How the small business fair dismissal code works

This is how the Small Business Fair Dismissal Code of the Fair Work Act functions when an employee of small business is summarily dismissed with or without notice or pay in lieu.

“The Code provides:
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
[32] The ‘Summary Dismissal’ section of the Code clearly applies to dismissals that have ‘immediate effect’ as that term is understood by reference to the decision in Ms Li Li Chen v Australian Catering Solutions Pty Ltd T/A Hearty Health, 26 and are not dismissals on notice.27 As explained in Jeremy Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services (Ryman), an immediate dismissal includes a dismissal with a payment in lieu of notice which is intended to have immediate effect.28
[33] In Ryman, the Full Bench provided a useful synopsis of the proper approach to the construction and application of the Summary Dismissal aspect of the Code and its interaction with Regulation 1.07 of the Fair Work Regulations 2009 (Cth) (the Regulations). 29
[34] In Ryman, the Full Bench considered the meaning of ‘summary dismissal’ and said that it referred to a dismissal without notice arising from ‘a breach of an essential term of the employment contract, a serious breach of a non-essential term of the contract, or conduct manifesting an intention not to be bound by the contract in the future on the part of the employee’. 30
[35] However, it is not the case that under the Code the Commission must be satisfied that serious misconduct was the basis for the dismissal. 31 Rather, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal and one must also consider whether that belief was based on reasonable grounds.32 This element, which has been described as the second element,33 incorporates the concept that the employer has carried out a reasonable investigation into the matter.34 It is not necessary to determine whether the employer was correct in the belief that it held.35 Whether the employer had ‘reasonable grounds’ for the relevant belief is of course to be determined objectively.36
[36] The focus on ‘serious misconduct’ must be taken as identifying the subject matter and it appears to be accepted that this term gleans its meaning from s 12 of the Act and thereafter regulation 1.07 of the Regulations. 37
[37] In applying these requirements, I must also have regard to the procedural matters highlighted within the Code.
[38] If an applicant’s dismissal was consistent with the Code, it cannot be considered unfair within the meaning of the Act.”

Extract from Martin v Porskar Pty Ltd as the Trustee for the Doug James Family Trust (2022) FWC 2598 delivered 11 October 2022 per Beaumont DP