The Small Business Fair Dismissal Code applies to employers with fewer than 15 full time equivalent employees. If a dismissal is consistent with the Code the employee is deemed not to have been unfairly dismissed.

Accompanying the Code is a Checklist designed to help employers comply with the Code.

In response to comments from Fair Work Australia that the Checklist was “deficient” and “of dubious value as a determinant of whether the Code has been complied with”, the Federal Government has amended the Checklist and preamble which accompany the Code. The changes, made on 16 July 2010, address uncertainties surrounding the presence of support persons during employee dismissals, and redundancies.

The original version of the Checklist was strongly criticised by Senior Deputy President Matthew O’Callaghan in Mr N v The Bakery (U2009/13348). The applicant Mr N, came from Hungary and had limited English language skills. He had been employed by The Bakery for three and a half years when his employment was terminated on the ground that he had falsified his hours worked.

The Bakery management organised a meeting to dismiss Mr N, prior to which they had sought to follow the Checklist for fair dismissal. At the meeting, Mr N was shown CCTV evidence proving the falsification of his time entries. Crucially, however, he was not offered the opportunity to have a support person present at the meeting. The Code requires that employers comply with section 387(d) of the Fair Work Act 2009 which states that in considering whether a dismissal was harsh, unjust or unreasonable, FWA must take into account:

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.

SDP O’Callaghan concluded that although Mr N did not request a support person, and his behaviour amounted to misconduct “marginally short of serious misconduct”, the fact that he was not offered the opportunity to have a support person was “a factor mitigating towards unfairness in the process”. His Honour was satisfied that The Bakery management had complied with the Checklist as far as was practicable. However, because the Checklist omitted to mention the requirement to reasonably allow the presence of a support person in discussions relating to dismissal, The Bakery had not complied with the Code despite their best intentions.

Fortunately for The Bakery, the dismissal of Mr N was found not to be harsh, unjust or unreasonable in light of all the circumstances. Nevertheless, the deficiencies of the Checklist were made abundantly clear by these proceedings.

The revised Checklist features new questions relating to support persons, which ask:

In any discussion with the employee where dismissal was possible, did the employee request to have a support person present, who was not a lawyer acting in a professional capacity? and If yes, did you agree to that request?

The Checklist and the preamble to the Code have also been changed to address criticisms from FWA Vice President Graeme Watson in relation to redundancies. The preamble now informs employers that where employees are made redundant, the requirements for a genuine redundancy are contained in section 389 of the Act, and directs employers to a question in the Checklist, which asks:

Did you dismiss the employee because it was a genuine redundancy? 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?

Importantly, a new introduction accompanying the Checklist sounds a warning about its usefulness for ensuring compliance with the Code by stating:

Completing the checklist does not mean that the Code has been complied with, nor is it a requirement of the Code that the checklist be completed.

The amended Checklist does clarify the obligations of employers under the Code. However, it is still of utmost importance for small business employers to be aware of their obligations under the Code and strictly comply with them in order to minimise the risk of claims of unfair dismissal.

To view the Code and Checklist, go to www.fwa.gov.au