If you are an emerging business experiencing positive growth and expansion and improving your bottom-line financial outcomes, it’s a strong tick of approval and just reward for your tireless efforts, hard work and calculated risk taking activities. Inevitably, a growing number of staff members can often accompany your growth efforts as you require additional resources, expertise and know how to practically meet increasing and expanded demands arising from your now somewhat larger business.
Besides the inevitable increase to your payroll spend and people management requirements, many small businesses tick over a ‘magic number’ without even realizing this has occurred. This magic number places their business within the realm and auspices of the Fair Work Commission and impacts their business in numerous ways from an industrial and employee relations perspective. The magic number being spoken about is when you grow your business to the point of employing at least 15 employees. Why this is so important is that once you reach the magic number of 15 employees, you are legally required to abide by a broad array of additional workplace laws and employment responsibilities.
Interestingly, many business owners are either unaware or blissfully oblivious to these additional HR requirements becoming relevant to them at this juncture in their business journey. Not only does this generate significant HR risks for the employer, but can result in financial impacts if fines and / or penalties are imposed for not abiding by relevant aspects of the Fair Work Act 2009. These obligations become painstakingly clear when making the difficult decision to terminate an employee and you are bound by broader legislative requirements to undertake this process in a fair and compliant fashion.
The Fair Work Ombudsman explains on the Fair Work website that “The Fair Work Act 2009 sets out a number of requirements that business, including small business, needs to be aware of. Best practice employers know and understand their rights and obligations under workplace law.” These rights and obligations relate to some specific HR activities, specifically unfair dismissal, unlawful termination and redundancy entitlements.
If you can confidently answer the following questions, then you possess a strong understanding of Fair Work related legalities in relation to termination of employment:
- What steps should I take to ensure that a dismissal is fair? Do I know what an employee can do if they think they have been unfairly treated?
- After terminating an employee, are they eligible to make a claim? Do you know how to ensure that a dismissal is fair and what to do when someone claims unfair dismissal?
- Are you aware of how the legislation protects an employee from being dismissed on certain grounds, including those that are discriminatory?
- How does a terminated employee determine whether a redundancy is genuine and what action can they take if they deem it to have not been genuine? Do redundancy payments apply and how much should you be paying in that regard?
- Did you know that if you terminate the employment of a permanent employee, the notice period that you must provide depends on the employee’s length of service?
If you are still employing less than 15 employees, you may be thinking that you are off the hook when it comes to these legislative requirements. Unfortunately (or fortunately depending on which way you look at it) this is not the case and you can’t just get rid of the “dead wood” at will, thanks to the introduction of the ‘Small Business Fair Dismissal Code’ which was introduced in 2009. According to the Fair Work website, “the Small Business Fair Dismissal Code applies to small business employers in the national workplace relations system. A small business is defined as any business with fewer than 15 employees. This is calculated on a simple headcount of all employees who are employed on a regular and systematic basis.”
The Code specifically relates to rules and obligations for small business employers in relation to summary dismissal, other dismissals and procedural matters for dismissals. The code outlines the following expectations (verbatim):
- Small business employees cannot make a claim for unfair dismissal in the first 12 months following their engagement. If an employee is dismissed after this period and the employer has followed the Code then the dismissal will be deemed to be fair.
- Employees who have been dismissed because of a business downturn or their position is no longer needed cannot bring a claim for unfair dismissal. However, the redundancy needs to be genuine. Re-filling the position with a new employee is not a genuine redundancy.
- A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given.
The simplest and most effective way for businesses of all shapes and sizes to initially mitigate their HR risks in relation to these Fair Work requirements, is to develop, implement and communicate a set of compliant and relevant HR policies which clearly outline their commitment, obligation and adherence to all aspects of the probationary period, managing staff performance, managing unacceptable conduct, terminations and redundancies. By doing this, you are ensuring that your business has a clear and effective platform for managing relevant workplace issues if and when they arise. You can never be too prepared. Take action to ensure you have a strong and robust HR platform prior to any issues of this nature occurring within your workplace.
