ASBFEO urges overhaul of Small Business Fair Dismissal Code

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), 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 reminded that while the vast majority of small business operators are hard-working Australians with good intentions, they can’t afford to engage in costly and stressful legal action and don’t have the support of a HR department when faced with the difficult decision to end a staff member’s employment.

That’s why it’s critical for the code to drive fairness, and set out clear expectations for small business employers, Ms Carnell stressed. 

“We know that small businesses do not make the decision to end a worker’s employment lightly. Research by the Fair Work Commission found one of the key challenges for small business operators was attracting and retaining good staff and that good employees were highly valued," Ms Carnell noted. 

“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." 

The ASBFEO's review contains recommendations in the following areas:     

• 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
• 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

“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 concluded.