Fair Work, Fair Dismissal

On 1 July the Fair Work Act 2009 (“Fair Work”) replaced “WorkChoices”, ushering in a new era of workplace relations in Australia. This article serves as a timely reminder to employers and employees that Fair Work has introduced a new set of unfair dismissal rules.

Who can make an unfair dismissal claim?

Any employee who is covered by a modern award, whose employment is covered by an enterprise agreement or who earns less than $100,000 per annum is eligible to bring an unfair dismissal claim, no matter how big or small the business that employs them. However, Fair Work does retain exclusions for true casual employees, and employees whose employment ends because a specific task is completed (such as seasonal employees), or a period has ended (fixed term employees). 

However, an employee must have been employed by the employer for at least six months to be entitled to bring an unfair dismissal claim, or 12 months if employed by a “small business employer”.   

The new “small business” provisions

Under Fair Work a new concept of a “small business employer” has been introduced.  A small business employer is an employer who employs less than 15 employees.  Until 31 December 2010 the test is whether the business employs fewer than 15 employees on a “full time equivalent basis”.  From 1 January 2011 a small business employer is any employer employing fewer than 15 employees by individual head count, whether full time or part time. 

A substantial number of optometrists own and operate, or work for, small businesses.  If you are an employee in a small business and feel that you have been unfairly dismissed, you will only be entitled to make an unfair dismissal claim if you have been employed by the employer for at least 12 months.

A reminder – when is a dismissal unfair?

Fair Work does not alter the fundamental principle that a dismissal will be unfair where it is “harsh, unjust or unreasonable”.  Leaving aside an employer’s right to summarily dismiss an employee for serious misconduct, Fair Work Australia (FWA) will take into account a range of factors when considering whether a dismissal is unfair including whether the dismissal relates to the employee’s conduct or capacity, and whether they were warned or given a chance to respond.

Fair Work introduces a new “Small Business Fair Dismissal Code”. 

The Fair Dismissal Code for Small Business Employers

Small business employers and employees should read the new Code, available here from the Federal Government’s Fair Work Australia (FWA) website.

Fair Work provides that it is not an unfair dismissal if the employer is a small business employer and they follow the Code when dismissing an employee. The Code deals with both summary dismissal and dismissal in other circumstances. It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious (such as fraud or theft) to justify immediate dismissal.   

In other circumstances, the small business employer must give the employee a reason, based on the employee’s conduct or capacity to do the job, why he or she is at risk of being dismissed.  The employee must be warned that they risk being dismissed if there is no improvement, and must be given an opportunity to respond to the warning and rectify the problem. 

If an unfair dismissal claim is made against a small business employer, the onus will be on the employer to prove that there has been compliance with the Code.  The FWA site also provides a Fair Dismissal Code checklist to assist employers with this task.

Other points of interest for employers and employees

If an employee believes he or she has been unfairly dismissed they must make their claim for unfair dismissal within 14 days of the dismissal. 

It is no longer a defence to an unfair dismissal claim that the dismissal is based on “genuine operational requirements”.  Instead, Fair Work provides that a dismissal will not have been unfair if the dismissal was a case of genuine redundancy.  If an employee is made genuinely redundant and the employer has complied with all requirements of any modern aware or agreement in relation to consultation, the employee cannot pursue an unfair dismissal claim.  A dismissal will not have been a case of genuine redundancy if the employee could have been redeployed elsewhere within the employer’s enterprise or by an associated entity of the employer.

Fair Work confirms that the primary remedy in any unfair dismissal claim will be reinstatement. Compensation will only be ordered where reinstatement is inappropriate.

FWA will replace the Australian Industrial Relations Commission in dealing with unfair dismissal proceedings. FWA has the discretion to hold a conference in relation to an unfair dismissal claim, or refer it to a hearing, and whether to permit either party to be legally represented.

Small businesses are no longer immune from unfair dismissal claims. Both employers and employees need to be aware of these important changes to workplace relations in Australia.

If you would like further information about how Guild Lawyers can assist you, please contact our Commercial Team, you can reach Peter Frazer at This email address is being protected from spam bots, you need Javascript enabled to view it or Mark Fitzgerald at This email address is being protected from spam bots, you need Javascript enabled to view it .