In response to some recent decisions of Fair Work Australia, the Government has made a number of changes to the Small Business Fair Dismissal Code Checklist ('the Checklist'). It is prudent that small businesses are aware of the changes made to the Checklist as the changes may affect their current procedures relating to termination of employees, particularly redundancies.

For the purposes of the Code, a small business is a business which employs less than 15 full time equivalent employees (including casual employees who work on a regular and systematic basis). The Small Business Fair Dismissal Code Checklist ('the Code') came into effect on 1 July 2009. Primarily, the Code provides:

  • The doubling of the minimum employment period from 6 to 12 months, during which time employees cannot take a claim for unfair dismissal
  • A short and simple Fair Dismissal Code which, if followed by the small business owner, will ensure a dismissal is not unfair.

Fair Work Australia has developed the Checklist to give some guidance to small business owners on how they need to approach problems where they may need to consider terminating or retrenching employees. The preamble to the Checklist and the Checklist itself can be accessed using the following link (part of the Fair Work Australia website):

http://www.fairwork.gov.au/Termination-ofemployment/Documents/Small-Business-Fair-Dismissal-Code.pdf.

The key changes implemented on 16 July 2010 relate to redundancies and the rights of an employee to have a support person present during discussions about potential performance or redundancy issues.

The following is a summary of the recent changes made to the Code's checklist:

  • The Checklist now refers to section 389 of the Fair Work Act 2009. This section provides the requirements for employers to determine whether a dismissal was a genuine redundancy. It is important that in addition to completing the checklist that employers ensure all requirements set out in section 389 of the Fair Work Act 2009 have been complied with prior to making final decisions on the retrenchment of employees
  • Previously, the Checklist simply asked employers to answer 'Did you dismiss the employee because it was a genuine redundancy?'. This has been expanded to include; 'In other words, was the dismissal because you didn't require the person's job to be done by anyone because of changes in the operational requirements of your business?'
  • Further to the questions regarding redundancy, the checklist includes a question which is intended to remind small business owners that employees or their representatives must be consulted, in accordance with consultation clauses provided for in modern awards, prior to decisions regarding redundancy
  • One further change made to the Code was to highlight the importance of employees being afforded the opportunity to have a support person present during discussions relating to possible terminations.

Whilst the Checklist is an excellent guide in assisting small business owners to develop employment practices relating to termination and redundancy in line with the legislation;

the preamble to the checklist now clearly states that 'completing the Checklist does not mean that the Code has been complied with' and that the purpose of the document is to simply to 'help small business employers assess and record their reasons for dismissing an employee'.

We can provide assistance to you or your small business clients with respect to compliance with the Fair Work Act 2009 and / or development of employee management practices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.