This extract from a decision of the Fair Work Commission deals with the relationship between national unfair dismissal laws and the Small Business Fair Dismissal Code.
“The Legislation
[28] Section 385 of the Act is expressed in the following terms:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code:
see section 388.”
[29] Section 388 of the Act provides:
“388 The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small Business Fiar Dismissal Code.
(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code
if:
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Small Business Fair Dismissal Code in
relation to the dismissal.”
[30] The Code contains the following definition of Summary Dismissal:
“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.”
[31] The provisions concerning other dismissals requires the employer to give the employee the reason why the employee is at risk of being dismissed and the reason must be valid based on the employee’s capacity or conduct. The employee must be verbally warned, preferably in writing, that they risk being dismissed if there is no improvement. The employee must be given an opportunity to respond and a chance to rectify the problem.
Consideration
[32] Section 396 of the Act requires consideration of preliminary matters before merit. These matters concern whether the application was made within 21 days,15 whether the person is protected from unfair dismissal, whether the dismissal was consistent with the Small Business Fair Dismissal Code, and/ or whether the dismissal was a case of genuine redundancy. It is not contended that the reason for dismissal was a genuine redundancy. Albeit Ms Tovey submits that the real reason for her dismissal was redundancy given the Lead Agent commencing an indefinite period of leave and the suggestion that Mr Bell intended to make the staff redundant.
[33] However, the reason given for the dismissal was serious misconduct. It is contended by the Applicant that the summary dismissal for misconduct was unfair. Section 382 of the Act provides that a person is protected from unfair dismissal, if at the time of being dismissed the person met the minimum employment period and an industrial instrument applied or their annual rate of earnings is less than the high-income threshold. It is not in contest that Ms Tovey was dismissed, that she met the minimum employment period of 12 months and she was not paid in excess of the high-income threshold.
[34] If the Applicant’s dismissal is consistent with the Small Business Fair Dismissal Code
(the Code), then under s.385 of the Act, the Applicant was not dismissed unfairly.
[35] The unfair dismissal protections under the Act provides provisions for employees employed by a small business. A small business is defined as employing less than 15 employees.16 It is not contested, and I accept that the Respondent in this matter is a small business employing fewer than 15. Despite being a small employer, Mr Bell did not provide the Small Business Fair Dismissal Code checklist. If the dismissal is not in compliance with the Code, then the factors to be considered on whether the dismissal was harsh, unjust or unreasonable are under s.387 of the Act.
[36] The leading authority in relation to summary dismissal under the Code is Pinawin.17 The original decision was appealed and the Full Bench determined that where the Code applies there are different considerations. The Code requires that the employer had reasonable grounds to reach the view that the Applicant’s conduct is serious enough to justify immediate dismissal. The Bench determined that s.396 of the Act requires the determination whether the dismissal is consistent with the Code before considering merits.18
[37] The Bench in Pinawin further considered the application of the Code and described the test for unfairness as applied by tribunals in the UK. It then referred to the principles adopted
in the UK and considered relevant cases determined in Australia.19 Having considered the relevant matters, it concluded that there are two steps to determine whether the Code is satisfied.
Relevantly the Bench determined:20
[29] First, there needs to be a consideration whether, at the time of dismissal,
the employer held the belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly, it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in their belief that it held.”
[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.
[38] Consistent with the principles of Pinawin, the question is whether at the time of the dismissal did Mr Bell hold the belief that the Applicant’s conduct was sufficiently serious to justify summary dismissal. And secondly, had Mr Bell carried out a reasonable investigation into the matter.
[39] The Code refers to serious misconduct; the definition relevantly provides “serious misconduct includes theft, fraud, violence and serious breaches of health and safety procedures.” With the use of the word includes, serious misconduct is not limited to those examples listed in the definition contained in the Code.
[40] The Full Bench in Ryman v Thrash21 considered the application of the Code, the definition of serious misconduct and what dismissals are dealt with by the “Summary Dismissal” section of the Code. The Bench noted the different expressions in the Code but importantly held that summary dismissal means “dismissal without notice arising from the 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.” The Bench then considered misconduct that may give rise to summary dismissal to include misconduct, disobedience, incompetence or negligence.22
[41] Further while considering the definition of serious misconduct, the Bench observed that an assessment of the degree of seriousness may constitute a valid reason for summary dismissal and there is no fixed standard but statutory instruments can influence the definition. The view was expressed that dismissal for serious misconduct is to be read in terms of the meaning in Regulation.1.07 of the Fair Work Regulations 2009. Therefore, the whole definition in Regulation 1.07 is covered by the Code.23
[42] Relevantly Regulation 1.07 provides:
“1.07 Meaning of serious misconduct
(1) For the purposes of the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
Examples of serious misconduct—employees
(2) For the purposes of subregulation (1), conduct that is serious misconduct includes the following conduct of an employee:
(a) wilful or deliberate behaviour that is inconsistent with the continuation of the contract of employment;
(b) conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer’s business;
(c) engaging in theft, fraud, assault or sexual harassment in the course of the employee’s employment;
(d) being intoxicated at work;
(e) refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(3) Paragraphs (2)(c) to (e) do not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.”
[43] The evidence was that Mr Bell believed Ms Tovey’s conduct was sufficiently serious. On receipt of the information from the audit he attempted to act promptly by meeting with Ms Tovey, but as she provided a medical certificate covering an absence of two weeks, he determined he had to act to dismiss her. This resulted in the dismissal letter being sent via email and her access to the business was severed.
[44] Ms Tovey was a key staff member in managing the business, she held a position of trust and had significant operational responsibility for the financial records, trust fund, payroll and management of staff. Mr Bell gave evidence of his concerns that despite the business operational success it was in a financially precarious state. On obtaining the assistance of an external accountant, an audit of the financial records was undertaken. On discovering the anomalies, he provided the reasons for the Applicant’s dismissal in writing. He gave evidence that the conduct was serious, the amounts concerned were substantial and the conduct was not a one off. The trust was broken when he discovered the unauthorised payments to herself, abuse of the credit card, but also the serious disclosure of commercially sensitive records to the Lead Agent and to her personal email address. The fact that the email addresses were blind copied showed a deliberate intent to hide the conduct.
[45] The critical evidence was the witness evidence of Ms Tovey and Mr Bell. Ms Tovey when giving evidence on the credit card use admitted to having been spoken to by Mrs Bell about control and accountability of its use. But despite the card being in her name for business expenses only she freely permitted the Lead Agent to use the card for lunches and dinners without any oversight. She also admitted to taking the team (all women) to a nail salon as a team building exercise on the company’s expense without authority. During cross examination she justified the event by saying that Mr Bell became aware of it. Her evidence on the use of the credit card was cavalier and lacked the understanding of the seriousness of permitting use of the business credit card without authority from Mr Bell. The credit card statement was compelling evidence of its abuse.
[46] Ms Tovey accepted that the accountants were expert in their field but challenged whether their calculations were correct on the assumption that all administrative staff were to be included in the calculations. Given the failure of Ms Tovey to discredit or challenge this evidence together with her inability to logically explain the financials, I prefer the evidence of the independent report prepared by the Field Group.
[47] Concerningly as the person responsible for payroll, Ms Tovey was unable to explain the discrepancies in her payslips regarding her ordinary hours and overtime in the context of her employment agreement. Ms Tovey was imprecise and failed to understand how employment entitlements ought to be calculated, particularly the accrual of annual leave. Her payslips show an excess accrual of annual leave and this remained unexplained.
[48] Ms Tovey explained that she included the Lead Agent in emails via blind copy containing sensitive commercial material because she wanted her approval and justified this because she was involved in her recruitment. This illogical explanation failed to provide a cogent reason for conduct that explicitly breached her employment agreement.
[49] Ms Tovey was asked to explain the financial records produced by her and tendered into evidence, she could not do so.24 Ms Tovey paid herself an extra 8 hours because her assistant was on leave which is illogical and not rationally explained, her payslip refers to deductions for the Lead Agent and they show an accumulation of annual leave not on ordinary hours but all hours recorded on the payslip.25 Ms Tovey further suggested there were discussions or comments that the business may be insolvent,26 if that was her understanding, as the bookkeeper who was responsible for the financials, her conduct of incurring expenses, pressing for significant pay rises and demanding a Mercedes as her company car are not in keeping of a staff member working in the interest of her employer.
[50] Equally the evidence of Mr Bell was concerning. Mr Bell accepted that he oversaw the financials each month, but it appears he no more than applied a cursory glance. As Director, he failed in his due diligence to review the financials and control the excessive expenditure including the payment of bonuses if not authorised. Instead he abrogated his responsibilities to Ms Tovey to manage the business’ financial affairs. At the time of Ms Tovey’s dismissal, the business was still operating, however, at the hearing Mr Bell confirmed the business had closed its doors on 27 March 2025 as he did not renew his real estate licence.
[51] The credibility of the witnesses has not been of assistance to the Commission. It has not been established whether the bonus payments were authorised. The evidence of the Respondent raises serious questions whether they were in fact authorised, but had the Respondent properly reviewed the financials he ought to have raised his concerns and acted sooner than February 2025. Ms Tovey had overpaid herself and this was evident in her annual leave accruals, had she not deducted the annual leave taken was not established. The payslips on which the Applicant relies is not the payroll record, but simply her payslip which may or may not be an accurate record of the payroll system. Ms Tovey did not establish that payment of a phone allowance was authorised, and this was strongly contested by the Respondent. Use of the credit card inappropriately was established; it was in Ms Tovey’s name, and she freely let the Lead Agent use the card and no supportive documents or authority for its use could be established. Ms Tovey’s disclosure of company sensitive financial records was disclosed, and this is a serious breach of her employment agreement.
[52] On the matter of the overpayment to the Lead Agent based on the calculations conducted by the accountant, this process was based on the understood process to calculate the commissions which showed some underpayments but largely overpayments. In some pay periods, the audit revealed payment more than once of a commission. The total sum of overpayment while contested by the Applicant, is a significant consideration. Importantly the Respondent says that it was unaware of this audit result at the time of the dismissal. However, I may take this evidence into consideration because had this been known, there was justification to dismiss the Applicant.27
[53] The Applicant’s conduct falls within the conduct characterised as serious misconduct, specifically if not theft, at a minimum a breach of an essential term her obligations under her employment contract and/ or incompetence or negligence at its worst.
Conclusion and disposition
[54] Having considered all of the materials before me I am satisfied that the Respondent is a small business and therefore covered by the Code. The dismissal was a summary dismissal, i.e. a dismissal without notice. The Code requires the employer to have had reasonable grounds to reach the view and hold the view that the conduct was serious enough to justify immediate dismissal and that the belief was based on reasonable grounds. The Respondent obtained the assistance of an accountant independent of the business to conduct an audit of its financial records, and this was the basis for the reasonable belief that the conduct was serious. Further this audit was a reasonable investigation into the matter. While some of the serious allegations could not be substantiated, it is important to understand that the Code does not require a determination that the employer was correct in his view.
[55] Nevertheless, the Respondent had reasonable grounds to reach the view that the Applicant’s conduct in disclosing information and paying herself unauthorised sums, including the 8 hours of pay, the use of the credit card and ultimately the overpayment of the Lead Agent’s commissions justified summary dismissal.
[56] Had I been required to consider the factors in s.38728 of the Act, there would have been some deficiency in the process, but may likely on balance be outweighed by the conduct
justifying the dismissal. I do not need to consider s.387 as the Respondent is a small business and the Code applies.
[57] For the above reasons I find the dismissal was consistent with the Small Business Fair Dismissal Code. If the Applicant’s dismissal is consistent with the Code, then under s.385 of the Act, the Applicant was not dismissed unfairly. Accordingly, I do not find that the dismissal was unfair. Consequently, I need not consider the criteria provided in s.387 of the Act.
[58] Accordingly, the application for unfair dismissal remedy by Ms Tovey against Bell Real Estate (Olinda) Pty Ltd is dismissed.”
Tovey v Bell Real Estate (Olinda) Pty Ltd [2025] FWC 2962 delivered 3 October 2025 per Yilmaz C