Perth Unfair Dismissal Lawyers: Small Business Dismissal Rules

Perth unfair dismissal lawyers get the same phone call almost every week: a small business owner has just sacked someone, or an employee has just been sacked, and neither side is quite sure where they stand. Small business dismissals sit in a strange corner of employment law. The rules are different from the ones that apply to bigger companies, the timeframes are tight, and the paperwork that saves you in one case is the same paperwork that sinks you in another.

If you run a small business in Perth, or you’ve just lost a job at one, the Small Business Fair Dismissal Code is the document that decides whether a termination holds up. It’s short, it’s plain English, and it still catches people out constantly, mostly because they’ve never actually read it before the dismissal happens rather than after.

This guide walks through how small business dismissals actually work under the Fair Work Act, what counts as a “small business” in the first place, how the minimum employment period changes your rights, what a fair process looks like, and where things usually go wrong. It’s written for Perth employers who want to get a termination right the first time, and for employees who suspect their dismissal wasn’t handled fairly. By the end, you’ll know exactly when it’s worth picking up the phone to a lawyer rather than guessing.

What Counts as a Small Business Under the Fair Work Act

Before anything else, you need to work out whether the Small Business Fair Dismissal Code even applies to your situation. This one definition changes almost everything about how a dismissal claim will be assessed.

Under the Fair Work Act 2009, a small business employer is one with fewer than 15 employees. That number isn’t based on full-time equivalents, and it isn’t just a headcount on the day someone is let go. The count includes:

• Full-time and part-time employees
• Regular casual employees (those with a systematic pattern of work and a reasonable expectation of ongoing employment)
• The employee being dismissed
• Any other employees dismissed at the same time
• Employees of associated entities connected to the business

Irregular or “as needed” casuals generally aren’t counted, which trips a lot of businesses up when they’re sitting right on the 15-employee line. A business that looks like a small business on paper can lose that status the moment associated entities or regular casuals are added to the tally, and vice versa.

This matters because small business employers get access to the Small Business Fair Dismissal Code, a simplified compliance framework that larger employers don’t get. If the Fair Work Commission finds you were genuinely a small business at the time of dismissal, and you followed the Code, the dismissal will generally be found not to be unfair, even if a larger employer doing the exact same thing would have failed.

The Minimum Employment Period: 12 Months, Not 6

One of the biggest differences between small business dismissals and everyone else comes down to timing. Under the Fair Work Act, an employee needs to complete a minimum employment period before they can bring an unfair dismissal claim at all.

• 6 months for employees of businesses with 15 or more employees
• 12 months for employees of a small business employer (fewer than 15 employees)

That extra six months is a genuine advantage for small employers. It means an employee who’s been with a small business for, say, ten months generally has no unfair dismissal rights at all, regardless of how the termination was handled. This catches a lot of employees off guard, and it’s one of the first things a solicitor checks when someone calls asking about an unfair dismissal claim.

It’s worth noting this doesn’t mean an employee under 12 months has no protections whatsoever. Claims for general protections (adverse action for exercising a workplace right, discrimination, and similar) don’t have the same minimum service requirement, and can still be pursued even in the first weeks of employment. This is one of the most common points of confusion, and it’s exactly the kind of distinction where getting advice early prevents a wasted claim, or a missed one.

The Small Business Fair Dismissal Code, Explained

The Small Business Fair Dismissal Code came into effect on 1 July 2009 and hasn’t changed much since. It’s deliberately short, and it splits dismissals into two categories: summary dismissal and dismissal with notice or warning.

Summary Dismissal for Serious Misconduct

A small business can dismiss an employee without notice or warning where the conduct is serious enough to justify it on the spot. The Code gives examples including:

• Theft, fraud, or dishonesty
• Violence in the workplace
• Being intoxicated at work
• Refusing to carry out a lawful and reasonable instruction that’s consistent with the employment contract

The employer needs to have reasonable grounds to believe the conduct occurred, based on the information available at the time. It doesn’t need to be proven beyond doubt at the moment of dismissal, but the belief needs to be genuinely held and reasonably formed, not just an assumption.

Dismissal With Warning for Conduct or Capacity Issues

For anything short of serious misconduct, the Code expects a small business to give the employee:

1. A warning that their job is at risk, delivered verbally or in writing
2. A reasonable chance to improve or correct the behaviour
3. An opportunity to respond and, if the employee wants, to have a support person present in any discussion

There’s no fixed rule on how many warnings are enough, or exactly how long an improvement period should run. This is deliberately flexible, but it also means the process is judged case by case, and “we told them once, ages ago” rarely holds up if there’s no record of it happening.

Keeping a Record Is Non-Negotiable

The single biggest reason small businesses lose unfair dismissal cases isn’t that they made the wrong call on the termination itself. It’s that they can’t prove what happened. A dismissal that was actually handled fairly can still be found unfair if there’s no evidence of warnings given, performance discussions had, or reasons explained.

A basic record for every dismissal should include:

• Dates and content of any verbal warnings (written up immediately after, even briefly)
• Copies of any written warnings or performance plans
• Notes from any meeting where the employee was given a chance to respond
• The specific reason for dismissal, in writing, given to the employee

None of this needs to be elaborate. It needs to exist.

What Makes a Dismissal Unfair in the First Place

Whether or not the Small Business Code applies, the underlying test for unfair dismissal under the Fair Work Act is whether the dismissal was harsh, unjust, or unreasonable. The Fair Work Commission looks at things like:

• Whether there was a valid reason for the dismissal related to capacity or conduct
• Whether the employee was notified of that reason
• Whether the employee had a chance to respond before the decision was made
• Whether the employer unreasonably refused a support person in discussions
• The size of the business, and whether that affected how the process was run

That last point is where the Small Business Code comes back in. A small operation without a dedicated HR function is judged with some allowance for its size, but that’s a lower bar to clear, not a free pass. Following the Code properly is still the clearest way for a small employer to demonstrate the process was fair.

Who Can and Can’t Bring an Unfair Dismissal Claim

Not every dismissed employee is eligible to make a claim. To bring an unfair dismissal claim to the Fair Work Commission, a person generally needs to meet all of the following:

• They were actually dismissed, or forced to resign (constructive dismissal)
• They completed the minimum employment period (6 or 12 months, depending on employer size)
• They earn under the high income threshold, currently $183,100 per year (from 1 July 2025, indexed annually), unless they’re covered by a modern award or enterprise agreement
• They weren’t a genuine casual employee without a regular and systematic pattern of work

Employees covered by an award or enterprise agreement can bring a claim even if they earn above the high income threshold, which surprises a lot of higher-paid small business staff who assume they’re automatically excluded.

The 21-Day Deadline

This is the rule that trips up more people than any other part of the process. An unfair dismissal application has to be lodged with the Fair Work Commission within 21 calendar days of the dismissal taking effect. Not business days. Calendar days.

The Commission will only extend that deadline in exceptional circumstances, and “I was trying to sort it out informally with my employer” isn’t usually enough on its own. If you’re an employee who thinks you’ve been unfairly dismissed, the clock starts the day the dismissal takes effect, not the day you decide to do something about it.

Practically, that means:

1. Get your paperwork together immediately (contract, payslips, warnings, emails, any termination letter)
2. Check your eligibility against the minimum employment period and income threshold
3. Lodge Form F2 with the Fair Work Commission if you decide to proceed
4. Attend the conciliation conference, where most matters resolve before a hearing is needed

What Happens if the Commission Finds the Dismissal Unfair

If a claim succeeds, the Fair Work Commission has two main remedies available:

• Reinstatement – the employee gets their job back, sometimes with lost pay made up
• Compensation – capped at the lesser of 26 weeks’ pay or half the high income threshold (currently around $91,550)

Reinstatement is ordered less often than people expect, particularly in small workplaces where the relationship has broken down entirely. Compensation is far more common, but it’s not designed to punish the employer. It’s calculated based on actual loss, with deductions for things like the employee’s own contribution to the situation or income earned since the dismissal.

Common Mistakes Perth Small Businesses Make

Most of the unfair dismissal problems that end up in front of Perth unfair dismissal lawyers come from a handful of repeated mistakes, not unusual or complicated situations.

• Dismissing by text message or email with no prior warning. This is one of the fastest ways to end up with a finding against you, even in a small business, because it usually means there was no real opportunity to respond.
• Assuming a verbal telling-off counts as a formal warning. If it isn’t documented anywhere, it’s very hard to rely on later.
• Not checking employee numbers properly before assuming the Small Business Code applies, only to find associated entities push the business over 15 employees.
• Confusing performance issues with misconduct and skipping the warning process because the employer feels the conduct was “serious enough,” when the Commission later disagrees.
• Failing to consider a support person when an employee reasonably asks for one in a dismissal meeting.
• Not keeping any written record of the reasons for dismissal, warnings given, or discussions held.

Any one of these on its own can be enough to have a dismissal found unfair, even where the underlying decision to terminate was entirely reasonable.

Why It’s Worth Talking to a Perth Unfair Dismissal Lawyer Early

The value of speaking to Perth unfair dismissal lawyers isn’t just for employees weighing up whether to file a claim. It’s just as relevant for small business owners before a dismissal happens, not after.

A short consultation before you terminate someone can help you:

• Confirm whether the Small Business Fair Dismissal Code applies to your business
• Check whether the employee has met the minimum employment period
• Review whether your warning process and documentation will hold up
• Draft the termination letter and reasons properly
• Identify whether general protections risks exist alongside unfair dismissal risk

For employees, early advice matters even more because of the 21-day deadline. A lawyer can quickly tell you whether you’re eligible, what your dismissal is actually worth in compensation terms, and whether conciliation or a formal hearing is the more realistic path.

The cost of an hour with an employment lawyer is small next to the cost of a contested unfair dismissal claim, which can run into thousands of dollars in legal costs and lost time even before compensation is considered. For further detail on eligibility and the claims process, the Fair Work Ombudsman and the Fair Work Commission both publish current guidance and the forms needed to lodge a claim.

Frequently Asked Questions

Does the Small Business Fair Dismissal Code apply automatically to businesses under 15 employees? Yes, but the employee count is assessed at the time of dismissal and includes associated entities and regular casuals, so it’s worth confirming the number properly rather than assuming.

Can an employee still claim unfair dismissal if they’ve been employed for less than 12 months at a small business? Generally no, for unfair dismissal specifically. They may still have options under general protections, which don’t carry the same minimum service requirement.

What’s the time limit to lodge an unfair dismissal claim in WA? The same as everywhere else in Australia: 21 calendar days from when the dismissal takes effect, lodged with the Fair Work Commission.

Do small businesses need a written warning before dismissing someone for poor performance? The Code expects a warning and a reasonable chance to improve for anything short of serious misconduct. It doesn’t have to be lengthy, but it needs to be genuine and, ideally, documented.

Is reinstatement or compensation more common in unfair dismissal outcomes? Compensation is far more common, particularly in small workplaces, and is capped at the lesser of 26 weeks’ pay or half the high income threshold.

Conclusion

Small business dismissals in Perth sit under a different set of rules from larger employers, built around the Small Business Fair Dismissal Code, a longer 12-month minimum employment period, and a strict 21-day window for any unfair dismissal claim. Getting a termination right means confirming your employee count properly, following a genuine warning process for anything short of serious misconduct, and keeping a written record of every step along the way, because the process is judged just as much on documentation as on the decision itself.

Whether you’re a small business owner trying to dismiss someone the right way, or an employee who thinks a dismissal wasn’t handled fairly, the timeframes are tight and the details matter, which is exactly why speaking to experienced Perth unfair dismissal lawyers before or immediately after a termination is worth the conversation.