Sack someone the wrong way and you can be defending an unfair dismissal claim at the Fair Work Commission within weeks. Here is when protection kicks in, the Small Business Fair Dismissal Code that protects you, the 21-day clock, and the remedies.
When protection starts — the minimum employment period
An employee can only claim unfair dismissal after:
- 6 months if you have 15 or more employees, or
- 12 months if you are a small business (under 15 employees — counting regular and systematic casuals and the employees of associated entities).
Dismiss before that and they generally cannot bring an unfair dismissal claim (though a general-protections or discrimination claim may still be open).
The Small Business Fair Dismissal Code — your shield
If you are a small business and you follow the Code, the dismissal is deemed fair. Two paths:
- Serious misconduct: you can dismiss summarily, without notice, if you believe on reasonable grounds the conduct is serious enough (theft, fraud, violence, serious WHS breaches) — and it helps to have reported genuine theft, fraud or violence to police. Record what happened, why it was serious, and what you did.
- Performance or ordinary misconduct: more procedural — a valid reason, a warning (preferably written) that the job is at risk, a chance to respond, a reasonable opportunity to improve, and a support person allowed. Keep the records and complete the Code checklist.
The process and the clock
- The employee must lodge with the FWC within 21 days of the dismissal taking effect (extensions are rare).
- Then: application → your response (you can object on jurisdiction, the minimum period, or genuine redundancy) → conciliation about 5 weeks in (roughly 75% settle, typically a separation payment plus a statement of service) → if unresolved, a hearing and a decision.
The remedies
- Reinstatement is the primary remedy (sometimes with back-pay and continuity).
- If that is unworkable, compensation for lost remuneration only — no payout for shock or distress — minus what the employee has earned since, capped at the lesser of 26 weeks' pay or half the high income threshold (about $91,550 for 2025-26).
What trips construction employers up
The common losing fact patterns: "not a good fit" with no documented warnings; a misconduct sacking where the worker disputes the facts or the response was disproportionate; and a "redundancy" where the role is quickly refilled (a genuine redundancy needs a real downturn and no quick refill). Contemporaneous documentation wins — warnings, investigation notes, safety concerns, and the completed Code checklist.
Common mistakes
- Sacking on the spot with no process or warning.
- Calling it "redundancy" then refilling the role.
- Forgetting small-business protection only starts at 12 months — and that the Code is your defence.
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