Small Business Fair Dismissal Code deemed unfit for purpose

    The Australian Small Business and Family Enterprise Ombudsman has reported that the Small Business Fair Dismissal Code in its current form, is not working in the way it was originally intended.

    This view is backed by Fair Work Commission unfair dismissal statistics and the National Retail Association (NRA).

    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.

    Code open to interpretation

    Ms Carnell says the code 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.

    “The vast majority of small business operators are hard-working Australians with good intentions,” she said.

    “The recommendations in this review aim to give small business operators clear guidelines to deliver certainty around complying with the code.

    “Importantly – 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.

    Fair Work Commission dismissal statistics

     The Fair Work Commission received 3,583 unfair dismissal applications in the first three months of this year. Most were settled during mediation but for the 172 cases that were presented to the commission, 111 or 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,” Ms Carnell said.

    NRA supports changes to code

    The National Retail Association (NRA) supports the proposed changes to the code.

    NRA CEO Dominique Lamb said the current Code is complex, difficult to understand and highly ambiguous in parts.

    “The NRA supports a more streamlined set of laws that doesn’t make dismissing someone easier, but provides greater clarity over the process involved,” Ms Lamb said.

    ALNA welcomes the recommended changes

    The Australian Lottery and Newsagents Association (ALNA) has also welcomed the recommended changes to the Small Business Fair Dismissal Code.

    ALNA CEO Ben Kearney said small businesses want to do the right thing, but the tools that they use should make it clear how they can do that.

    “Ending a staff member’s employment is not easy – and it shouldn’t be. But in the instances that there needs to be a dismissal, we want a simple model that small businesses can have a higher degree of confidence in using, and the current model doesn’t achieve that,” he said.

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