Being dismissed from your job is often a stressful and confusing experience. The Fair Work Act 2009 provides a framework to protect employees from unfair dismissals in Australia, but understanding what actually constitutes ‘unfair’ can be challenging. If you’ve been dismissed and are wondering about your rights, consulting with experienced Stevens & Associates in Sydney can help clarify your position under Australian employment law.
Key Takeaways
- An unfair dismissal occurs when termination is harsh, unjust or unreasonable, without valid reason, or procedurally unfair.
- Not all employees are eligible to make claims – eligibility depends on factors like employment status, length of service and income thresholds.
- Claims must be filed within 21 days of dismissal taking effect.
- Remedies can include reinstatement or compensation up to 26 weeks’ pay.
- Both employers and employees benefit from understanding the legal framework before taking action.
What is ‘unfair dismissal’ under the Fair Work Act?
Section 385 of the Fair Work Act defines unfair dismissal as termination that is harsh, unjust or unreasonable, not consistent with the Small Business Fair Dismissal Code (if applicable), and not a case of genuine redundancy.
To establish an unfair dismissal claim, an applicant must prove they were actually dismissed (not resigned), the dismissal was not a case of genuine redundancy, and the termination was harsh, unjust or unreasonable in the circumstances.
Not everyone can make a claim. Eligibility criteria include:
- Being an employee (not a contractor)
- Completing the minimum employment period (6 months, or 12 months for small businesses)
- Earning below the high-income threshold (unless covered by an award or enterprise agreement)
- Filing within the 21-day timeframe
Legal tests applied by the Fair Work Commission
When determining if a dismissal was unfair, the Commission considers whether it was harsh, unjust or unreasonable by examining several factors outlined in s387 of the Act:
Valid reason: Was there a sound, defensible reason related to the employee’s capacity or conduct? The reason must be based on facts, not mere allegations.
Notification: Was the employee notified of this reason and given an opportunity to respond before the dismissal decision?
Support person: Was the employee unreasonably refused a support person during discussions about the dismissal?
Warnings: For performance-related dismissals, was the employee warned about unsatisfactory performance and given a chance to improve?
The Commission weighs these factors against each other, with no single factor being determinative on its own.
Procedural fairness requirements
Procedural fairness is a cornerstone of fair dismissal. Employers should follow these steps before terminating employment:
Conduct a thorough investigation into alleged misconduct or performance issues, gathering relevant evidence.
Provide the employee with specific details of concerns in writing.
Allow sufficient time for the employee to prepare a response.
Hold a meeting where the employee can respond to allegations with a support person present if requested.
Consider the employee’s response genuinely before making a decision.
Document all steps of the process with dated notes of meetings, copies of warnings, and performance improvement plans.
“Even when there is a valid reason for dismissal, failing to follow a fair procedure can render the termination unfair under the Act.” – Stevens & Associates
Common lawful dismissal scenarios
Not all dismissals qualify as unfair under the Act. Common exclusions include:
Genuine redundancy: Where the employer no longer requires the job to be performed due to operational changes, has complied with consultation obligations, and has considered redeployment options.
Serious misconduct: Behaviour that causes serious and imminent risk to health, safety, or the employer’s reputation may justify summary dismissal without notice, though procedural fairness is still required.
End of fixed-term contracts: When a contract with a specified end date expires naturally.
Probationary terminations: During the minimum employment period, employees generally cannot claim unfair dismissal (though other claims may be available).
Time limits and jurisdictional rules
The Fair Work Commission strictly enforces a 21-day deadline for filing unfair dismissal applications from the date the dismissal takes effect. Extensions are rarely granted and only in exceptional circumstances.
Small businesses (fewer than 15 employees) are subject to the Small Business Fair Dismissal Code, which provides a simpler dismissal process. Following this code creates a defence against unfair dismissal claims.
It’s worth noting that unfair dismissal is just one avenue for challenging termination. Other options include general protections claims (which protect workplace rights and address discriminatory dismissals) and workers’ compensation claims for injuries.
Remedies available under the Fair Work Act
If a dismissal is found to be unfair, the Commission can order:
Reinstatement: Returning the employee to their former position (or an equivalent one). This is the primary remedy under the Act, though it’s ordered in fewer than 10% of successful cases.
Compensation: Where reinstatement is inappropriate, compensation of up to 26 weeks’ pay may be ordered. The amount depends on factors including length of service, effect of the dismissal, efforts to mitigate loss, and the employer’s financial situation.
The Commission cannot order payment for shock, hurt feelings, or punitive damages.
Building a strong unfair dismissal claim
To prepare an effective claim, gather these key pieces of evidence:
Employment documentation: Contract, position description, policies, and procedures.
Performance history: Reviews, commendations, and any warnings received.
Dismissal documentation: Termination letter and any meeting notes.
Relevant communications: Emails, messages, and witness statements that support your case.
The process typically involves filing the application, participating in conciliation (where about 80% of cases settle), and if necessary, proceeding to a formal hearing or conference.
Guidance for employers
Employers can reduce the risk of unfair dismissal claims by:
Maintaining clear policies about conduct and performance expectations.
Documenting performance issues as they arise.
Providing opportunities for improvement before considering dismissal.
Following a consistent and fair procedure for all disciplinary matters.
Seeking legal advice before terminating employment in complex cases.
Guidance for employees
If you’ve been dismissed, take these immediate steps:
Request written reasons for your dismissal if not provided.
Gather all relevant documents and communications.
Make detailed notes about the dismissal process while events are fresh in your mind.
Seek advice promptly from the Fair Work Commission, a union, or an employment lawyer.
Be mindful of the strict 21-day deadline for filing a claim.
Case examples that define ‘unfair’
Recent Commission decisions highlight what typically makes a dismissal unfair:
Disproportionate response: An employee with a clean 10-year record dismissed for a single minor breach of policy.
Procedural failure: Dismissal without giving the employee a chance to respond to allegations.
Insufficient evidence: Termination based on unsubstantiated claims without proper investigation.
Failure to consider mitigating factors: Dismissal without considering the employee’s personal circumstances or explanations.
By contrast, dismissals typically considered fair include those involving proven serious misconduct, persistent underperformance despite warnings and support, or genuine redundancy with proper consultation.
Conclusion
Understanding what makes a dismissal ‘unfair’ under the Fair Work Act helps both employers and employees navigate the complexities of employment termination. For employers, following proper procedures and maintaining thorough documentation can significantly reduce the risk of successful claims. For employees, knowing your rights and the available remedies can help you take appropriate action if you believe your dismissal was unfair.
If you’re facing a dismissal situation, whether as an employer or employee, seeking timely expert advice is critical given the technical nature of this area of law and the strict timeframes involved. Stevens & Associates can provide the guidance needed to navigate these challenging circumstances with confidence.
