Do you know if the small business fair dismissal code protects you?

What is it, and what does it actually give you?

The code applies to businesses with fewer than 15 employees. It doesn’t stop an employee from making an unfair dismissal claim, and it never will. What it does is give you a clear standard to follow, and if you’ve followed it, that’s strong evidence your dismissal was fair.

There’s a second benefit tied to business size too. Employees at a small business need 12 months of service before they can bring an unfair dismissal claim at all, compared to six months at a larger employer.

That cuts both ways, though. It doesn’t mean you have unlimited time to deal with someone who isn’t working out. If you’re approaching that 12-month mark with an employee you have concerns about, timing becomes something you need to actively manage rather than assume you have plenty of.

The Fair Work Commission also recognises that a 12-person business won’t have the same HR resources or specialist expertise as a large corporation, and that recognition is built into how dismissals are assessed. It isn’t an exemption from following a fair process. It’s an acknowledgment that the process might reasonably look a little different depending on the size of the business.

Are you covered?

Before relying on any of this, work out whether you actually qualify. Fewer than 15 employees sounds simple, but the headcount includes more than just your permanent staff on the books. Run through the checklist below.

	Total headcount is under 15 This includes the employee you’re dismissing, not just the people staying on.
	Regular and systematic casuals are counted Not just your permanent staff. A casual working consistent shifts counts toward your total.
	Employees of associated entities are counted too Related companies and franchise structures are often assumed to count separately. They don’t.

Get any of these wrong and you could be relying on a protection that was never actually available to you.

You’re covered by the code, what next?

Once you know the code applies to you, it splits into two different tracks depending on why you’re dismissing someone.

For serious misconduct, you need a genuine and reasonable belief that the conduct was serious enough to justify immediate dismissal, based on the information available to you at the time. That belief still has to be tested, not assumed. Even when conduct looks obvious, such as an employee who appears intoxicated at work, you still need to put the allegation to them before deciding. There could be a medical explanation, medication, or something else you’re not aware of, and you simply don’t know until you ask.

For everything else, the standard is different. You need a valid reason, a warning that dismissal could follow if things don’t improve, and a reasonable opportunity for the employee to actually improve.

Whichever pathway applies, the same two things carry across both. Offer a support person, and keep a clear record of what you did and when.

What isn’t covered by the code

Being a small business doesn’t protect you from every type of claim. The code is only relevant to unfair dismissal.

It has no bearing on general protections claims, discrimination, bullying, or underpayment, and those can carry greater exposure with no minimum service period attached at all.

Take a casual employee who goes on maternity leave, where the busy period she was hired for will have ended by the time she’s due back. Ending her employment while she’s on leave might look like a straightforward business decision, but it sits squarely in general protections territory, and following the small business code wouldn’t touch that risk at all.

A dismissal that’s clean under the code can still land a business in front of the Commission on a completely different basis.

How to use the code

If you’re under 15 employees, the code works best as a checklist, not an insurance policy. It doesn’t guarantee an outcome, and it isn’t something you can point to after the fact and expect it to do the work for you.

That’s the real value of the code: not the document itself, but the discipline of building a record as you go.

If you want to go deeper on any of this, watch the on-demand recording of our Termination without tears webinar, or get in touch with Citation HR for a walkthrough of your own termination process before you need it.