The Fair Work Act which took effect on 1 July 2009 substantially changed the landscape for unfair dismissal law in Australia.

For employers who are deemed to be "Constitutional Corporations" (most commonly known as "Pty Ltd" companies) then if those employers employ more than 15 full time employees then, they are bound to follow the unfair dismissal regime which is set out in the Act.

One of the big traps which we are now seeing small employers with less than 15 full time employees are failing to understand the Small Business Fair Dismissal Code. The Government set in place special unfair dismissal arrangements which apply to small businesses which although simplifying the dismissal process for a small business also set in place important considerations for employers who may wish to terminate an employee.

The benefits are that small business employers will get: -

(a) A minimum period of 12 months in which employees cannot make unfair dismissal claims from the commencement of their employment. This is normally 6 months for other employers.

(b) The Fair Dismissal Code to provide a checklist to ensure that dismissals are not unfair; and

(c) A specialist service for small and medium size businesses from the Fair Work Ombudsman.

We have attached a copy of the Code in a link to this report together with a copy of the statement issued by the Australian Government concerning the Unfair Dismissal System and its impacts on small businesses.

From 1 January 2011 the 15 "full time employees" test will go and a simple 15 employee headcount will operate.

The Code is easy to follow and we recommend that any small businesses with under 15 full time employees urgently adopt the Code and, to the extent that you have any questions in relation to this please do not hesitate to contact Tom Ellicott who leads the Business and Commercial Law Practice Group.

Small Business Fair Dismissal Code

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A simple, fair dismissal system for small business

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