Losing a job or making the decision to end someone’s employment is a big moment. Emotions can run high, and there’s often a lot at stake for both sides.
That’s why Australia’s workplace laws set out clear rules around when a dismissal is “unfair,” what a fair process looks like, and what remedies might apply.
In this guide, we break down unfair dismissal in plain English so you know your rights and obligations. Whether you’re an employer managing risk or an employee wondering where you stand, we’ll walk through eligibility, valid reasons, process, and practical steps you can take to avoid disputes.
What Is Unfair Dismissal In Australia?
Unfair dismissal is when an employee is dismissed from their job in a way that is “harsh, unjust or unreasonable.” This is assessed by the Fair Work Commission (FWC) on a case-by-case basis.
Generally, three things matter most:
- Was there a valid reason for dismissal related to conduct, capacity or operational requirements?
- Was the process fair (for example, was the employee told the reason and given a chance to respond)?
- Is the outcome disproportionate in the circumstances (i.e. harsh, unjust or unreasonable)?
The FWC weighs these factors by reference to the statutory checklist in section 387 of the Fair Work Act, which looks at issues like notice of concerns, opportunity to respond, support person, warnings (for performance), and the size and HR resources of the employer.
Who Can Make An Unfair Dismissal Claim?
Not everyone can bring an unfair dismissal application. The Fair Work Act sets out eligibility criteria. In most cases, an employee may apply if they:
- Were dismissed (not a genuine redundancy or a voluntary resignation).
- Have completed the minimum employment period (usually 6 months, or 12 months for small business employers).
- Earn less than the high-income threshold or are covered by an award or enterprise agreement.
- Lodge the claim within 21 days of the dismissal taking effect.
Casuals can be eligible if they were employed on a regular and systematic basis and had a reasonable expectation of ongoing employment.
Probation does not guarantee a “risk-free” termination. While many employees won’t meet the minimum employment period during probation, the safest approach is to follow a fair process. Our overview of termination during probation explains how to manage this period lawfully.
It’s important to separate unfair dismissal from other claims like general protections or discrimination. Those claims follow different rules and timelines and can apply even where an employee doesn’t qualify for unfair dismissal.
What Counts As A Valid Reason And A Fair Process?
The FWC looks at two core questions: was there a valid reason for dismissal, and did the employer follow a fair process?
Valid Reasons
Common “valid reasons” include:
- Serious misconduct (e.g. theft, violence or serious safety breaches).
- Repeated misconduct or breach of policy after warnings.
- Poor performance where the employee was informed and given a reasonable chance to improve.
- Loss of required qualifications or lawful capacity to perform the role.
- Operational change leading to a genuine redundancy (more on this below).
For performance or conduct concerns, “valid” means the reason is based on evidence and related to the job, not assumptions, personality clashes or unsubstantiated allegations.
Procedural Fairness (Natural Justice)
Even with a valid reason, a dismissal can be unfair if the process is flawed. The key elements include:
- Tell the employee clearly (and preferably in writing) what your concerns are.
- Give them a real opportunity to respond before a decision is made.
- Allow a support person in any meeting, if requested.
- Consider the employee’s response in good faith and investigate where appropriate.
- Provide warnings for performance (unless it’s serious misconduct).
If allegations are serious, many employers issue a show cause letter and, where necessary, consider standing down an employee pending investigation to ensure a fair and safe process.
Genuine Redundancy Isn’t Unfair Dismissal
A redundancy can be a “genuine redundancy” if the employer no longer requires the person’s job to be done by anyone due to operational changes, the employer has complied with consultation obligations in any applicable award/enterprise agreement, and redeployment was not reasonable.
The legal test is set out in section 389 of the Fair Work Act. If the dismissal is a genuine redundancy, unfair dismissal generally will not apply (though other claims might still be available in some cases).
Common Scenarios And How They’re Assessed
Performance Isn’t Improving Despite Support
For underperformance, it’s important to identify issues early, set clear expectations and timeframes, and document the process. A warning should be specific about what needs to change and the consequences if it doesn’t.
If termination follows a proper performance management process and a fair opportunity to improve, the FWC is more likely to find the decision reasonable. Having a clear Employment Contract and up-to-date workplace policies makes this much easier to manage.
Single Act Of Serious Misconduct
Where there’s alleged serious misconduct (like theft or violence), the employee can usually be dismissed without notice after a prompt and fair investigation. However, you still need to put the allegation to the employee and genuinely consider their response. Skipping this can undermine the entire decision.
Conduct Issues That Are Not “Serious Misconduct”
For lesser conduct issues (e.g. repeated lateness or minor policy breaches), the FWC expects a proportionate, stepped approach. That might include verbal and written warnings, coaching, and a final warning before termination. The process should be consistent with your policies and past practice.
End Of Probation
Many employers assume probation is a free pass. It isn’t. While unfair dismissal eligibility might not be met yet, other risks remain (e.g. discrimination or adverse action claims). A short, fair process-setting expectations, discussing concerns, and confirming the decision-still matters. Our guide to probationary termination steps through the practicalities.
Redundancy After A Restructure
Restructures are legitimate, but the redundancy must be genuine. Document the business case, consult where required, and actively consider redeployment options. The FWC will scrutinise whether the role really disappeared, or whether the employee was effectively “replaced” under a new title.
The Unfair Dismissal Process: What Happens If A Claim Is Made?
Unfair dismissal applications must be lodged within 21 days of the dismissal taking effect. Here’s how the process generally unfolds.
1) Application And Employer Response
The employee files their application with the FWC setting out why they say the dismissal was unfair. The employer then files a response explaining the reasons for dismissal and the process followed, and attaches relevant evidence (letters, performance records, policies, meeting notes).
2) Conciliation Conference
Most matters start with a confidential phone conciliation run by the FWC to try and resolve the dispute informally. Many cases settle at this stage-often with an agreed separation payment, a statement of service, and sometimes non-monetary terms (e.g. mutual non-disparagement). It’s common to discuss notice or payment in lieu of notice, even if those were already addressed at termination.
3) Arbitration (If Not Resolved)
If the matter doesn’t settle, it can proceed to a formal hearing (arbitration) where the Commission decides whether the dismissal was unfair and, if so, what remedy is appropriate.
Potential Remedies
- Compensation (capped): The FWC can order compensation up to the statutory cap, not for hurt and suffering, but mainly for economic loss.
- Reinstatement: Sometimes the FWC orders the employee be returned to their job (more common in public sector or larger organisations where relationships can be managed).
- No remedy: If the FWC finds the dismissal was fair, the claim will be dismissed.
Throughout, keep your documentation organised. Clear records of warnings, meetings, emails, and policy training can change the outcome.
How Employers Can Reduce Unfair Dismissal Risk
Prevention is far better than defense. Here are practical measures that make a big difference.
Use Clear Contracts And Policies
Start with a well-drafted Employment Contract that sets out duties, performance expectations, notice, and grounds for termination. Pair it with accessible policies (conduct, performance management, leave, grievance), ideally captured in a staff handbook or a tailored workplace policy suite.
Train Managers On Process
Most unfairness issues arise from how the decision is handled-not the reason itself. Train managers on giving feedback, documenting concerns, holding fair meetings (including the right to a support person), and escalating where required.
Investigate Before You Decide
If allegations are serious, consider a short paid stand down while you investigate. Use a structured approach: identify the allegations, gather evidence, invite a response, genuinely consider it, then decide. A properly framed show cause process can be decisive evidence that the dismissal was fair.
Be Consistent And Proportionate
Apply policies consistently. If you’ve typically given warnings for similar issues, do the same here. Consider whether a final warning, performance improvement plan, or short garden leave period (where appropriate) would be more proportionate than immediate termination.
Document, Document, Document
Take short file notes after key discussions and confirm important steps in writing. Keep copies of signed contracts, policy acknowledgements, warnings, and meeting invites. In a dispute, contemporaneous records carry real weight.
Get Advice On Complex Cases
Some matters are especially sensitive-misconduct allegations, medical capacity, redundancies affecting multiple roles, or senior exits. Getting advice early can help you choose the right path and prepare the right documents (for example, a tailored separation package drawn from an employee termination documents suite).
Tips For Employees Considering An Unfair Dismissal Claim
If you’re an employee who believes your dismissal was harsh, unjust or unreasonable, a few practical steps can help you assess your options.
- Act quickly: The 21-day time limit is strict. Diarise it and start gathering your documents now.
- Collect evidence: Employment contract, performance reviews, emails, warnings, medical certificates, and messages that relate to the dismissal.
- Write a short timeline: Note key dates (meetings, warnings, performance plans) and what was said or provided.
- Consider your goals: Is reinstatement realistic or is compensation your aim? This guides how you approach conciliation.
- Be open to settlement: Many cases resolve early with sensible terms so both parties can move forward.
If you signed anything at termination (like a deed of release) get advice promptly-what you’ve signed may affect whether you can make a claim.
Practical Issues Around Notice, Pay And Final Entitlements
Whatever the reason for ending employment, you still need to square away the basics:
- Notice or payment in lieu: Unless it’s serious misconduct, employees are entitled to notice or payment in lieu of notice based on length of service and any contract terms.
- Unpaid wages and leave: Pay all outstanding wages and accrued annual leave, and deal with any long service leave per the applicable state or territory rules.
- Redundancy pay: If it’s a redundancy (and not exempt as a small business, for example), severance may apply-check the National Employment Standards and any applicable award or enterprise agreement.
- Record keeping: Provide a payslip and final pay summary, and retain employment records as required by law.
Clear, accurate finalisation helps reduce disputes after the fact and shows the process was handled professionally.
Key Takeaways
- Unfair dismissal is about both substance and process-the FWC will look at the reason for dismissal and whether the process was fair under section 387.
- Eligibility matters: minimum employment periods, the high-income threshold, and the 21-day time limit all affect whether a claim can proceed.
- Genuine redundancy is excluded from unfair dismissal, but it must meet the statutory test in section 389 (consultation and redeployment are key).
- Most disputes turn on process-clear warnings, a chance to respond, investigation where needed, and consistent application of policies.
- Good foundations help: a clear Employment Contract, sensible workplace policies, and well-kept records make it easier to manage performance and defend decisions.
- Conciliation resolves many claims; where matters continue, remedies are usually compensation (capped) or, less commonly, reinstatement.
- When issues are sensitive-serious misconduct, medical capacity or restructures-get advice early and use appropriate documents such as a show cause process or an employee termination documents suite.
If you’d like a consultation about unfair dismissal risks, processes or responding to a claim, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
