1 July 2009 start date for new fair dismissal code for small business
The Labor party proposes to replace the Howard Government’s WorkChoices regime in which every business with 100 employees or less is exempt from unfair dismissal laws.
Under the new scheme, which is intended to come into effect on 1 July 2009, a small business employer will be able to dismiss an employee with less than 12 months’ service at any time without consequence.
Once the 12 month period has passed, to fairly dismiss an employee, small business employers will have to comply with a new Fair Dismissal Code for Small Business which includes a checklist.
The two critical things that a small business employer must do to comply with the code are:
- Give the employee one warning, based on a reason that validly relates to the employee’s conduct or capacity to do the job; and
- Provide a reasonable opportunity for the employee to improve his or her performance.
Gillard claims "it is that simple". Multiple warnings are not required and while written warnings are desirable, they are not required.
Gillard also advises that employers can still terminate an employee’s employment without notice for serious misconduct for reasons including theft, fraud, violence and serious breaches of occupational health and safety procedures.
All unfair dismissal disputes will be handled by the new arbitration body Fair Work Australia, which Gillard says will use "fast and informal processes". Legal representation will be allowed only in exceptional circumstances.
Compensation will be capped at six months’ pay, with the full amount only available for the most serious cases. Interestingly, it appears that the focus will shift to compensation rather than reinstatement as the primary remedy.
This scheme however is not without political objection – including union objection. Nor has the legislation yet to be released. For this reason, small business should continue to watch this space over the coming months, with the legislation scheduled for release later this year.
By Lisa Anaf
Deacons is Australia's leading franchise law firm, with offices in Melbourne, Sydney, Perth, Brisbane, Canberra and in 11 locations in Asia. We have assisted over 200 franchise companies, from large international corporations to start up franchisors. We do not handle franchisee matters.
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