Employment Law Spotlight on Dismissal Rules - Rules Vary for Small Businesses

13th July 2020


  • Michelle Cowan, Senior Associate, Active Law, talks about key provisions around employment dismissals.
  • The requirements for dismissal for small businesses employing less than 15 employees are reduced under certain circumstances, making them less onerous.
  • Read more to find out the special circumstances and how the rule might change for your business or employees.

Many employers (and employees) are not aware that the Fair Work Act 2009 (Cth) (the Act) reduces the requirements for small businesses in some circumstances. In this article, we look at those variations and what it means for your small business.

For the purposes of the Act, a small business is one that has fewer than 15 employees at the time a relevant event occurs. Any associated entities of the business concerned will be included in the business for the purpose of the employee headcount. The count includes all permanent and fixed term employees as well as any regular casual employees, including any person being dismissed.

Being defined as a small business under the Act means that decisions relating to dismissal and redundancy obligations are less onerous. However, there are still obligations that must be complied with if you don’t want to risk a finding against your business.

Minimum employment period

The minimum employment period is a period allowed for in the Act in which an employee does not have access to the jurisdiction to raise an unfair dismissal claim against their employer. Whilst businesses generally have 6 months to make decisions about the ongoing employment relationship, a small business employer has 12 months.

Determining an unfair dismissal

To determine that a person has been unfairly dismissed, the FWC must be satisfied that:

(a)      the person has been dismissed; and

(b)     the dismissal was harsh, unjust or unreasonable; and

(c)      the dismissal was not consistent with the Small Business Fair Dismissal Code (the Code); and

(d)     the dismissal was not a case of genuine redundancy.

An employee's dismissal is consistent with the Code if immediately before the dismissal or at the time the employee was given notice of the dismissal (whichever happens first), the person's employer was a small business employer, and the employer complied with the Code.

Dismissal under the Code

In non-summary dismissal cases outside of the minimum employment period, an employee must be warned that if there is no improvement to their conduct or capacity, they could be dismissed from their employment. The employee must be given a valid reason why their employment is at risk, based on their conduct or capacity to do the job.

The employer must give the employee an opportunity to respond to the warning and a reasonable chance to correct the problem. The employer may need to provide additional training and support to ensure the employee understands the employer's job expectations.

Procedural considerations

During discussions between the employer and employee about possible dismissal, the employer must allow the employee to have another person present to assist them. However, this person cannot be a lawyer acting in a professional capacity.

If an employee files a claim with the FWC, that they have been unfairly dismissed, the employer will have to show the FWC they have complied with the Code.

Summary dismissal

Under the Code it is fair to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct will be actions like theft, fraud, violence and serious breaches of workplace health and safety procedures. The FWC does not have to make a finding on the evidence about whether the conduct occurred but rather, needs to find whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal.

An employer must be able to demonstrate that they did in fact hold the belief that the employee engaged in the alleged serious conduct and that immediate dismissal was justified in the circumstances. The employer must be able to present evidence of the inquiries or investigations they to form their belief.


A small business employer is also not required to redundancy pay when making an employee’s position redundant. A link to the Fair Work Ombudsman’s information about the Small Business Fair Dismissal Code is included. The document explains the Code and provides a checklist for termination of employment. 

Whilst the Code appears simple to understand, a surprising number of employers make decisions without applying the Code and retaining evidence. We recommend if you are not sure of your obligations before you decide to dismiss an employee, that you get legal advice for an experienced employment lawyer. Active Law can assist you with performance management and dismissal decisions and you ca reach us at (07) 3160 0000 or [email protected]



Reliance on content the material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.


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