Small Business Fair Dismissal Code

The Code is registered as F2009L02570 and is in force in its original form, with no amendments, as at 5 November 2026. It has three parts: summary dismissal, other dismissal and procedural matters. The Fair Work Ombudsman publishes it with an optional checklist (Code and checklist).

An employee of a small business can’t make an unfair dismissal claim at all until they have been employed for 12 months (Fair Work Commission). The Code matters for employees past that point who earn under the high income threshold, which is $190,100 for dismissals on or after 1 July 2026, or who are covered by an award or enterprise agreement. For the other rules that change at fewer than 15 employees, see small business Fair Work obligations.

The Commission doesn’t have to decide whether the conduct actually happened. It asks whether you genuinely believed the employee did it, that it was serious and that it justified immediate dismissal, and whether you had reasonable grounds for that belief (Fair Work Commission). Reasonable grounds usually come from your own inquiries: speaking to witnesses, checking records or footage, and putting the allegation to the employee.

• Reporting theft, fraud or violence to police is sufficient but not essential, and you need reasonable grounds for the report.
• Write down what you found, when and how, before you decide.
• The summary dismissal checker and show cause letter help you test and put the allegation.

1. Identify the problem and why it puts the job at risk.
2. Warn the employee, ideally in writing, that they could be dismissed if they don’t improve. The warning letter template sets this out.
3. Listen to their response and take it into account.
4. Give them a reasonable period to improve, with training or clearer expectations where that would help.
5. If there is no improvement, tell them the decision and confirm it in writing with a termination letter.

In any discussion where dismissal is possible, the employee can have another person present to assist, but not a lawyer acting in a professional capacity. For running a fair performance process, see managing underperformance.

If an employee claims unfair dismissal, you will have to show you complied with the Code, including that a warning was given (except for summary dismissal). The checklist’s 10 questions cover:

• Whether you had fewer than 15 employees and the employee had 12 months’ service.
• Whether the dismissal was a redundancy, and if so whether you consulted as your award or agreement requires and considered redeployment.
• Whether you believed on reasonable grounds the employee stole, committed fraud, was violent or seriously breached safety procedures, or committed other serious misconduct.
• Whether you agreed to a request for a support person.
• For performance or conduct, whether you warned, allowed time to improve, offered training, gave the reason and a chance to respond, and kept records.

Complete it at the time of the dismissal, sign it and keep it with the warnings and meeting notes.

• Redundancy: a genuine redundancy under s 389 can’t be challenged as unfair dismissal, but that is a separate test from the Code.
• General protections: dismissing someone for a prohibited reason, such as taking sick leave or making a complaint, is unlawful whatever the business size. These claims have no service requirement and a 21-day limit (Fair Work Commission).
• Notice and final pay: you still owe NES notice or pay in lieu unless the dismissal is for serious misconduct. See ending employment lawfully.
• If you didn’t follow the Code: the Commission then decides whether the dismissal was harsh, unjust or unreasonable using the usual criteria, such as valid reason, notification and opportunity to respond.

From 1 July 2026 the application fee is $92.70 and the compensation cap is $95,050 for dismissals on or after that date (Fair Work Commission). If a claim arrives, the Code and your records are your defence, so file them with the employee’s records, which you must keep for 7 years in any case.