Guide 2 of 5 · Workplace
The Fair Work definition: a small business employer, fewer than 15 employees
Under the Fair Work Act 2009, a national system employer counts as a small business employer at any moment when it employs fewer than 15 employees, counting regular casuals and the employees of associated entities. The line changes how long an employee must work before being protected from unfair dismissal, whether the Small Business Fair Dismissal Code applies, whether redundancy pay is owed under the National Employment Standards, and some rules for casual employees.
General information, not employment or legal advice. The official place to check is the Fair Work Ombudsman; for unfair dismissal claims, the Fair Work Commission.
Employees, counted by head · the line: fewer than 15
The definition, in section 23
“(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
- subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
- a casual employee is not to be counted unless, at that time, the employee is a regular casual employee of the employer.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.”
Fair Work Act 2009, s 23, compilation of 7 July 2026, from the Federal Register of Legislation
Who is counted
- People, not hours. The Fair Work Commission says the number 15 refers to individuals, not the full-time equivalent.
- Casuals, if regular. A casual counts only if they are a regular casual employee, which section 12 of the Act defines as a casual employee who has been employed by the employer on a regular and systematic basis.
- The wider group. Associated entities count as one employer, and the Fair Work Ombudsman’s redundancy page says their employees are counted even when based overseas.
- The person leaving. For a dismissal or termination, subsection 23(4) says the count includes the employee being dismissed and any other employee dismissed at the same time.
- At that moment. The test is taken at a particular time, so it can change: the Fair Work Ombudsman says an employer with 15 or more employees at a particular time is no longer a small business employer.
The definition is for national system employers. The Commission says the Small Business Fair Dismissal Code is for national system employers that meet it, and links its page on who the Fair Work system covers.
What changes at the line
| Rule | Small business employer | Other employers | Section |
|---|---|---|---|
| Minimum employment period before unfair dismissal protection | One year | 6 months | s 383 |
| Small Business Fair Dismissal Code | A dismissal can be consistent with the Code | Not available | s 388 |
| Redundancy pay under the National Employment Standards | Excluded, with two exceptions (below) | Payable, unless another exclusion applies, such as under 12 months’ continuous service | s 121 |
| A casual employee’s notice that they believe they are no longer casual | After at least 12 months’ employment | After at least 6 months’ employment | s 66AAB |
| Giving a casual the Casual Employment Information Statement | At the start, and again after 12 months | At the start, after 6 months, after 12 months and after each later 12 months | s 125B |
Unfair dismissal protection has other conditions as well: under section 382, completing the minimum period is one requirement, and the employee must also be covered by an award or enterprise agreement or earn less than the high income threshold.
The Code, in outline
Section 388 says a dismissal was consistent with the Small Business Fair Dismissal Code if the employer was a small business employer immediately before the dismissal, or when notice was given, whichever came first, and complied with the Code. The Commission’s summary of what the Code asks:
- Serious misconduct. Dismissal without notice or warning is fair where the employer reasonably believes the conduct is serious enough to justify it. The Code’s examples include theft, fraud, violence and serious breaches of health and safety procedures, and the Commission’s summary adds sexual harassment, pointing to regulation 1.07 of the Fair Work Regulations.
- Other dismissals. The employee is warned that their job is at risk, given a valid reason based on their conduct or capacity, given a chance to respond, and given a reasonable chance to fix the problem.
- A support person. In discussions where dismissal is possible, the employee may have another person present, who cannot be a lawyer acting in a professional capacity.
- Proof. If the employee makes an unfair dismissal claim, the employer has to show it complied with the Code.
Redundancy pay: the two exceptions
Under section 121, the National Employment Standards’ redundancy pay rule does not apply where, immediately before the termination or when notice was given, the employer is a small business employer. The Fair Work Ombudsman names two exceptions.
A business made small by downsizing
An employer that becomes small because it ended other employees’ jobs may still owe redundancy pay. The Fair Work Ombudsman says this applies only where the employer is bankrupt or in liquidation, the employee is not covered by an industry-specific redundancy scheme, and the redundancies that made the business small happened on or after 15 December 2023. Section 121(4) sets out the timing of those earlier terminations in detail.
An industry scheme
An award or agreement can carry industry-specific redundancy terms that reach small businesses, so a small business in that industry may have to pay. The Fair Work Ombudsman’s advice is to check the award or agreement.
What the line does not change
Small businesses are not exempt from general protections or unlawful termination claims, which the Fair Work Ombudsman describes as different from unfair dismissal claims. Since 1 January 2025, intentionally underpaying wages has been a criminal offence. The Fair Work Ombudsman says a small business employer will not be referred for criminal prosecution if it has taken the steps in the Voluntary Small Business Wage Compliance Code, though civil penalties may still apply.
This definition counts heads. The Ombudsman’s Act counts part-timers as fractions, and the tax test counts no one at all.