Small Business Dismissal Code - Do you comply?
March 10, 2011
The Small Business Fair Dismissal Code (the Code) under the Fair Work Act 2009 (Cth) (the Act) sets out guidelines for employers to follow when considering the termination of an employee or whether a redundancy is genuine. A Small Business is defined as one that employs less than 15 employees.
The Code provides for a number of procedural steps to be followed to show evidence of compliance if the employee makes a claim for unfair dismissal to Fair Work Australia and contrary to some misguided views, there is no automatic exemption for Small Businesses simply because they have complied with the Code. Fair Work Australia will carefully scrutinize the employers’ actions for evidence of compliance with the Code such as:
- Giving the employee a reason (valid reason based on conduct or capacity) why he or she is at risk of being dismissed.
- Verbal or written warnings of the risk of dismissal.
- Provision of an opportunity to respond to any warning and reasonable chance to rectify the problem.
- Provision of any additional training and clarifying the employer’s job expectations.
- Allowing the employee to have a support person (other than a lawyer) present to assist in discussions where dismissal is possible 1.
- Other supporting documentation including:
- Copies of warnings
- A completed checklist
- Statement of termination
- Signed witness statements.
The test under the Code when dealing with summary dismissal (without notice) is not that the conduct actually occurred, but whether the employer believes, on reasonable grounds, that the conduct occurred. FWA will then examine the facts and circumstances leading the employer to that view.
The Code itself states that “completing the checklist does not mean the Code has been complied with”, and whilst FWA may look favorably on an employer who seeks professional advice before effecting any termination, the final test of compliance with the Code and whether the dismissal itself was fair, will be decided by FWA based on the evidence presented to it, ……. just like a large employer really!
The clear message for Small Businesses is to seek advice before acting against an employee. It might just turn out to be a very prudent course of action. Decisions of FWA under “the Code” have shown that, whilst the tests for Small Businesses may be different to larger employers, the level of scrutiny of the Small Employer’s actions and procedural compliance, is no less intense.
Contact Laurie Moloney, Director, for further information and advice.
[1] Note: The employer is not obliged to offer the employee the opportunity to have a support person present.
