Small Business Fair Dismissal Code; how it works

This extract from a recent unfair dismissal case determined by the Fair Work Commission is a very good explanation for how the Small Business Fair Dismissal Code operates in such a case.

“Legislation

 

[65]    Section 385 of the Act outlines the meaning of “unfair dismissal”:

 

“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.”

 

[66]    Section 396 of the Act sets out the following:

 

“The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

 

(a)      whether the application was made within the period required in subsection 394(2);

 

(b)     whether the person was protected from unfair dismissal;

 

(b)     whether the dismissal was consistent with the Small Business Fair Dismissal Code;

 

(c)      whether the dismissal was a case of genuine redundancy.”

 

[67]    Section 388 of the Act outlines the Small Business Fair Dismissal Code objection:

 

“388   The Small Business Fair Dismissal Code

 

(1)      The Minister may, by legislative instrument, declare a Small Business Fair 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.”

 

Compliance with the Code

 

[68]    As set out above in s.396 of the Act, the Commission must determine whether the dismissal was consistent with the Small Business Fair Dismissal Code before considering the merits of the application.

 

[69]    The effect of s.385(c) of the Act is that when a dismissal is consistent with the Code, it is not an unfair dismissal, and the application must then be dismissed. In the instance that the dismissal is not consistent with the Code, the Commission must then consider whether the dismissal is unfair on the basis of the general criteria in s.387 of the Act. The Code deals with ‘summary dismissal’ on the ground of serious misconduct and ‘other dismissal’ on the basis of the employee’s conduct or capacity to do the job.

 

[70]    It is not contested, and I am satisfied, that the Applicant was a person protected from unfair dismissal and the claim was made within the statutory time limit. I must now consider whether the Respondent complied with the Code in dismissing the Applicant.

 

[71]    As the Respondent summarily dismissed the Applicant, I have considered the part of the Code relating to summary dismissal and other procedural matters of relevance.

 

[72]    The Code relevantly provides:

 

“Small Business Fair Dismissal Code

 

 

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.

 

 

Procedural Matters

 

 

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 the Fair Work Commission, 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.”

 

[73]    In the matter of Ryman v Thrash Pty Ltd T/A Wishart’s Automotive Services13 (Ryman), the Full Bench of the Commission considered the Code and said:

 

“In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.”14

 

[74]    The approach required to assess whether the Respondent’s genuinely held belief was objectively reasonable, has been described by a Full Bench of the Commission in Pinawin T/A RoseVi.Hair.Face.Body v Domingo15 (Pinawin) in the following terms:

 

“[29]… … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, 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. 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 the 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.”16

 

[75]    The Full Bench considered other authorities when reaching their view:

 

“[27] Deputy President Bartel in Khammaneechan v Nanakhon Pty Ltd said:

 

“[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant’s conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based.”

 

[28] Senior Deputy President O’Callaghan in Harley v Rosecrest Asset Pty Ltd (t/as Can Do International) said:

 

“[8] For an employer to believe on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s 387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred.

 

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquiries or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.””17 (references omitted)

 

[76]    The evidence shows that the dismissal was an immediate or summary dismissal as contemplated by the Code. The Respondent dismissed the Applicant because Mr Gonzalez considered that Ms Ramirez’s conduct was serious misconduct.

 

[77]    Mr Gonzalez’s evidence persuaded me that he had a genuine belief that Ms Ramirez’s conduct was sufficiently serious to justify her immediate dismissal. His notes on the checklist, referenced above, confirm that he was of the view that Ms Ramirez threatened him with violence and committed other misconduct including verbal intimidation, illegally recording telephone calls with him, inappropriately using her mobile phone in the workplace and showing him a lack of respect. Mr Gonzalez’s evidence was clear that it was his subjective and genuinely held view that the conduct he alleged against Ms Ramirez in fact occurred and was serious misconduct.

 

[78]    However, the more difficult question is whether Mr Gonzalez’s belief was based on reasonable grounds. It is not for me, when considering this question, to determine whether there was a valid reason for dismissal or consider whether the dismissal was harsh, unjust or unreasonable. These are considerations to be made only if the Respondent is found not to have complied with the Code. The present question for determination is whether Mr Gonzalez had reasonable grounds for his belief that the Applicant’s conduct was sufficiently serious to justify dismissal. This is to be determined objectively.

 

[79]    The matters of Pinawin and Ryman make reference to the relevance of a reasonable investigation to determine whether the Respondent had reasonable grounds to form a view that the conduct was sufficiently serious to warrant summary dismissal. If the Respondent did rely on observations of the alleged conduct from other parties, it would have been necessary for them to conduct an investigation to support their contention of reasonable grounds for the view held. However, in this case, Mr Gonzalez was a direct participant in the communications and events said to be the serious misconduct that led to the Applicant’s dismissal and no investigation was necessary to establish whether the conduct occurred or to consider the context of the conduct and communications.18

 

[80]    Therefore, it is necessary for me to determine in an objective manner, whether Mr Gonzalez could reasonably have formed a view, in the circumstances of this matter, that the conduct of the Applicant was sufficiently serious to justify immediate dismissal.

 

[81]    Weighing in favour of a finding that Mr Gonzalez had reasonable grounds for his belief is the consideration he undertook of the elements of the Code and the checklist I accept that he completed prior to terminating the Applicant’s employment.

 

[82]    However, weighing against such a finding is that Mr Gonzalez made representations on that checklist that he must have known had no basis in fact. That is because whilst answering yes to the statement “The employee threatened me or other employees, or clients, with violence, or actually carried out violence in the workplace” he could not have reasonably believed that to be correct. I say this because Mr Gonzalez offered no evidence at all in this proceeding that could be said to be threats of, or actual violence committed by Ms Ramirez. A Respondent relying on the Code as a jurisdictional bar to a claim for unfair dismissal cannot simply tick a box on the checklist listing conduct likely to be serious misconduct and rely on that checklist as evidence of a reasonably formed belief if there is no fact or evidence to support the assertion. [83] Given my earlier findings that Ms Ramirez’s queries and concerns about her employment were not inappropriate of themselves and were not made in an aggressive or disrespectful manner, and the other allegations of misconduct, being alleged threats of violence or actual violence, the recording of telephone calls and inappropriate use of a mobile phone in the workplace did not occur as alleged, I find that the Respondent could not, in the circumstances of this matter, have reasonably formed the view he did that the Applicant committed misconduct, let alone serious misconduct. As the events did not occur as the Respondent has described them, objectively speaking, the Respondent has not established that the basis for the belief it held is reasonable.

 

[84] Accordingly, I am not satisfied that the Respondent complied with the Code. The Respondent’s jurisdictional objection is dismissed.

 

The Merits of the dismissal

 

[85] As I have dismissed the jurisdictional objection, it is now for me to determine whether the dismissal by the Respondent was harsh, unjust or unreasonable. Section 387 of the Act provides the criteria for consideration of whether a dismissal was harsh, unjust or unreasonable:

 

“387  Criteria for considering harshness etc.

 

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

 

(a)      whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

 

(b)     whether the person was notified of that reason; and

 

(c)      whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

 

(d)     any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

 

(e)     if the dismissal related to unsatisfactory performance by the person–whether the person had been warned about that unsatisfactory performance before the dismissal; and

 

(f)      the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

 

(g)      the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

 

(h)     any other matters that the FWC considers relevant.”

 

Ramirez v Gonva Group Pty Ltd – [2024] FWC 1522 delivered 13 June 2024 per Thornton C