Small Business Employer Guide
Unfair Dismissal for Small Business Employers
If your business has fewer than 15 employees and you have received an unfair dismissal application, different rules may apply. This guide covers what small business employers need to know about the Small Business Fair Dismissal Code.
What is the Small Business Fair Dismissal Code?
The Small Business Fair Dismissal Code is a set of guidelines established under the Fair Work Act 2009 that applies specifically to employers with fewer than 15 employees at the time of the dismissal. If the employer followed the Code, the dismissal is considered fair.
The Code recognises that small businesses may not have dedicated HR departments or formal processes, and provides a simplified framework for assessing whether a dismissal was fair.
Key requirements of the Code
Genuine reason for dismissal
The employer must have a genuine reason for the dismissal based on the employee's conduct or capacity. The reason must be defensible and documented.
Warning (for non-serious misconduct)
For dismissals based on unsatisfactory performance or conduct that is not serious misconduct, the employee must have been given a warning that their employment was at risk, and a reasonable opportunity to improve.
Serious misconduct exception
If the dismissal was for serious misconduct (theft, fraud, assault, serious safety breach), a warning is not required. The employer can dismiss immediately, but must still have a reasonable basis.
Reasonable belief
The employer must have held a genuine belief, on reasonable grounds, that the employee's conduct or capacity justified the dismissal.
How to determine if you are a small business
Under the Fair Work Act, a small business employer is one that has fewer than 15 employees at the time of the dismissal. The count includes:
- All employees of the employer (full-time, part-time, and regular casuals)
- Employees of associated entities
- The dismissed employee themselves
Casual employees are only counted if they are employed on a regular and systematic basis.
Important for small business employers
Even if the Small Business Fair Dismissal Code applies, you still need to respond to the application within the employer response timeframe. The Code provides a defence, but only if you properly document and present your position.
ARCEN Direct flags small business matters during intake and ensures your response documentation reflects the Code's requirements.
What small business employers should prepare
- Evidence of total employee headcount at the time of dismissal
- Documentation of the reason for dismissal
- Evidence of any warnings given (for non-serious misconduct)
- Records showing the employee was given an opportunity to respond
- Any supporting documents (contracts, policies, emails, meeting notes)
- A chronology of events leading to the dismissal
Small business? Start your response now.
ARCEN Direct handles small business unfair dismissal responses with the same structured approach. The system automatically flags Small Business Fair Dismissal Code considerations.