Managing Employee Dismissals under the Small Business Fair Dismissal Code
- The protections in the Fair Work Act 2009 (Cth) prohibit employers from dismissing employees without cause in most situations.
- In this article we explain the statutory process that small businesses can use to dismiss employees for cause and how employers can avoid unfair dismissal claims in the Fair Work Commission.
- Note that the small business fair dismissal code only applies to businesses of 15 employees or less (including the employee that has just been dismissed). Larger businesses have no fixed ‘code’ to rely upon and should instead seek legal advice regarding their specific situation.
What is the Small Business Fair Dismissal Code?
It is a specific statutory procedure that small businesses can use to terminate an employee for cause. Provided the employer follows the specific procedure, the employee is not entitled to commence an unfair dismissal claim under the Fair Work Act.
The Federal Government is entitled to declare the contents of the code pursuant to section 388 of the Fair Work Act.
Provided the code is complied with the dismissal is not unfair and the employer cannot be sued.
The general process to comply with the code is as follows:
- An employee’s performance or conduct is below an acceptable standard.
- The employee is given a warning (ideally in writing) that the employee was not doing the job properly and would have to improve his or her conduct or performance, or otherwise be dismissed.
- The employee is allowed a reasonable period of time to improve their performance. Ideally 2-3 weeks but depending on the nature of the unsatisfactory conduct they were warned of.
- Assuming the employee does not comply with the warning, you organise a meeting with them at a reasonable time.
- The employee should be advised the purpose of the meeting and that they may have a support person present.
- During the meeting, the employee should be advised that they have not improved their conduct and have failed to comply with the written warning. Further that the employer intends to dismiss them for this reason.
- Prior to formally dismissed them, during the meeting, the employer should give the employee a chance to respond to the allegations against them.
Can I dismiss an Employee on the Spot?
Yes, but only in serious cases.
The code permits summary dismissal in the case of serious misconduct. Serious misconduct includes violence or theft. In such cases, the employer can dismiss the employee instantly.
Note however that the employer should ensure that they can prove, without a doubt, the serious misconduct occurred. If the employer does not have this evidence and uses summary dismissal, they could be exposed to an unfair dismissal claim by an employee.
What if I am sued for Unfair Dismissal?
We address unfair dismissal claims in a separate article. However in short, and as a general rule only:
- If an employee succeeds in an unfair dismissal claim then the employer should expect to have to pay an award of monetary damages by way of compensation.
- This payment of monetary compensation will generally include payment for lost wages of around 3 – 6 months, together with a monetary penalty for failing to comply with the Fair Work Act.
This article is provided by way of general guidance only and should not be relied upon as legal advice applicable to your specific circumstances. We have extensive experience advising employers and employees in respect to unfair dismissal. Contact us today for a free consultation.