Small Business and Terminating Employees
Many small business employers are aware that there are specific laws which regulate the termination of their employees. However, there are some common misconceptions.
A Small Business is one which employs less than 15 employees. The test is the number of employees; it does not matter whether the employees are casual, full time or part-time.
The Fair Work Act 2009 (the Act) provides that a person has been unfairly dismissed if:
• The person has been dismissed; and
• The dismissal was harsh, unjust and unreasonable; and
• The dismissal was not consistent with the Small Business Fair Dismissal Code; and
• The dismissal was not a case of genuine redundancy.
A dismissal is consistent with the Code if the employer was a small business and the employer complied with the code in relation to the dismissal.
The Small Business Fair Dismissal Code (the Code) provides a guide for small business employers when terminating an employees' employment. The Code provides a checklist the employer can complete before terminating the employment of an employee. It is not a requirement that the checklist be completed; however it is sometimes helpful for the employer and it can also provide some evidence of compliance with the Code.
It is important to understand that completing the checklist, or even complying with the Code, does not automatically exempt a small business employer from the unfair dismissal process. An employee can still make a claim for unfair dismissal, and Fair Work Australia must determine whether the Code has been complied with.
Some of the indicators that an employer has complied with the Code include:
• Providing warnings to the employee and advising the employee of the risk of termination;
• Warnings can be written or verbal;
• Allowing the employee to respond, and to have a support person present through and disciplinary process; and
• Providing a reasonable time for the employee to improve if it is a performance or conduct issue.
Although the Code is a helpful guide for small business employers, it is important to seek legal advice prior to terminating the employment of any employees. Employers should keep in mind that being a small business employer is not a complete protection to unfair dismissal laws.
Posted on 10th January 2012
