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The Small Business and Family Enterprise Ombudsman’s proposal to change the Small Business Fair Dismissal Code is not likely to result in fairer outcomes for employees or fewer claims for small business owners to deal with.

The changes may make it easier for small businesses to get rid of employees quickly, meaning the system would be heavily weighted against workers.

That’s why we are calling on Attorney General and Minister for Industrial Relations Christian Porter to consider the employees first, who already have little protection or job security when employed with a small business, when reviewing the industrial relations process.

The Ombudsman's review recommends separate processes under the code for serious misconduct, conduct and redundancy. It also recommends broadening the definition of serious misconduct to specifically include behaviour like causing reputational risk to the employer or refusal to carry out reasonable instructions.

Changing the definition in this way, would unfortunately broaden the circumstances in which an employee can be sacked without remedy.

The proposed changes would have a significant impact on workers because the vast majority of businesses - 97 per cent – have fewer than 20 employees. The Code applies to businesses with fewer than 15 employees.

The current system for small businesses is already geared to make it tricky for employees who believe they have been unfairly dismissed and operates largely in favour of employers and business.

Currently, if you work for a small enterprise like an independently owned café or shop, you don’t even get the right to challenge a dismissal unless you have been there for a year, whereas other workers can access unfair dismissal laws after 6 months’ employment.

The small business code says bosses can dismiss someone if they have a belief on “reasonable grounds” that conduct is serious enough to justify immediate dismissal. Under the proposed changes, the word “reasonable” would be removed from the Code, leaving no room for an objective assessment of the circumstances.

Currently in other cases, small business employers are free to sack workers provided they have given a warning and given the employee a reasonable chance to respond and to improve. Again, the proposed changes would involve the removal of the word “reasonable” from the Code.

In my experience representing workers who have been unfairly dismissed, small business owners do often take a cavalier approach in deciding to sack workers and removing any objective standard from the test will further harm vulnerable workers.

The proposal appears to permit an employer to use their self-completed checklist as ‘evidence’ of compliance with the Code and also proposes a separate process for small business dismissals in the Fair Work Commission, whereby an initial desktop assessment of compliance with the Code would be made and sent to a new Small Business Commissioner with a recommendation to simply dismiss a worker’s application.

Small business already relies on the fact that someone who has lost their job probably can’t afford legal fees or rely on representing themselves to navigate the system, which often results in workers accepting inadequate compensation simply because they can’t afford to go further.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

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