The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has handed down a comprehensive review of the Small Business Fair Dismissal Code, recommending a suite of changes to help small business employers meet their obligations.
And the recommendations have drawn support from both the Franchise Council of Australia (FCA), and the National Retail Association (NRA).
Following a review of the code, Carnell said “Put simply, the Small Business Fair Dismissal Code in its current form, is not working in the way it was originally intended.”
Carnell said most small business operators are well-intentioned but get caught by ambiguity and complexity.
“The recommendations in this review aim to give small business operators clear guidelines to deliver certainty around complying with the code.
“Importantly – the recommended amendments and checklists are designed to guide a small business employer through a fair dismissal process, not to make the dismissal process easier.”
FCA and NRA support small business fair dismissal recommendations
Both FCA CEO Mary Aldred and NRA CEO Dominique Lamb agreed the code’s intricacies have caused unnecessary expense for small business owners.
“The complexity of the code has resulted in too many small businesses being dragged into costly unfair dismissal hearings and it’s critical to set out clear expectations for employers in such situations,” said Aldred.
As Lamb pointed out “A small business owner doesn’t have the financial war chest to engage in costly legal action, nor do they have support structures such as HR departments or in-house lawyers that big business has access to.
“Hiring and retaining good staff members is something that every small business places a premium on and often the decision to let an employee go is the last resort.
“A more simplified set of laws would result in fewer unfair dismissal applications to the Fair Work Commission, which is in the interests of small business owners and employees alike,” she said.
Carnell pointed out that figures released by the Fair Work Commission, during the first three months of this year, revealed it received 3,583 unfair dismissal applications.
“Most were settled during mediation but for the 172 cases that were presented to the Commission, 111 (65 per cent) were dismissed because they were without merit or deemed legally invalid, meaning they should not have gone to the Commission in the first place,” she said.
“By taking the ambiguous language out of the Code such as ‘reasonable grounds,’ ‘valid reason,’ and ‘reasonable chance’ and improving the checklist questions, small businesses will be in a much better position to comply.
“We want the Code to work, so that small businesses are doing the right thing and there’s less need to engage lawyers,” Carnell said.
Recommendations
- Amendments to ensure the code meets its intended functions and objectives and provides certainty on what is required of small business employers to ensure a dismissal is fair
- Defining what is serious misconduct
- Improving small business education and awareness in relation to the Code and checklists to help them meet their obligations
- Clarifying the unfair dismissal claims process for small business employers and employees
Aldred said the suggested changes would “provide clarity and fairness for all parties in a contested dismissal situation”.