Smoke and mirrors; dismissal laws for small business

It is well known that the Fair Work Act is intended to relieve small businesses of the same level of sophistication that a non small business must apply to ensure that the dismissal of an employee is not relevantly unfair. The Act seeks to achieve this by permitting the relevant Commonwealth Minister to prescribe by regulation a so-called Small Business Fair Dismissal Code, which when followed, provides an employer with a jurisdictional defence to an unfair dismissal claim.
The following is an analysis of the law which applies to the summary dismissal by a small business of an employee for serious misconduct.
“The 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.
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.”
The Commission does not have to make a finding, on the evidence, whether the conduct occurred. Rather, the Commission needs to determine whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal. Steri-Flow Filtration Systems (Aust) Pty Ltd v Erskine (2013) FWAFB 1943; Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust t/as Banana Tree Cafe (2010) 204 IR 39 ; Pinawin v Domingo (2012) 219 IR 128.
So the first distinction between the rules which apply to unfair dismissal cases for small and non small businesses is that the height of the evidence bar is much lower than for a non small business and it will be sufficient, in the case of a summary dismissal for misconduct, that the small business employer have reasonable grounds for concluding that the employee’s conduct was serious enough to justify summary dismissal. If the small business employer does have objectively reasonable grounds for that belief, it does not matter that the Commssion may have a contrary view. Or at least that is the theory.
In the case of a non-small business employer, it is the Commission’s view which matters.
The summary dismissal aspect of the Code was considered by a Full Bench in Pinawin T/A RoseVi.Hair.Face.Body v Domingo. (2012) 219 IR 128. The Full Bench stated:
“ … 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.
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.”
Accordingly, for an employer to believe on reasonable grounds that the conduct of the employee was serious enough to justify immediate dismissal, the employer must establish that it did in fact hold the belief that:
● the conduct was by the employee;