Small businesses are not expected to have the same level of Human Resources expertise as larger businesses. This is reflected in the Fair Work Act 2009 (the Act) Small Business Fair Dismissal Code.
If your business is a small business, it is this Code against which you should be measured if you terminate the employment of one of your employees and they challenge that decision in the Fair Work Commission (FWC).
The Act defines a small business as a business with less than 15 employees which is based on a simple headcount of all staff employed on a regular and systematic basis.
Does the Small Business Fair Dismissal Code apply if at the time you made the decision to terminate the employment of the employee, you were unaware of the existence of the Code? That is, do you still get the benefit of the Code even if you were unaware that this was the benchmark against which your decision would be measured?
The good news for small businesses is that the answer to the above question is yes. A recent decision of the FWC confirmed that even where the small business was unaware of the existence of the Code, the FWC had an obligation to bring it to the attention of the small business so that they could present their defense to the unfair dismissal application in the context of the terms of the Code.
Although this is good news for small businesses, it is important to remember that the Small Business Fair Dismissal Code, although a lower benchmark than that which is applied to larger businesses, is not a ‘get out of jail free card’. The Act requires that an employer can demonstrate compliance with the Code. The Code contains a checklist which will assist small employers comply with the Code.
Irrespective of the size of your business, compliance with the legal requirements in terminating the employment of an employee is only one consideration for employers. Fair and defensible processes also send a message to your other employees. That message being that this is not a decision that you take lightly and where it is necessary, fairness will guide your process.
If you require any assistance in managing employee performance or conduct matters or implementing disciplinary action, our experienced consultants can provide you with practical and pragmatic guidance to minimise your risks. Please contact me on 3218 3014 or cheryl-anne.laird@mazars.com.au
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.
