Complying with the Small Business Fair Dismissal Code when dismissing an employee increases your chances of successfully defending against a claim of unfair dismissal (but doesn’t guarantee success).

 

What is the code and whom does it cover? 

The code applies to small businesses with fewer than 15 employees. The total comprises “a simple headcount of all employees, including casual employees employed on a regular and systematic basis”. It includes the dismissed employee. 

Employees who have worked for the employer for less than 12 months, and those genuinely made redundant, cannot claim unfair dismissal. “Genuinely redundant” means either there has been a downturn in business or the job is no longer required; it does not apply if the employer hires another employee to perform the same or a similar role. 

The actual code is a brief document, comprising only six paragraphs and a checklist of 10 questions. It is not mandatory to complete and sign the checklist; however, it is strongly recommended to do so at the time of dismissing the employee. If a claim of unfair dismissal later arises, the employer will have to provide proof of compliance with the code – see further discussion below. 

 

Contents of the checklist 

The 10 questions seek the following information: 

Question 1

Asks how many employees the business has, to determine whether the code applies in this case. 

Question 2

Determines whether the employee is eligible to make a claim of unfair dismissal. 

Question 3

Asks whether the employee was made redundant. If yes, the employee cannot make a claim of unfair dismissal and the employer does not have to comply with the Code. But it also asks whether the employer complied with any consultation requirements (eg set out in an award or enterprise agreement) and whether redeployment of the employee was considered. 

Question 4

Lists the main reasons for dismissal for serious or wilful misconduct. If any of these apply, the employer does not have to comply with the Code. It is sufficient, but not essential, that an allegation of theft, fraud or violence be reported to the police. However, you must have reasonable grounds for making the report. 

Question 5

Asks the employer to list any other reason for dismissal for serious misconduct. 

 

If an employer answered “yes” to any of Qs 3, 4, or 5, the remaining questions of the Code need not be answered. 

Question 6 

Asks if the employee requested to have a support person present at any discussion about possible dismissal, and Q7 asks whether the employer agreed to that request. 

Question 8

Applies to dismissal for unsatisfactory conduct, job performance, or capacity to do the job. It covers the “procedural fairness” issues: whether the employee received an official warning, whether they were given time to improve performance or conduct, whether training and other assistance were provided, whether the employee’s performance or conduct subsequently improved, whether the employee was told the reason for dismissal, whether they had an opportunity to respond, and whether the employer kept records of warnings and other discussions about performance or conduct. 

Question 9

Asks the employer to provide any other reason for dismissing the employee. 

Question 10

Asks whether the employee voluntarily resigned or abandoned their employment. 

Finally, the employer needs to sign a declaration that the information recorded on the checklist is true. You can view the code here.

 

Completing the checklist is not a guarantee: evidence required 

Merely completing the code checklist and signing the declaration of compliance is not enough. If the Fair Work Commission (FWC) receives an unfair dismissal claim, it can require an employer to provide documentary evidence of compliance. This means you should still keep documentary evidence, such as: 

  • copies of written warnings 

  • minutes of meetings 

  • witness statements 

  • evidence of unsatisfactory performance such as work records 

  • reports of investigations 

  • other relevant correspondence. 

Therefore, do not complete the code checklist unless you have actually carried out all the steps it contains and can prove it. The FWC may elect to accept the code declaration without further investigation, but there is no guarantee of that. If it does accept the code was complied with, then this will act as a jurisdictional hurdle for employees and will prevent their claim from progressing further.