Fair Work Act 2009 - Declaration under subsection 388(1) - Small Business Fair Dismissal Code

The Small Business Fair Dismissal Code is a legislative instrument made under the Fair Work Act 2009. It is not a separate employment Act. Its function is to declare the attached Code that applies within the unfair dismissal framework for small business employers.

The instrument states that the attached Code is the Small Business Fair Dismissal Code and that it came into operation on 1 July 2009. The current register entry shows the instrument as in force. For business owners, the practical point is that this is a legally significant dismissal standard for eligible small employers, not just a general HR guide.

The Code is written in short terms, but it has real practical consequences. It sets out what a small business employer should do before dismissing an employee, what can justify immediate dismissal, what process is expected in other cases, and what evidence may need to be produced if the dismissal is later challenged as unfair.

The Code is directed to small business employers for unfair dismissal purposes. A key practical point is timing. The relevant question is whether the employer is a small business employer at the time of dismissal. Businesses should not assume the Code applies just because they were small when the employee was hired or when the issue first arose.

If your workforce size has changed, check your position before taking dismissal action. If your business is not within the small business unfair dismissal framework at the time of dismissal, the Code may not be the right process to rely on. In that case, the broader unfair dismissal rules may need to be considered instead.

This page is aimed at employers who may fall within the small business dismissal framework and need to understand the minimum process set out by the Code itself. Because the Code sits inside the Fair Work Act system, businesses should also confirm that they are looking at the right legal framework before acting.

The Code deals with two broad dismissal pathways. The first is summary dismissal, where the employer dismisses without notice or warning because the conduct is believed to be serious enough to justify immediate dismissal. The second is other dismissal, which covers cases where the issue is the employee's conduct or capacity to do the job and the matter is not serious enough for instant termination.

Choosing the right pathway matters. If the conduct is not sufficiently serious, a business should not treat the matter as summary dismissal. In those cases, the Code expects a valid reason, a warning, an opportunity to respond, and a reasonable chance to rectify the problem.

The Code also includes procedural rules for discussions where dismissal is possible and evidence requirements that become important if the employee later makes an unfair dismissal claim. In practice, businesses should decide early which pathway they are following and document the steps taken under that pathway.

The Code says it is fair for an employer 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.

The Code gives examples of serious misconduct. These include theft, fraud, violence and serious breaches of occupational health and safety procedures. These examples show the kind of conduct the Code treats as potentially serious enough for immediate termination.

The Code also says that, for a dismissal to be deemed fair, it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. The employer must still have reasonable grounds for making the report. This means a police report can support the employer's position, but it is not automatically required in every case and it does not remove the need for reasonable grounds.

In practice, a business considering summary dismissal should pause and ask whether it can point to reasonable grounds for its belief. The Code does not say that mere suspicion is enough. It is safer to identify the conduct clearly, record what information the business relied on, and keep documents that show why immediate dismissal was considered justified.

For dismissals that are not summary dismissals, the Code sets out a clear minimum process. The small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned, verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The Code then requires the employer to provide the employee with an opportunity to respond to the warning and to give the employee a reasonable chance to rectify the problem, having regard to the employee's response.

The Code gives practical examples of what rectifying the problem might involve. It might include the employer providing additional training and ensuring the employee knows the employer's job expectations. This shows that the process is not only about issuing a warning. It is also about giving the employee a real chance to improve.

For many small businesses, the risk point is informality. A conversation that feels obvious to the owner may not be enough if it does not clearly communicate the valid reason, the risk of dismissal, and the chance to improve. Written warnings are not mandatory in every case, but the Code expressly says they are preferable, and they are much easier to prove later.

The Code includes a specific procedural rule for discussions with an employee where dismissal is possible. In those discussions, the employee can have another person present to assist. However, that other person cannot be a lawyer acting in a professional capacity.

For employers, this means dismissal meetings should be approached carefully. If the discussion could lead to termination, it is sensible to treat it as a Code meeting and allow the employee to have a support person who fits within the rule. Keeping a note of who attended and what was discussed can help if the process is later questioned.

This procedural step does not replace the need to follow the substantive requirements of the Code. It sits alongside the warning, response and improvement requirements in non-summary cases, and alongside the reasonable grounds requirement in summary dismissal cases.

The Code expressly says that a small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal. In other words, the process is not just about what happened. It is also about what the employer can prove happened.

The Code gives examples of evidence that may be used. These include a completed checklist, copies of written warnings, a statement of termination or signed witness statements. In non-summary dismissal cases, evidence that a warning was given is specifically mentioned. The Code notes an exception for summary dismissal cases, where a warning is not required.

For a business owner, this means record-keeping should be built into the dismissal process from the start. If a warning is given, keep a copy. If a meeting occurs, make a note of the date, attendees and key points. If the employment ends, keep the termination statement and any supporting documents. Good records do not guarantee a result, but poor records make it much harder to show that the Code was followed.

The Code is best read as a minimum process for eligible small business employers dealing with unfair dismissal risk. It does not say that every employment issue can be solved by following only these steps, and it should not be treated as overriding other workplace laws or your contractual obligations.

Before relying on the Code, a business should check at least four things. First, whether it is a small business employer at the time of dismissal. Second, whether the matter is truly a summary dismissal issue or instead a conduct or capacity issue requiring warnings and a chance to improve. Third, whether the employee has been allowed a support person in discussions where dismissal is possible. Fourth, whether the business has enough documents to show what happened.

Businesses should also make sure their employment contracts, policies and internal procedures do not create additional steps that need to be followed. The Code can be central to the unfair dismissal analysis, but it is not the only document that may matter in a workplace dispute.

The instrument states that the Small Business Fair Dismissal Code comes into operation on 1 July 2009. The declaration is dated 24 June 2009. The current register entry identifies the instrument as F2009L02570 and shows it as in force.

Because workplace law can change over time, businesses should check the current register entry and the current Fair Work Act position before relying on this page for a live dismissal decision.

This page is based on the Federal Register of Legislation entry for the Fair Work Act 2009 - Declaration under subsection 388(1) - Small Business Fair Dismissal Code, including the text of the attached Code. The instrument is identified on the register as F2009L02570 and is shown as in force.

The page focuses on what the instrument itself says. Businesses should still check the broader Fair Work Act framework and their own workplace documents before acting on a dismissal.