The Small Business Fair Dismissal Code is a legislative document declared by the Minister for Employment.

All small businesses should have employment contracts which may include probation periods and clearly outline business policies and procedures. These policies should clearly define the terms and conditions of employment at the company and provide clear disciplinary rules and procedures for dismissal. All rules and policies should be acted upon fairly for all employees. 

It is fair for a small business to dismiss any employee without notice or warning only once the employer has reasonable grounds to believe the employee was guilty of serious misconduct. Serious misconduct encompasses the following attributes: theft, fraud, violence and breaches of work health and safety regulations. A small business dismissal is deemed fair when an allegation of theft, fraud or violence be reported to the police. The employer must base this report on reasonable and honest grounds.

Regarding other forms of dismissal at a small business, a small business must give an employee a valid reason based on their capacity or conduct to do the job if they are at risk of being dismissed. All employees must be warned in writing that they are at risk of being dismissed if there is no improvement. The employer must then provide the employee with an opportunity to respond to the warning. The small business must also give the employee a chance to rectify the issues stated in writing regarding their employment.

If the employee makes an unfair dismissal claim to the Fair Work Commission, the employer will be required to provide evidence of compliance with this Code.