The Unfair Dismissal Rules that Apply to Small Businesses

Be aware of the unfair dismissal rules that apply to small businesses.

If you are a small business within the definition of the Small Business Fair Dismissal Code (Code), it is very important that you are aware of the rules that govern your ability to dismiss an employee.

Likewise, in the event that your business is considering dismissing an employee, it is very important that you have strategy in place for the purpose of managing the risk that the relevant employee might bring an unfair dismissal claim against you.

The following general comments can be made in relation to the unfair dismissal rules that apply to small businesses under the Code:

1. The Code defines a small business as a business that employs fewer than fifteen (15) employees.
2. Employees of a small business are not able to make a claim for unfair dismissal in the first twelve (12) months following the commencement of their employment.
3. If an employee of a small business is dismissed after the first twelve (12) months following the commencement of their employment, the dismissal will be deemed to be fair if the employer has followed the procedure that is set out in the Code.
4. Employees of a small business employees are, on the other hand, able to make a claim for unfair dismissal after the expiry of the first twelve (12) months following the commencement of their employment.

Whilst the question of whether a dismissal is fair depends on all of the circumstances, the following general comments can be made:

1. It will be regarded as fair for an employer to summarily dismiss an employee, without first giving the employee any notice or warning, when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Examples of such serious misconduct include theft, fraud, violence and serious breaches of occupational health and safety procedures.
2. In cases not involving serious misconduct:

• The employer must give the employee a valid reason (based on the employee’s conduct or capacity to do the job) as to why he or she is at risk of being dismissed.
• The employer must warn the employee verbally in or writing that he or she is at risk of being dismissed if there is no improvement. Needless to say, a written warning is preferable.
• The employer must give the employee a sufficient opportunity to respond to the warning and rectify the problem that has given rise to the warning being given. Part of the process of giving the employee an opportunity to rectify the problem might involve the employer providing the employee with additional training, and/or ensuring the employee knows what the employer’s job expectations are.

3. If the allegations against the employee warrant an investigation (for example, allegations of bullying or harassment made by another employee, allegations of theft or dishonesty, etc.), then it is advisable that the employer to engage a professional HR firm to carry out the investigation. This is a sensible approach for the employer to take for the following reasons:

• This ensures that the investigation is carried out professionally, independently, and at arm’s length from the employer;
• the professional HR firms that carry out these investigations have established protocols in place for the purpose of ensuring that procedural fairness is given to all parties to the complaint;
• The employer can later point to the fact that the investigation was outsourced to external HR firm in response to any allegations that the investigation was carried out in a way that was biased against the relevant employee; and
• If after completing their investigation the professional HR firm reports back with a finding that the allegations against the relevant employee have substance and with recommendations for the next steps, the employer can point to the above factors to justify the next steps that are to be taken.

Our Litigation Team are able to provide you with advice that is specific to your circumstances in relation to any issues concerning unfair dismissal which you may have.

Feel free to contact our office today to make a confidential appointment with a Lawyer from our Litigation Team.