Small business employers and the Small Business Fair Dismissal Code

Codes and Keys

August 4, 2016

For most employers the disciplinary process with its obligation to ensure procedural fairness usually leads to a well-documented but often protracted process. For small business employers, where an employer has followed and is compliant with the requirements of the Small Business Fair Dismissal Code, the employee is not (generally) to be considered to be unfairly dismissed.

For most employers the disciplinary process with its obligation to ensure procedural fairness usually leads to a well-documented but often protracted process.

For small business employers, where an employer has followed and is compliant with the requirements of the Small Business Fair Dismissal Code (the Code), the employee is not (generally) to be considered to be unfairly dismissed.

The Code, which applies to small businesses (i.e. those who employ less than 15 employees), requires the employer (in circumstances not involving summary dismissal) to provide the employee (with more than 12 months of continuous service):

A verbal or written warning that their employment is at risk of termination if their conduct or performance does not improve;
A reasonable opportunity and /or further training to improve their conduct or performance;
The opportunity to bring a support person (not an advocate);
A valid reason as to why their employment was terminated; and
An opportunity to respond to the reason for termination of employment.

The Code also provides that the termination of employment without notice (summary dismissal) would be fair if there were reasonable grounds to believe that the employee’s conduct involved “serious misconduct” (i.e. fraud, theft, assault, serious safety breach etc).

The above is set out in the Code in the form of a Checklist.

A failure to comply with the Code may give rise to a claim that the termination of employment was harsh, unjust or unreasonable.

In VS v Pang Enterprises Pty Ltd ATF Pang Family Trust T/A Bakers Delight Newport [2016] FWC 2786 Senior Deputy President Hamberger considered an unfair dismissal application lodged with the Fair Work Commission (FWC).

The Employee was employed as a casual employee for more than four years for the Employer who operated a Bakers Delight Bakery franchise. In or about January 2016, the Employer terminated the Employee’s employment.

As the Employer was a small business, SDP Hamberger was required to consider whether the Employer followed the Code. It was determined that the Employer did not comply with the Code and noted in particular that the Employee was not given a warning (verbal or in writing) of the risk of termination, or an opportunity to improve her performance or conduct.

Accordingly, SDP Hamberger went on to consider whether the termination of employment was harsh, unjust and unreasonable having regard to the criteria under section 387 of the Fair Work Act 2009 (Cth) (FW Act). In this regard, he commented that it was unclear why the Employer terminated the Employee’s employment and noted that various different reasons were provided, but none of which was a valid reason.

SDP Hamberger also held that the Employee was not notified of the reason for the termination of employment (or given an opportunity to respond) and was not provided with any prior warning about her performance. SDP Hamberger determined that the termination of Employee’s employment was harsh, unjust and unreasonable and ordered the Employer to pay the Employee $6,000.00.

Small business employers are reminded to follow the Code during the disciplinary and termination processes. As noted above, compliance with the code is a key element of an employer’s case when it is defending an unfair dismissal claim as it can be used for the purposes of arguing that the application for unfair dismissal should not proceed.

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Resources: Blogs

Codes and Keys