Dismissal rules for small business owners

If you dismiss an employee, they may contact us with an unfair dismissal claim. When we deal with their application, we check if your actions followed the Small Business Fair Dismissal Code.

The Code is for national system employers that meet the definition of 'small business' in the Fair Work Act.

This definition says that you are a small business if you employ fewer than 15 people. 'Fifteen people' refers to the number of individuals, not the full-time equivalent number. It includes:

• casuals who work for you on a 'regular or systematic basis'
• the person you dismissed.

Find out if you are a national system employer at Who Australia's Fair Work system covers.

If the case goes to a hearing, you need to show us you followed the Code. To do this, you may have to give us evidence such as:

• a copy of one or more written warnings you gave the employee
• a copy of the checklist that is in the Code
• the ‘statement of termination’ you gave the employee
• signed statements from witnesses who support your evidence.

When you respond to the claim, you may have a good reason to Object to an application for unfair dismissal.

Even if you explain that you have followed the Code, we may:

• invite you to take part in a conciliation with the employee
• hold a hearing or conference if the conciliation does not happen or is unsuccessful.

See section 385 and section 388 of the Fair Work Act 2009.

The Code allows you to dismiss any employee without notice or warning only if you believe the employee’s actions are ‘serious misconduct’.

Examples of serious misconduct:

• theft
• fraud
• violence
• sexual harassment
• serious breaches of occupational health and safety procedures.

You need to believe:

• the employee was the person who took the actions
• the conduct was serious
• the conduct justified immediate dismissal.

You may also need to prove to us that you believe these things. To do this, you can show us evidence of your enquiries or investigations to try and confirm your belief.

If there is no serious misconduct, you must have warned the employee that they are at risk of dismissal and give them a reason. The reason must be based on:

• a problem with their behaviour or conduct
• their ability or capacity to do their job.

Then, you must give the employee a chance to fix the problem or improve their capacity to do their job. This may mean you need to give the employee extra training or make sure they know what you expect them to do.

To check you understand the definition of 'employee', see Who the law protects from unfair dismissal.

Contact the Fair Work Ombudsman if you have questions about the Code, or how to follow it.

We cannot answer questions about the Code or give you legal advice. Find out where you can find legal advice.