Do Small Business Employers Get Special Treatment in the FWC?
Small business owners may not have specialist human resources staff to give them advice before they dismiss an employee. Consequently, a “Small Business Fair Dismissal Code” was declared by the Minister for Education, Employment and Workplace Relations. This is to avoid red tape and reduce cost for small businesses to follow when dismissing an employee so ensure dismissals are fair. However, is the Small Business Fair Dismissal Code providing special treatment and excuses for small businesses by holding them to a lower standard? Should all businesses be held to the same reasonable standard despite the size of the organisation? Do Small Business Employers Get Special Treatment in the FWC?, lets answer the questions, read on!
Is the Small Business Dismissal Code Wrong?
There’s an argument in industrial relations academic circles that the dismissal code is the wrong way around. That larger business in the main, behave themselves, try and pay the proper award wages. Pay employees on time and dismiss employees with process be it by varying degrees. That the gross misconduct of paying cash in hand. Flat hourly rates in contravention of the award system. Pay employees inconstantly.
Some if they can try and get out of paying notice, long service leave is by small business. Its large employers that are more efficient, invest more monies in human capital. They have to be seen to be doing the right thing. For their shareholders and attract the right talent. Nobody wants to work for a dodgy company. (Beit a lot have been caught for underpaying employees)
I do feel sorry from time to time the effects, cost and trauma, say a small business of 2-4 employees does go through. But we cannot decide a employees employment and human rights on how many employees a company has.
The Small Business Fair Dismissal Code is essentially a checklist
The Small Business Fair Dismissal Code is essentially a checklist. That provides small business owners a framework to follow during the dismissal process of an employee to ensure the dismissal is fair. A business is a small business employer if it employs fewer than 15 employees at the time of the dismissal of the employee. This head count includes all permanent full-time, part-time and casuals, who are employed on a regular and systematic basis.
Section 385 of the Fair Work Act 2009.
Under s 385 of the Fair Work Act 2009 (Cth) (the FW Act). A person has been unfairly dismissed if the Fair Work Commission is satisfied that the dismissal was not consistent with the Small Business Fair Dismissal Code. Thus, a small business employer will be required to provide evidence of compliance with the Small Business Fair Dismissal Code. If the employee makes a claim for unfair dismissal to the Fair Work Commission.
A small business employer is not bound to follow the Small Business Fair Dismissal Code when dismissing an employee. If the employee in question has been employed for less than 12 months. Generally, there are two situations which arise where the Small Business Fair Dismissal Code is relevant: summary dismissal (that is, termination without notice) and ordinary dismissal with notice.
Potential Lack of Justice for Small Business Employees
The reasoning behind the introduction of the Small Business Fair Dismissal Code and in turn Do Small Business Employers Get Special Treatment in the FWC?, was to reduce the burden placed on small businesses and to accommodate their lack of expertise in industrial relations matters. Although the Fair Work Commission acknowledges that small businesses are not exempt from dismissing their employees in an unfair way, they are already receiving special treatment in other ways. For instance, small businesses are not required to pay redundancy to their employees. In addition, employees are required to be employed for at least 12 months before they are protected from unfair dismissal, as opposed to 6 months for larger businesses.
Although an employee can make an application under the General Protections provisions in Part 3-1 of the FW Act. This is usually not the most cost effective litigation employees can pursue. Commencing any sort of litigation or court action can be an expensive ordeal and in the event of a dismissal. If an employee pursues a General Protections claim and no resolution is reached in the Fair Work Commission, the employee may be facing tens of thousands of dollars in legal fees. This is because are then required to lodge their claim in the Federal Court or the Federal Circuit Court. In contrast, the unfair dismissal regime in the Fair Work Commission is a relatively cost-friendly process.
If you are seeking advice or representation, many firms or companies will offer their services on a no-win, no-fee basis. Or for a reasonable fixed fee. This allows greater access to justice for more people. Without fear that a great deal of money will need to be spent before a desirable outcome is achieved.
General protections are not consolation prize
Despite less jurisdictional criteria for a General Protections claim, lodging this application is not a consolation prize for when you are ineligible to lodge an unfair dismissal claim. This means that just because you may be unable to lodge an unfair dismissal due to not meeting the requirements, you cannot automatically lodge a General Protections claim. These two claims have very different arguments and cover different aspects of the FW Act.
Another downside to the Small Business Fair Dismissal Code is that it is not located in the FW Act or the Fair Work Regulations. The legal status of the Code is governed by a ministerial declaration pursuant to section 388(1) of the FW Act. Therefore, the content of the Code can be changed at any time without a need to amend legislation through the parliamentary process.
Small Business Fair Dismissal Code Only Deals with Termination for Cause
There are two types of dismissal dealt with by the Code. The first relates to summary dismissal of an employee based on ‘serious misconduct’ where the concept of reasonableness is central. The second concerns dismissal based on the employee’s conduct or capacity to perform their job.
Summary dismissal is when an employee terminates an employee’s employment without providing notice. The Small Business Fair Dismissal Code deems it to be fair to dismiss an employee without notice or warning. This if the employer believes, on reasonable grounds, that the employee’s conduct is sufficiently serious to justify termination. Such conduct may include:
- violence; and/or
- serious breaches of occupational health and safety procedures.
The FW Act does not require the employer to prove that the alleged conduct occurred. The employer may be required to provide evidence to prove that they held the belief. The employer must only establish that they had reasonable grounds to hold the belief. Such evidence may include inquiries or investigations that the employer undertook which may have resulted in the establishment of the belief.
The threshold requirements before a dismissal of this kind is deemed fair is decidedly lower under the Code than would normally be applied under the general unfair dismissal regime. It has even been described as presenting ‘a low bar for employers to hurdle.’ The Code achieves this by replacing the traditional factors relating to substantial and procedural fairness in dismissal with what appears to be a loosely articulated and undefined reasonableness requirement.
Ordinary Dismissal with Notice and Procedural Matters
In all other dismissal cases, such as dismissal for poor performance, the employer must provide the employee with notice or warning that they may be dismissed. The reason for the notice must be both valid and based on the employees conduct and/or capacity to their job. The Small Business Fair Dismissal Code states that, unless the employee is dismissed summarily, the employee must be warned that if he/she does not improve then they may be dismissed.
While the Small Business Fair Dismissal Code provides that the warning may be verbal. It is preferable if the warning is reduced to writing and it is prudent to keep copies of any documents in relation to the dismissal. As these documents may be required later on to prove the employer took the right actions to comply with the Small Business Fair Dismissal Code.
The employee then must be given a reasonable time in which to respond to the warning and/or rectify the problem/issue. This step may require the employer providing additional training and/or ensuring that the employee is fully aware of his/her job expectations. After reasonable time has lapsed, and the employer has not been satisfied by the employee’s response and/or progress, the employee may be dismissed. Aforementioned, the employee is not protected from unfair dismissal if the employer can demonstrate compliance with the Small Business Fair Dismissal Code. Do Small Business Employers Get Special Treatment in the FWC? the answer can be yes.
Employer cannot reasonably refuse the employee to have a support person present
In addition, the employer is required to ensure the dismissal procedure is carried out properly. That all documentation has been filled out. In discussions with an employee in circumstances where dismissal is possible, the employer cannot reasonably refuse the employee to have a support person present. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Small Business Fair Dismissal Code. This is if the employee makes a claim for unfair dismissal to the Fair Work Commission. Including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
These requirements are arguably a low bar set for small businesses. In Heather Munckton v Laser Bean Pty Ltd T/A Muzz Buzz,Commissioner Bissett of the Fair Work Commission has acknowledges the vulnerable position of small business in the context of human resource management procedures but maintains that this is not an excuse for not dismissing an employee in a professional manner. Her Honour stated the following:
“Despite the Respondent being a small business, I find the approach of Mr Stinean to employee management bewildering. While he accorded his customers respect and had concern for their needs he did not flow this through to his treatment of his staff. That he is a small business owner does not excuse the lack of civility and professionalism with how he communicates with and manages his employees”.Commissioner Bissett
Redundancies and Consultation in Small Business
Employees who have been dismissed because of a business downturn or their position is no longer needed cannot bring a claim for unfair dismissal. However, the redundancy needs to be genuine. Refilling the position with a new employee is not a genuine redundancy. The requirements for determining whether a dismissal was a genuine redundancy are contained in section 389 of the FW Act. Nevertheless, a small business is not required to pay out redundancy. In turn this can creates a financial burden on employees who have been dismissed by their small business employers.
No Excuses For Poor Dismissals and small business special treatment
Despite these clear problems with the Small Business Fair Dismissal Code. These comments by Commissioner Bissett reinforce the fact that there is a limit in which the Code will excuse small businesses. Nevertheless, the function of the Small Business Fair Dismissal Code may be redundant due to the overall apparent special treatment for small businesses.
Conclusion: Do Small Business Employers Get Special Treatment in the FWC?
Thank you for reading “Do Small Business Employers Get Special Treatment in the FWC?”, I hope it was informative. We are A Whole New Approach P/L. We are not lawyers, but the leading workplace advisors. AWNA are constantly striving for best practices, we leaders in commentary, research and representation. We are proud of our staff and the outcomes we get for our clients. All matters relating to Fair work Australia (FWC), including workplace investigations, resignations, and bullying, employment rights. Give us a call, advice is free, prompt and to the point. We keep it real. We have a questions and answers page that may be helpful.
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Another article that may be helpful reading on small business fair dismissal code options, click here
Another article on serious misconduct (a very common way of dismissing employees in small business), click here
Small business dismissal laws, click here
 Fair Work Act 2009 (Cth) s 387.
 Van Wyngaarden v David Hartree Design Associates Pty Ltd  FWC 6117 (29 August 2016) (C Johns) at .
  FWC 2874.
 Ibid at .
One of the nations leading workplace advisors, representatives and commentators. Gary has represented some 12,000 clients over some 20 plus years, published some 300 plus articles. He is passionate about employees rights and the test of fairness in the workplace. Have a problem, concern, wants to contribute to the debate or research, call him directly.