The meaning of a small business employer and why it matters

By Vivian Michael | Employment

Are you a small business employer and why this matters

The meaning of a small business employer is in section 23 of the Fair Work Act 2009 (Cth). We'll break down the legal definition for you and why it matters below.

Meaning of small business employer

In a nutshell, you are a small business employer if you have less than 15 employees.

And why should this meaning matter to you?

Well, the meaning matters to you because: 

  • If an employee submits an unfair dismissal claim with the Fair Work Commission, the small business dismissal code will apply; and 
  • Small businesses are don’t have to pay redundancy pay to employees.

Now, here's who you can count as an employee:

  • All employees; and
  • Only casual workers working on a regular and systematic basis; and
  • Associated entities are taken to be one entity so any employees of those.

And, in the case of employee dismissal, if that employee makes a claim with the Fair Work Commission, count them and others you have let go at that time.

Don't worry, regular and systematic is not a complex concept, we'll explain that next.

What is regular and systematic?

Below is a breakdown of regular and systematic:

  • Regular means there is a pattern of work not necessarily frequent, often or uniform
  • Systematic means there is a system, method or plan.

And if there is no clear pattern or roster, the existence of these factors is enough:

  • The employer has made an offer of work and the employee made themselves available; and 
  • The offer and acceptance was regular enough that it could not be regarded as occasional or irregular.

So now you know why the definition matters, it's wise to learn what resources exist to help you hire and dismiss employees when you need to, confidently. 

Bonus resources

Below are some useful resources for a small business dismissal and redundancy:

  • Dismissal code: here's a link to the small business dismissal code so you can have a ready checklist to make sure any of your dismissals are fair; and
  • Redundancy: here's a link to guide you about redundancy pay.





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About the Author

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to make quality business legal services accessible to entrepreneurs launching in Australia that would otherwise DIY, rely on legacy contracts or go without.

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