Small Businesses

Roughly 40% of employees in Australia are employed by small businesses. Small businesses are governed by the Fair Work Act 2009. However, some aspects of employment law are different in respect of employers that are small businesses. This page deals with employment law and small businesses in Australia.

What are small businesses?

A small business is defined as a business that employs fewer than 15 people at any given time. This does not include casual workers unless they are employed on an ongoing and systematic basis. A business ceases to be a small business upon hiring more than 15 employees.

Unfair dismissal

The rules surrounding the dismissal of employees are different in respect of employees of small businesses. These rules are set out in the Small Business Fair Dismissal Code, which came into force in 2009.

Employees of small businesses cannot make an unfair dismissal claim in their first 12 months of employment. If an employee of a small business is dismissed after they have worked for the employer for more than 12 months, they may have an unfair dismissal claim if the employer did not follow the Code.

Under the code, an employer may dismiss an employee summarily (without giving the employee notice) if the employee has engaged in serious misconduct. Serious misconduct includes stealing from the employer, engaging in fraud, violent behaviour, or serious breaches of occupational health and safety procedures.

If a small business wishes to dismiss an employee in any other situation (in other words, where they are not guilty of serious misconduct), the employer must give the employee a valid reason based on their conduct or capacity to do their job.

The employee must have been given a warning that there was a risk of termination if their performance did not improve. They must also have been given an opportunity to respond and a chance to rectify the problem. This may include being provided with further training or being given further clarification about the employer’s expectations. The employee may have a support person present when discussions with the employer occur.

An employee of the small business is not unfairly dismissed if they are dismissed because the employer no longer needs their job to be done by anyone (genuine redundancy).

National Employment Standards

The National Employment Standards (NES) are a set of standards that apply to all employees in Australia, regardless of whether they are employed by a small business or some other type of employer. The NES set out the minimum entitlements of full-time, part-time, and casual employees in a range of areas including:

• leave entitlements
• public holiday pay
• superannuation
• flexible work arrangements
• maximum hours of work all
• notice of termination
• redundancy

Small business operators must abide by the National Employment Standards. This means that their employees entitlements must be no less than what is prescribed under the NES. For example, people who are employed by a small business in Australia on a full-time basis are entitled to a minimum of four weeks’ annual leave per year and at least 10 days’ personal leave per year. All employees of small businesses are entitled to 10 days of paid domestic and family violence leave per year, and two days compassionate leave per year (on a paid basis for full-time and part-time employees, and on an unpaid basis for casual employees).

Anti-discrimination laws

Federal, state, and territory anti-discrimination laws do not distinguish between small businesses and other employers. Small business operators must ensure that they create a work environment free from discrimination and that they do not discriminate against employees or potential employees on the basis of prohibited attributes such as race, sex, age, pregnancy, religion, or sexual orientation.

If an employee of a small business believes they have been discriminated against, they may complain to the Australian Human Rights and Anti-Discrimination Commission or to the Anti-Discrimination Commission in their state or territory.

Whether a person should complain to the national commission or to the state or territory commission will depend on the circumstances of their particular case. If you are unsure about the best forum for an antidiscrimination complaint, seek legal advice as soon as possible.

If you require legal advice or representation in any legal matter, please contact Go To Court Lawyers.