There’s a magic number which most owners of an Australian business would definitely know. Fifteen.
This is the golden number below which their employee head count should always be, to benefit from the more generous clauses set out in the ‘Small Business Fair Dismissal Code’.
WHAT IS THE CODE?
It’s simple. Small businesses with less than fifteen employees have different rules for dismissing employees. The Code protects small businesses from unfair dismissal claims – as long as that employer has followed the fair and reasonable steps set out the legislated guidelines.
In the code, there is a checklist. This takes the employer through a step by step guide, in assessing and recording reasons for terminating an employee. It supports the employer in understanding their procedural obligations and how to best be compliant. In so doing, it protects both their business and their credibility.
WHAT IS THE BENEFIT?
Small business employees cannot make a claim for unfair dismissal in the first 12 months following their engagement. If an employee is dismissed after this period, and the employer has followed the Code, then dismissal is deemed to be fair.
WHAT IS THE CATCH?
Keep your head-count under fifteen! Here is how the Australian Small Business Fair Dismissal Code defines small business:
A small business is defined as any business with fewer than 15 employees.
To figure out whether a business is a small business, count all employees employed at the time of the dismissal including:
- the employee and any other employees being dismissed at that time
- regular and systematic casual employees employed by the business at the time of the dismissal (not all casual employees)
- employees of associated entities, including those based overseas.
The size of the business is counted the earliest of:
- when the employee is told their employment has been terminated, or
- when the employee is given their notice of termination.
WHAT’S THE BEST ADVICE?
Be smart. Follow the code, and document all the circumstances on the journey to dismissing an employee. The Fair Work Commission loves to see hard evidence and procedural fairness when faced with a claim. Do your best to follow the protocol and always seek specialist support if you’re unsure. It will stand you in good stead.
Here at #HR, we often see the consequences - and the costs - of poor judgement and all-too-common oversights. All could easily be avoided. We know that dismissing an employee is never easy. So stick to the magic number – and protect yourself.