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Do you operate a small business?

September 23, 2016

small business

Operating a small business is different in many aspects.These organisations are quite unique in that they operate with limited resources and under immense pressures when compared with large enterprises.

In recognition of the array of challenges that a small business faces, the Fair Work Act 2009 (C’th) provides a number of exemptions for these organisations. But how do you determine what a “small business” is? And what do these exemptions mean for operators of a small business?

How do you define a small business?

The Act defines a “small business” as one which employs 14 or few employees. This is generally taken to be a simple headcount of employees on the payroll system and includes causal employees who are employed on a regular and systematic basis.

What exemptions may apply to a small business?

  1. Unfair Dismissal

Most employees will be able to bring a claim for unfair dismissal if they are dismissed after 6 months of service. For small businesses, however, an employee must have completed at least 12 months of service before being able to bring a claim. This exemption gives small businesses an additional 6 months to determine whether someone is the right fit for their business before making a decision.

For those employees with more than 12 months service, a small business can be confident of avoiding a costly unfair dismissal claim providing they have strictly complied with the Small Business Fair Dismissal Code.

  1. Redundancy Pay

Businesses who terminate a permanent employee in circumstances of redundancy will generally have to pay an amount of redundancy pay. This entitlement can be quite costly – up to 16 weeks’ worth of pay in addition to other employee entitlements.

The good news for you is that small businesses are excluded from the obligation to pay redundancy pay, which is a welcoming relief.

  1. Flexible work requests

Some employees, such as parents with responsibility for the care of a school-aged child, will have to the right to make a request for a flexible working arrangement. An employer can only refuse the request on “reasonable business grounds”.

Reasonable business grounds include things such as it would be too costly for the employer, or there is no capacity to change the working arrangements of other employees. The good news for a small business is that it will generally be much easier to refuse the request, considering the constraints in which they generally operate.

For more information on the recommendations and what this means for you, clients should contact the HR Assured team. If you’d like more information about the benefits of becoming an HR Assured client contact us today for an informal chat.