Summary dismissal by small business; the requirements

Compliance by a small business with the Small Business Fair Dismissal Code in the termination of the employment of an employee by a small business employer constitutes a complete jurisdictional defence to an unfair dismissal claim. However if the small business employer cannot demonstrate sufficient compliance with the Code, that is not the end of the matter , and the Fair Work Commission will still need to review the circumstances of the dismissal to determine whether it was relevantly unfair under the unfair dismissal provisions which deal with dismissals by non-small business employers.

Here is an extract from  a FWC case which reveals just that 2 stage process.

“The summary dismissal aspect of the Code was considered by a Full Bench in Pinawin T/A RoseVi.Hair.Face.Body v Domingo. 7 The Full Bench stated:

“[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.”

Accordingly, under the Code, for a small business 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;
  • the conduct was serious; and
  • the conduct justified immediate dismissal.

The above belief must be based upon reasonable grounds.

The Code also provides that for a summary dismissal to be deemed fair, it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the Police. However, the employer must have reasonable grounds for making the report.

Further, the assessment of reasonable grounds involves consideration as to whether an investigation, which was reasonable in the circumstances, was carried out by the employer. What is reasonable in that context will depend upon the nature of the allegations and the circumstances of the employer.

It also follows that under the Code, the employer does not need to demonstrate by evidence to the Commission that the alleged misconduct actually took place. Further, as it is the belief and reasonable grounds related to the dismissal that must be considered, this involves a consideration to what was known and believed at the time, and not subsequent to that decision. Both of these elements are to be contrasted to the approach adopted in connection with the s.387 (meaning of harsh etc. dismissal) considerations………………………

In order to have reasonable grounds to believe that an employee’s conduct was sufficiently serious to justify immediate dismissal, without conducting any meaningful investigation and without even disclosing the allegation to that employee prior to or at the time of the dismissal, the circumstances are likely to be exceptional. That is, the conduct would need to be directly witnessed or verifiable by clear objective evidence and involve very serious conduct for which no reasonable alternative explanation was plausible………….In the end, I am not satisfied that Home Giraffe has demonstrated that it has complied with the Code in dismissing Mr Humphreys.

I also note that if the dismissal of Mr Humphreys was considered to be an “other dismissal” within the meaning of the Code, the dismissal would not have been consistent with the Code. This must follow as there was no warning given at any stage that the applicant risked losing his employment……I have weighed all of the factors and circumstances of this application.

In Byrne and Frew v Australian Airlines Pty Ltd,27 the following observations were made by McHugh and Gummow JJ:

“It may be that the termination is harsh but not unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

In determining matters in this jurisdiction, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in that position.28The Commission is also directed to ensure a “fair go all round”. This is reinforced by the objects of this Part of the FW Act in s.381 including ss.(2) which provides as follows:

“(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.”

As revealed in various decisions of the Commission (and the Court), each case must be considered in its own circumstances and it is appropriate, amongst other factors, to have regard to whether the procedural deficiencies made any difference to the fairness of the outcome.29 As a result of s.387(f) and (g) of the FW Act, I have also taken into account the circumstances of the business and the impact on the procedures adopted. This includes what amounts to a desire by Mr Chunys to keep his (investigation) powder dry. However, this is not a significant factor in this case, given the lack of immediate action actually taken in that regard.

I have found that there was a valid reason for dismissal. I have also found that the dismissal was not harsh.

In this case, there are significant elements of procedural unfairness including that Mr Humphreys was given absolutely no opportunity to deal with the very serious allegations that were relied upon by Home Giraffe to make the decision to dismiss him. Further, he was actually given reasons at the time that were false. There were matters that Mr Humphreys could have advanced to put his alleged conduct in context and the allegations that were made had potential significant consequences beyond the immediate decision to terminate. The absence of any semblance of natural justice was, in the context of this matter, unreasonable.

On balance, having regard to the provisions of s.387 of the FW Act as applied to my findings in this case, I am satisfied that the dismissal was unreasonable. As result, it was unfair within the meaning of the FW Act.”



Humphreys v The Trustee for the Chunys Trust (2017) FWC 3850 delivered 31 August 2017 per Hampton C