Unfair Dismissal

Overview

Unfair dismissal is one of the most common employment law claims in Australia. Under the Fair Work Act 2009 (Cth), a person who has been dismissed may apply to the Fair Work Commission for a remedy on the basis that their dismissal was harsh, unjust, or unreasonable. Not every dismissed employee is eligible to bring a claim. The applicant must have completed the minimum employment period — six months for employers with 15 or more employees, or twelve months for small business employers — and must be covered by the national workplace relations system. They must also earn below the high income threshold (indexed annually) or be covered by a modern award or enterprise agreement.

The Commission assesses whether a dismissal was harsh, unjust, or unreasonable by reference to a range of statutory criteria. These include whether there was a valid reason for the dismissal related to the person’s capacity or conduct, whether the employee was notified of that reason, whether they were given an opportunity to respond, and whether the employer’s process was consistent with the size and resources of the business. Procedural fairness is central — a valid reason alone will not save a dismissal if the process was deficient.

Key Considerations

An application for unfair dismissal must be lodged with the Fair Work Commission within 21 days of the dismissal taking effect. This is a strict time limit and extensions are granted only in exceptional circumstances. Missing the deadline is one of the most common reasons otherwise meritorious claims fail.

The Commission will first attempt to resolve the matter by conciliation — a confidential, without-prejudice process conducted by a conciliator. A significant proportion of claims settle at this stage. If conciliation is unsuccessful, the matter proceeds to a formal hearing or conference before a Commissioner, who will determine whether the dismissal was unfair.

Valid reason is assessed objectively — was there a sound, defensible, and well-founded reason for the dismissal? For conduct-based dismissals, this typically requires the employer to have conducted a reasonable investigation and to have formed a genuine belief, on reasonable grounds, that the conduct occurred. For capacity-based dismissals, the employer will usually need to demonstrate that the employee was given a reasonable opportunity to improve.

Procedural fairness carries substantial weight. Even where a valid reason clearly exists, the Commission may find a dismissal unfair if the employee was not told the reason, was not given an opportunity to respond, was not warned that their employment was at risk, or was denied a support person in meetings. The process matters as much as the substance.

Remedies include reinstatement (though this is rarely ordered in practice) and compensation of up to 26 weeks’ pay, reduced by matters such as the employee’s contribution to the situation and any remuneration earned since the dismissal. The compensation cap means the financial exposure for employers is defined, but the reputational cost and management time involved in defending a claim should not be underestimated.

Small business employers have access to the Small Business Fair Dismissal Code. If a small business employer can demonstrate compliance with the Code, the dismissal will not be found to be unfair. The Code sets a lower procedural threshold than what is expected of larger employers, but it still requires a genuine basis for the dismissal and, in most cases, a prior warning.

How We Can Help

We advise employers on how to manage terminations in a way that is substantively sound and procedurally defensible — reducing the risk of a successful unfair dismissal claim. We also represent employers and employees at every stage of the process, from conciliation through to contested hearings before the Commission.

Whether you are contemplating a dismissal and want to ensure your process will withstand scrutiny, or you have received an application and need to respond, we can provide clear, practical advice on your position and options.

Speak With Our Team

If you are dealing with an unfair dismissal issue — whether you are an employer managing a termination or responding to a claim, or an employee who believes you have been unfairly dismissed — we are happy to discuss your situation in confidence.