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.
“Put simply, the Small Business Fair Dismissal Code in its current form is not working in the way it was originally intended,” Ms Carnell said. “It is ambiguous and open to interpretation, particularly by lawyers, which means too many small businesses are being pulled into unfair dismissal hearings which are costly and impact productivity.“
Ms Carnell stressed that the recommendations in this review aim to give small-business operators clear guidelines to deliver certainty around complying with the code and that 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.
The ASBFEO also noted that small businesses do not make the decision to end a worker’s employment lightly, citing research by the Fair Work Commission which found one of the key challenges for small-business operators was attracting and retaining good staff and that good employees were highly valued.
“Small businesses can’t afford to engage in costly and stressful legal action. They don’t have the support of an HR department when faced with the difficult decision to end a staff member’s employment,” Ms Carnell argued. “That’s why it’s critical for the code to drive fairness, and set out clear expectations for small business employers.
According to figures released by the Fair Work Commission, during the first three months of this year, it received 3583 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.
“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,” Ms Carnell said.
The ASBFEO has also refuted allegations made by the Australian Council of Trade Unions (ACTU) that the revised Code would impinge on the rights of small-business employees.
On ACTU claims that the report “is a blueprint undermining the rights of working people and letting bosses fire them for any reason or no reason”, Ms Carnell said that the changes to the Code “do not change the rights of working people or extend the basis on they can be dismissed; they are to help small-business owners understand how to comply with the Code and to ensure any dismissal is conducted fairly and in accordance with the Fair Work Act”.
And, on the ACTU’s assertion that the proposed changes would make jobs even more insecure than they currently are, the ASBFEO responded that if small-business employers are confident that if they comply with the Code, the dismissal will be deemed to be a fair dismissal, they will be more likely to employ permanent staff: whereas, if they are worried about unfair dismissal claims, they are more likely to employ casuals or contractors.
