New Fair Dismissal System for Small Business announced

By Adrienne Unkovich, MD, Workforce Guardian – Australia’s number one online employment relations service

Australian Federal Workplace Minister – Julia Gillard has announced the new process for unfair dismissals which includes special arrangements for small business which require a warning and time for the employee to change their behaviour. The changes are expected to come into effect in July 2009.

Under the proposed laws, an employee of a small business (defined as having less than 15 employees) will be able to claim for unfair dismissal after they have been employed for at least 12 months.

To dismiss someone fairly after 12 months the employer will have to comply with the new Fair Dismissal Code for Small Business and whilst not mandatory, a checklist has been developed to help small business employers comply with the code.

For businesses with more than 15 employees a claim can be made after 6 months of employment.

See the Fair Dismissal Code Checklist

Warnings and “chances”

The employer must give the employee a valid reason, based on the employee’s conduct or capacity to do the job, why the employee is at risk of being dismissed, except in the case of serious misconduct where no warning is required.
• Only one warning is required. While it is not mandatory for it to be in writing that is strongly recommended.
• The employer must give the employee a ‘reasonable chance’ to respond and rectify the problem, which may include additional training and ensuring the employee knows the employer’s expectations.

Fair Dismissal Process

•Unfair dismissal claims must be lodged with Fair Work Australia within 7 days.
•Fair Work Australia will be able to make initial inquiries and discuss issues directly with the Employer and the Employee and will not allow legal representation unless in exceptional circumstances.

A remedy of reinstatement or capped compensation

•Reinstatement will be the primary remedy unless it is not in the interests of either party
•Where reinstatement is not feasible compensation may be ordered to a maximum of six months pay.

Exemptions:

Employees who have been dismissed because of business downturn or because their position is no longer needed cannot bring a claim for unfair dismissal provided there are genuine operational reasons for the redundancy.

Summary dismissal

A dismissal without notice or warning, often called a ‘summary dismissal’, is also covered in the code. The employees conduct must be sufficiently serious to justify immediate dismissal e.g. sufficiently serious cases of theft, fraud, violence or breaches of occupational health and safety procedures.

What should you do?

Regardless of the size of your business it’s important that employers you start preparing for the changes now. Ensure you have:
• Employment contracts in place for ALL employees that comply with current Australian Employment Law.
• Workplace rules and policies describing the behaviour that is expected of your employees and the circumstances that may result in summary dismissal.
• A disciplinary procedure which has been clearly communicated to all your employees.

Want to know more?

More information and insight can be obtained from Workforce Guardian. Australia’s most comprehensive inexpensive online employment relations service that helps employers navigate confusing employment law in order to properly hire, manage and exit employees:

• Fully compliant Employment Contracts and Independent Contractor Agreements – easy and quick to create using an interview style format,
• Step-by-step employment processes and legally compliant document templates such as employee evaluation forms and employee termination forms,
• Central and secure round the clock storage of sensitive employee information,
• Expert employment relations advice when needed,
• Verified by Clayton Utz and available via the web 24/7.

Disclaimer
This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article