Jul

17

Fair Work Act – Small Business

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Fair Work Act 2009 for small business

The majority of The Fair Work Act 2009 (“the Act”) came into operation on 1 July 2009. Provisions relating to the new National Employment Standards (“NES”) and Modern Awards commenced on 1 January 2010. This fact finder looks at the Act applies to small businesses.

 

What is a small business employer?

The Act defines a small business employer as one who employs less than 15 people at a given time. Up until 1 January 2011, the number of fulltime equivalent employees are used to calculate the number of employees in a business. This includes casual employees as long as they have been employed on a regular and systematic basis. From 1 January 2011 the number of employees will be based on a headcount of people employed at the time, regardless of the number of hours worked.

As with previous legislation, associated entities are taken to be one entity. Accordingly, when determining the number of employees employed at a particular time, the employees employed by all associated entities are counted. An “Associated Entity” is an Associated Entity (the associate) of another entity (the principal) if:

  • the principal controls the associate; or
  • the associate controls the principal and the operations, resources or affairs of the principal are material to the associate; or
  • the associate has a qualifying investment in the principal and the associate has significant influence over the principal and the interest is material to the associate; or
  • the principal has a qualifying investment in the associate and the principal has significant influence over the associate and the interest is material to the principal; or
  • an entity controls both the principal and the associate and the operations, resources or affairs of the principal and the associate are both material to the entity.

A qualifying investment in another entity is when the first entity has an asset that is an investment in the second entity, or has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.

 

When Can an Employee Bring Unfair Dismissal Proceedings

The Act provides special provisions for small business employers regarding unfair dismissal proceedings.

A qualifying period applies before an employee can bring a claim for unfair dismissal. An employee needs to have worked for the business for at least 12 months before a claim for unfair dismissal can be lodged. This differs from the 6 month qualifying period for larger businesses.

The “less than 100 employees” defence to unfair dismissal proceedings which was previously available no longer applies. As long as an employee has completed a qualifying period, and he or she earns less than the prescribed High Income Threshold, he or she will be entitled to commence proceedings for unfair dismissal.

Please note that there no minimum qualifying period for unlawful termination or adverse action claims.

 

The Small Business Fair Dismissal Code

The Act provides that an employee will have been unfairly dismissed if the dismissal was harsh, unjust or unreasonable, was not a case of genuine redundancy, and was not consistent with the Small Business Fair Dismissal Code.

A person’s dismissal is consistent with the Small Business Fair Dismissal Code if, immediately before the time of the dismissal or the time at which the person was given notice (whichever happened first) the employer was a small business employer and the employer complied with the requirements of the Small Business Fair Dismissal Code in relation to the dismissal.

Where the employer proposes to summarily terminate an employee’s employment, the Code requires that the employer believe on reasonable grounds that the employee’s conduct is sufficiently serious. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedure. The Code also suggests that summary dismissal will be deemed fair if the conduct is of a type that could be or has been reported to the police.

In any other circumstances, the employer must give the employee reasons for dismissal. The reason needs to be validly based on the employee’s conduct or capacity to do the job. The employee should receive oral or, preferably written warning that he or she is at risk of being dismissed. The employee should also have the opportunity to respond to the warning and be given a reasonable chance to rectify the problem. In order to rectify the problem, the employer may be required to provide additional training or guidance.

When discussing matters relating to possible dismissal, the employee should normally be allowed to have a support person present. However, it would not be the ordinary case for that person to be a lawyer acting in a professional capacity.

Prudent employers should maintain documentary evidence to show that the dismissal complied with the code.

 

Representation by a lawyer in unfair dismissal proceedings

Fair Work Australia deals with unfair and unlawful termination proceedings.

A person may only be represented by a lawyer or paid agent in proceedings brought before Fair Work Australia with the consent of Fair Work Australia. Fair Work Australia may grant permission for a person to be represented by a lawyer or paid agent if it would enable the matter to be dealt with efficiently, or it would be unfair not to allow representation as the person is unable to represent themself effectively, or it would be unfair not to allow representation taking into account the fairness between the parties involved.

 

Redundancy

The National Employment Standards provide that employees who are made redundant are entitled to a redundancy payment upon termination of their employment, subject to some exceptions. A small business employer is exempt from this requirement and is not obliged to provide redundancy payments to employees.

 

Conclusion

There have been many changes under the Fair Work Act 2009. Of these, some changes specifically affect small business employers. These employers should review their current workplace policies and procedures to ensure compliance with the Small Business Fair Dismissal Code.

If you do not currently utilise policies and procedures, now is a good time to implement workplace polices in respect of unsatisfactory performance and disciplinary procedures. If you have any queries or require any advice in relation to the Fair Work Act please contact Tony Pattinson at Ferguson Cannon Lawyers.

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Category: Business & Corporate Services, Employment Law, Fact Finders, General

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