Small Business. Big Mistakes. Why the ‘Fair Dismissal Code’ Isn’t a Free Pass
If you’ve been sacked by a small business, chances are your employer believes they’re protected by something called the Small Business Fair Dismissal Code. Many assume that as long as they follow the checklist, the Fair Work Commission won’t look twice.
But that’s not how it works. The Code offers guidance—not immunity. And small business owners get it wrong more often than they think.
What Is the Small Business Fair Dismissal Code?
It’s a framework that applies to businesses with fewer than 15 employees. If an employee has worked the minimum employment period (12 months in a small business), they are protected from unfair dismissal—but the employer can point to the Code as a defence.
Under the Code, a dismissal is deemed fair if the employer reasonably believes the employee’s conduct was serious enough to justify immediate termination (e.g. theft, violence, fraud), or if proper warnings were given and performance didn’t improve.
But that phrase—“reasonably believes”—is where most small businesses fall apart.
The Fair Work Commission doesn’t just take the employer’s word for it. The belief must be objectively reasonable, and it needs to be backed by evidence.
Here’s where the Code often fails:
No actual investigation. Employers jump to conclusions without checking the facts.
No genuine warnings. A quick “you better fix this or else” doesn’t count.
Warnings not related to dismissal. General feedback isn’t enough—the employee must be told their job is at risk.
No opportunity to respond. Even small employers must allow the employee to explain themselves.
The HR Book explains it plainly: employers can’t rely on the Code if the process was vague, rushed, or unjustified. The Commission will look behind the employer’s belief and assess whether it was fair in all the circumstances.
What This Means for Employees
If you’ve been let go by a small business, don’t assume the Code defeats your claim. Here’s what you should consider:
Were you given a chance to respond?
Was the allegation ever investigated?
Did the employer tell you your job was on the line?
Was the reason for dismissal real—or just a cover for something else?
If any of those answers raise red flags, your dismissal might still be unfair—even if your employer hides behind the Code.
There have been numerous cases where the employer relied on the Code but lost because they couldn’t show that the dismissal was genuinely based on misconduct or performance, or they failed to follow even basic procedural steps. A checklist isn’t a get-out-of-jail-free card and it doesn’t override common sense or fairness.
