employee without notice or warning. However, an employer will need to have reasonable grounds for doing so. Examples of this type of wrongful and serious conduct are theft, fraud, violence and serious breaches of occupational health and safety standards.

In the cases of theft, fraud or violence, if the employer has reasonable grounds for doing so, he or she must report the incident to the police. This type of dismissal will be considered fair.

Other cases of Dismissal

In all other cases, the employer must provide reasons for the employee’s dismissal. It must be a valid reason based on an employee’s conduct or capacity to do the job.  The employee must be warned verbally or in writing of the pending dismissal.

The employee must be provided with the opportunity to rectify the problem, which may include the employer providing additional training, bearing in mind that the employee knows the employer’s job expectations.


An employer can provide the following evidence to show that he or she has complied with the SBFDC:

  • A warning (not including in the case of a summary dismissal);
  • A completed checklist (provided by the SBFDC which helps employers assess and record their reasons for dismissing an employee);
  • Copies of written warnings;
  • Termination statements; and
  • Signed witness statements.


If you require any assistance in relation to the SBFDC, either as an employee or an employer, contact one of our employment lawyers today on 1300 544 755.

Emma Heuston
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