Small Business Fair Dismissal Code explained

The Fair Work Act provides (sec 388) that the dismissal of an employee by a small business employer (defined in sec 23) will not be regarded as an unfair dismissal if the employer complied with the Small Business Fair Dismissal Code. What does compliance with the Code require for this jurisdictional defence to apply?

“As mentioned above, I find that the Respondent was a small business employer within the meaning of s.23 of the FW Act at the relevant time, having fewer than 15 employees (including casual employees employed on a regular and systematic basis).

[41] Therefore, and despite the Respondent’s position that it does not rely on the Small Business Fair Dismissal Code, it remains necessary to consider whether the dismissal was consistent with the Small Business Fair Dismissal Code. 16

[42] The Small Business Fair Dismissal Code provides as follows:

“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.”

[43] Although the termination of the Applicant’s employment was with immediate effect, the Applicant was not dismissed for serious misconduct as defined in reg. 1.07 and received payment in lieu of notice. Therefore, the Applicant’s dismissal is to be assessed against the “other dismissal” section of the Small Business Fair Dismissal Code. 17

[44] In Lloyd & Co Pty Ltd v Suttie 18, the Full Bench stated that the crucial considerations under the “other dismissal” section “are whether the employer gave the employee a valid reason why he or she was at risk of being dismissed, warned the employee of the risk of being dismissed if there is no improvement, gave the employee an opportunity to respond to the warning, and gave the employee a reasonable chance to rectify the problem.”19

[45] It is clear in the matter before me that the Respondent did not give any reason to the Applicant that she was at risk of being dismissed prior to the dismissal. Furthermore, the Respondent did not provide the Applicant any warning or otherwise provide an opportunity to rectify any issues or concerns prior to her dismissal.

[46] Accordingly, I find that the Applicant’s dismissal was not consistent with the Small Business Fair Dismissal Code. Having found that the dismissal was not consistent with the Small Business Fair Dismissal Code, I now turn to a consideration as to whether the dismissal was harsh, unjust or unreasonable.”

Elliott v Care For Kids Group Pty Ltd  [2022] FWC 2368 delivered 6 September 2022 per Ryan C