News 19 November 2018

Reinstatement ordered following harsh small business dismissal

A small business has been ordered to reinstate an employee, after it was found that the dismissal was harsh, and not consistent with the Small Business Fair Dismissal Code (the Code).


In April 2018, a sales employee was terminated for allegedly running a private business during their work hours at a importer, in breach of the employee’s contract of employment. The employee had an outside business selling candles and bath products, and was alleged to be engaging in their private business activities while at work. The employee’s dismissal took immediate effect.

Small Business Fair Dismissal Code

A person has been unfairly dismissed if the commission is satisfied that the dismissal was:

  • Harsh, unjust, or unreasonable
  • Not consistent with the Code
  • Not a case of genuine redundancy

The Code provides that a small business employer must:

  • Give the employee a valid reason why the employee is at risk of being dismissed
  • Warn the employee that the employee risks being dismissed if there is no improvement
  • Provide the employee with an opportunity to respond to the warning, and a reasonable chance to rectify the problem

October 2018 Decision Read

Commissioner McKinnon found that:

  • The employee’s engagement with their private business during work hours was in breach of their contract, and a valid reason for dismissal.
  • However, prior to the dismissal, no warning was given to the employee that they were at risk of being terminated
  • Furthermore, The employee was given no chance to respond, or rectify the problem

Therefore, the dismissal was ‘harsh’, and not consistent with the Small Business Fair Dismissal Code.

Commissioner McKinnon considered the dismissal to be a disproportionate response to a valid concern, and ordered reinstatement of the employee. Following reinstatement, the employee is on notice that it is not appropriate for them to conduct personal business at work.

Lessons for Employers

A person is not unfairly dismissed if the dismissal is consistent with the Small Business Fair Dismissal Code, and the employer is a Small business. If an employee makes an Unfair Dismissal claim, a small business employer will need to provide evidence of compliance with the Code. Evidence may include: a completed checklist, copies of written warnings, signed witness statements, a letter of termination.

Under current employment legislation, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly. Attend our Managing Termination, Redundancy and Unfair Dismissals to increase your knowledge of counselling and discipline processes, and how to best manage an unfair dismissal claim.

Jessica Kelly, Graduate Workplace Relations Advice Line Advisor

Download our Small Business Fair Dismissal Code factsheet.

Media Contact

All media enquiries may be directed to the Media and Communications Manager

03 8662 5310

0423 883 945

For all other enquiries please contact the Victorian Chamber on 03 8662 5333

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