Small business guide to sacking employees.

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Table of Contents

• Do I have to give an employee a warning?
• Is there an employment eligibility period with unfair dismissal claims?
• Who is unable to make an unfair dismissal claim?
• Should an employee be given notice of termination?

Sacking employees is a difficult process, both emotionally and legally. Small businesses are covered by a special Fair Dismissal Code.  The code covers businesses with 15 employees or less.  The Fair Dismissal Code does not apply in the first 12 months of an employee’s employment. The Fair Dismissal Code outlines two types of dismissal – ‘summary dismissal’ and ‘other’. Summary Dismissal in the Fair Dismissal Code means circumstances where an employer can sack an employee on-the-spot.  The Fair Dismissal Code provides some clear examples of lawful grounds for a small business owner to dismiss an employee, they are:

• Theft

• Fraud

• Violence

• Serious breaches of workplace health and safety

You should, however, always put the allegations to an employee and give them a chance to respond before you consider dismissing them. The Fair Dismissal Code suggests it is good practice to report these incidents to the police as it will be more likely the dismissal will be considered fair and lawful if it is later challenged by the employee (e.g. by making an unfair dismissal claim).  It is important to note that the standard of proof in dismissing an employee on these grounds is ‘balance of probabilities’ not ‘beyond reasonable doubt’, the latter being the test for criminal prosecution. If the dismissal fits in the other category of general dismissal then there is a legal requirement for small businesses to provide those employees with a verbal or written warning before they are dismissed.

Do I have to give an employee a warning?

This really depends on how bad the employee has behaved.  If it is for general poor performance and misconduct you must tell the employee they have done the wrong thing and give them the opportunity to respond and/or improve.  You also need to give them a reasonable amount of time to improve. If your business has less than fifteen employees then you are required to give employees at least one warning – preferably written – before you are legally allowed to dismiss them for something that does not give grounds for summary dismissal. You should also keep records of any conversations you have in relation to warnings.  These notes should specify how you suggested the person could improve – so try to keep it as constructive as possible.  Don’t jump the gun – always give employees a chance to respond and time to improve.  From an evidentiary perspective it also helps if you have two people present representing the business during all discussions relating to an employee’s performance.

Is there an employment eligibility period with unfair dismissal claims?

Yes.  An employee cannot make an unfair dismissal claim within the first 12 months of their employment if their employer has fifteen employees or less. For all other employers, an employee cannot make a claim within the first six months.

Who is unable to make an unfair dismissal claim?

• Independent contractors;

• Employees who choose to resign;

• Employee on a fixed term or seasonal contract (and the employee ends at the time specified);

• Employees who were demoted and which did not involve a significant reduction in their remuneration or duties;

• Employees whose remuneration exceeds the remuneration threshold (currently $129,300).

Should an employee be given notice of termination?

Yes – the amount of notice required depends on the length of the employee’s employment at your business. However, if you summarily dismiss somebody they do not require any notice or warning. If you’re still unclear on what circumstances give you the right to let someone go, speak with an employment solicitor to clear up any concerns you might have. They will also be able to review your employment contracts to make sure they are fully complaint with current employment law.