Crossing 15 staff changes your Fair Work obligations overnight. Unfair dismissal, redundancy pay and casual rules all shift. Here is what to fix first.
Nobody sends you a letter. There is no notification, no form to lodge, no reminder in your inbox. You hire someone, the team goes from fourteen to fifteen, and a set of legal protections your business has relied on since day one quietly stops applying.
Most owners find out afterwards. Usually during a termination that would have been straightforward last month, or a redundancy where someone asks about severance and the answer has changed. The HR obligations at 15 employees are not obscure or buried. They are just easy to miss, because nothing about the day feels different.
Here is what actually shifts, how the count is calculated, and the handful of things worth sorting out in the quarter before you get there.
The Threshold Is Counted On The Day It Matters
Section 23 of the Fair Work Act defines a small business employer as one with fewer than 15 employees at a particular time. Reach 15 and you are no longer a small business employer for the purposes of the Act.
Three details in that calculation catch people out.
It is a headcount, not full time equivalent. Ten part timers count as ten people, not five. A business with six full time staff and nine part timers is at fifteen.
Associated entities are counted together. If you run two companies with common ownership, the Act treats them as one entity for this purpose. Eight in one and seven in the other puts you over the line, whatever your org chart says.
Casuals count if they are regular and systematic. A genuinely irregular casual who picks up the odd shift does not count. A casual who works most Thursdays and has done for a year almost certainly does. This is the part businesses get wrong most often, because casuals feel like a separate category and the Act does not treat them that way.
There is one more wrinkle worth knowing. When the question is whether you were a small business employer at the time of a dismissal, the employee being dismissed is included in the count, along with anyone else being terminated at the same time. So a business that drops to fourteen by making one person redundant was still a fifteen person employer at the moment that mattered.
The count is also assessed at a particular time rather than annually. Seasonal businesses can move above and below the line more than once a year, and each event is judged on the headcount on that day.
What You Lose The Moment You Reach 15
Three protections disappear, and they are the ones that matter most when something goes wrong.
The Small Business Fair Dismissal Code no longer applies. This is the big one. The Code gives small business employers a defined process to follow, and if a dismissal genuinely followed it, the Fair Work Commission will treat that dismissal as fair. It is a real defence with a checklist attached. At fifteen employees it is gone, and every dismissal is assessed against the general test of whether it was harsh, unjust or unreasonable. That is a far more subjective standard, and it means your process, your documentation and your ability to show a valid reason now carry the whole weight.
The unfair dismissal window halves. Small business employees need twelve months of service before they can lodge an unfair dismissal claim. Once you have fifteen or more employees, that minimum employment period drops to six months. Anyone on your books past six months is now protected. If you have been treating the first year as a long runway to work out whether someone is right for the business, that runway just got cut in half.
The redundancy pay exemption ends. Most small business employers are not required to pay redundancy pay under the National Employment Standards. Once you cross the threshold, the full NES scale applies: four weeks of pay at one year of service, rising to sixteen weeks at nine years, then twelve weeks once an employee passes ten years. On a workforce of eighteen people with a few long servers, a restructure that would have cost nothing in severance last year can now cost tens of thousands.
Worth checking either way: some modern awards contain industry specific redundancy schemes that apply to small businesses regardless of the NES exemption. Construction is the common example. If you have never checked whether your award has one, do that before you rely on the exemption at all.
Under 15 Employees vs 15 And Over
What Changes For Your Casual Workforce
The employee choice pathway lets an eligible casual notify you in writing that they want to move to full time or part time employment. You have to respond in writing within 21 days, and you can only refuse on specific grounds.
The service requirement depends on your size. Casuals working for a small business employer need twelve months of service before they can give that notice. At fifteen or more employees, it drops to six months.
That halving deserves attention if you run a casual heavy operation. A hospitality venue or a retail business that grows from twelve to eighteen staff has just made a large part of its casual pool eligible to request permanency six months earlier than before. The notices tend to arrive in clusters once one person works out they can. Getting your position clear ahead of time, including which roles genuinely cannot be converted and why, is far easier than working it out under a 21 day clock.
What Does Not Change At All
It is worth being clear about the obligations that apply regardless of size, because businesses sometimes assume the small business label covers more than it does.
Minimum notice of termination applies to every employer. So does the requirement to keep accurate employee records and issue payslips within one working day of payday. Work health and safety duties, including the psychosocial hazard obligations, do not scale with headcount. Parental leave, family and domestic violence leave and every other National Employment Standard entitlement apply from your first employee.
The right to disconnect is now in this category too. It began for employers with fifteen or more employees on 26 August 2024 and reached small business employers on 26 August 2025, so it currently applies to every workplace. If you have not set expectations about out of hours contact, our guide on navigating the right to disconnect covers what a reasonable position looks like.
Award compliance never softened for small businesses either. Correct classifications, penalty rates and allowances have always been your responsibility, and the Fair Work Ombudsman publishes the tools to check them.
Not certain whether you have already crossed 15?
VeiraMal will run the count properly, including casuals and associated entities, and tell you where you stand.
Book Your Free Discovery CallThe HR Obligations At 15 Employees That Catch Businesses Out
Four patterns come up repeatedly.
The count was wrong. Casuals were left out because nobody thought they counted, or the second entity was treated as separate. The business believed it was at thirteen and was actually at seventeen, which it discovered during a claim.
Termination habits did not update. Managers kept running dismissals the way they always had, informally and without written warnings, because that approach had never caused a problem. It had never caused a problem because the Code was covering for a thin process.
Nobody costed redundancy before restructuring. A team change was planned on the assumption that severance was not payable. The number arrived late and blew the budget.
Contracts and policies were written for a fourteen person business. Probation clauses that assumed twelve months of protection, no consultation clause, no clear performance process. Documentation is the thing that gets examined when a dismissal is challenged, and generic templates rarely hold up. Our guide to HR documents every Australian business must have is a reasonable place to start auditing yours.
The Quarter Before You Cross The Line
If you are sitting at eleven or twelve and hiring, you have time to do this properly. Four things are worth doing.
Run the count honestly. Include every regular casual and every associated entity. Write the number down and keep it current, because you will want to be able to prove where you sat on a given date.
Get your termination process written and taught. Valid reason, notice in writing, an opportunity for the employee to respond, a support person allowed, records kept. Your managers need to be able to follow it without ringing you.
Model your redundancy exposure. Take your five longest serving employees and calculate what the NES scale would cost if their roles went tomorrow. Even if you never use the number, it changes how you plan.
Review contracts and policies against your new size. This is a short project with a clear finish line, and an HR compliance audit will usually surface everything in a couple of weeks.
1
Discovery Call
A free conversation about your headcount and where the risk sits.
2
Threshold Review
Contracts, policies and process checked against your actual size.
3
Ongoing Support
Advice on call when the difficult conversations arrive.
Where VeiraMal Fits
Businesses crossing this line rarely have an HR function yet. That is the awkward part. The obligations arrive at exactly the point where you have too much complexity for the owner to absorb and not enough workload to justify a full time HR salary.
VeiraMal was founded in Melbourne by Natasha Silveira in 2018 and works with businesses across Melbourne, Sydney and Hobart. Our HR services cover contracts, policies, employee relations and the awkward conversations, and our payroll team keeps records in the state they need to be in if anyone ever asks to see them. You get award expertise, employee relations experience and payroll capability from the same place, without carrying three salaries to get there.
One more threshold to keep on your radar. At a hundred employees, gender equality reporting obligations begin, and that is a data collection exercise you want to start early rather than in the reporting month. Our explainer on what WGEA reporting involves sets out what is required.
If you are somewhere between twelve and twenty staff right now, the useful next step is small. Count properly, then look honestly at whether your termination process would survive being examined. Get in touch and we will do both with you.
Frequently Asked Questions
What HR obligations change at 15 employees in Australia? +
You stop being a small business employer under the Fair Work Act. The Small Business Fair Dismissal Code no longer applies, the unfair dismissal minimum employment period drops from 12 months to 6, the National Employment Standards redundancy pay scale begins to apply, and eligible casuals can use the employee choice pathway after 6 months instead of 12.
Do casual employees count towards the 15 employee threshold? +
Yes, if they are regular casuals. A casual engaged on a regular and systematic basis is counted. Genuinely irregular casuals are not. This is the most common reason businesses miscalculate their own headcount.
Do two companies with the same owner get counted together? +
Yes. The Fair Work Act treats associated entities as one entity when calculating the number of employees. Two related businesses with eight and seven staff are a single employer of fifteen for this purpose.
Does a small business ever have to pay redundancy pay? +
Sometimes. Most small business employers are exempt from redundancy pay under the National Employment Standards, but some modern awards contain industry specific redundancy schemes that apply regardless, and an employment contract or enterprise agreement can create its own entitlement. Check the instrument that covers the employee before assuming nothing is owed.
What happens if we drop back below 15 employees? +
Your status is assessed at the relevant time rather than annually, so a business can move above and below the line. Note that when the question relates to a dismissal, the employee being dismissed and anyone else terminated at the same time are included in the count, so reducing headcount through terminations does not retrospectively make you a small business employer for those dismissals.
Crossing 15 Staff? Sort The Paperwork Before The Problem
VeiraMal reviews your headcount, contracts, policies and termination process against the obligations that actually apply to your size. Businesses in Melbourne, Sydney and Hobart.
Book Your Free Discovery CallMelbourne: Level 2, 480 Collins Street, VIC 3000
Sydney: Level 26, 44 Market Street, NSW 2000
Hobart: Level 6, Reserve Bank Building, 111 Macquarie Street, TAS 7000
info@veiramal.com
