Unfair dismissal and small business employers

“What is the Small Business Fair Dismissal Code?

See Fair Work Act ss.385; 388(1) and the Small Business Fair Dismissal Code

In the case of dismissal by a small business employer, a person has not been unfairly dismissed if the Commission is satisfied that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

What is a small business employer?


See Fair Work Act s.23

An employer is a small business employer if it employs fewer than 15 employees (by head count) at the relevant time. All employees employed by the employer at the time (including the dismissed employee, any other employees dismissed at the same time and those employed by associated entities), are to be counted. Casual employees are not counted, unless they are regular casual employees.

For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.266

The Code

A person’s dismissal is consistent with the Code if:

  • immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happens first), the person’s employer was a small business employer, and
  • the employer complied with the Code in relation to the

Summary Dismissal

The Code states that:

‘It is fair 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.’267

The Code defines serious misconduct as including ‘theft, fraud, violence and serious breaches of occupational health and safety procedures’.268

The Commission does not have to make a finding, on the evidence, whether the conduct occurred.269 The Commission needs to find whether the employer had a reasonable belief that the

conduct of the employee was serious enough to warrant immediate dismissal.270 It is not necessary for the Commission to determine whether the employer was correct in the belief that it held.271

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 they did in fact hold the belief that:

  • the conduct was by the employee
  • the conduct was serious, and
  • the conduct justified immediate 272

The employer must establish that they had reasonable grounds to hold the belief, which could be established by providing evidence of inquiries or investigations the employer undertook to establish their belief.273

Other dismissal

In non-summary dismissal cases, the employee must be warned that if there is no improvement to their conduct or capacity, they could be dismissed.274

The employee must be given a reason as to why their employment is at risk and the reason must be a valid reason based on their conduct or capacity to do the job. 275

The employer must give the employee 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.276

Procedural matters

During discussions between the employer and employee about matters where dismissal is possible, the employer must allow the employee to have another person present to assist them. However, this person cannot be a lawyer acting in a professional capacity.277

If an employee claims to the Commission that they have been unfairly dismissed, the employer will have to prove that they have complied with the Code.278