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Complying with Fair Dismissal Requirements in Your Australian Small Business

Just like any relationship, employment relationships will eventually end. Some end amicably, others not so well. You want to make sure the departure of staff doesn’t cost your small business more than you bargained for. In Australia, unfair dismissals will put a hole in your bank balance, so take care to heed these lessons.

  • A Small Business Fair Dismissal Code applies to small business employers with fewer than 15 employees. Small business employees can’t claim that they were unfairly dismissed if they are dismissed in the first 12 months of employment.

  • If an employee of a small business is dismissed after the 12 month qualifying period they may apply for reinstatement or compensation for unfair dismissal.

  • A small business employee’s dismissal (after 12 months employment) will be consistent with the Small Business Fair Dismissal Code if you do the following:

    • Except where summary dismissal is justified, you must give the employee a reason why he or she is at risk of being dismissed.

    • Have a valid reason for the decision to dismiss based on the employee’s conduct or capacity to do the job.

    • Warn the employee (preferably in writing), that he or she risks being dismissed if their work performance or conduct does not improve.

    • Provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem. This might include you providing additional training and some revision on the job expectations.

    • In discussions with the employee where dismissal is a possible outcome, he or she is entitled to have a support person (not a lawyer) attend the meeting.

In reality, the obligations are basically the same obligations that are imposed on all employers, large and small. The lesson is: Make sure you provide evidence that you have complied with these criteria and demonstrate that your business fits the definition of a small business at the time the employee was dismissed. If you can do this, the dismissal will be consistent with the Code and you shouldn’t be paying the employee any more money.

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