Unfair dismissal in Australia is when an employee is dismissed in a manner that is harsh, unjust, or unreasonable. Eligible employees can apply to the Fair Work Commission within 21 days for remedies including reinstatement or compensation capped at 26 weeks’ pay.
Legislation: Fair Work Act 2009 Part 3-2 | Category: Termination
What is Unfair Dismissal?
Unfair dismissal occurs when an employee’s termination is harsh, unjust, or unreasonable. The Fair Work Commission assesses whether there was a valid reason for dismissal and whether proper process was followed, including giving the employee an opportunity to respond to allegations.
Who Can Claim Unfair Dismissal?
To be eligible, an employee must:
- Have completed the minimum employment period: 6 months (or 12 months for small business employers with fewer than 15 employees)
- Either be covered by a Modern Award or enterprise agreement, OR
- Earn below the high income threshold: $175,000 per year (2024-25)
What Does the Commission Consider?
- Was there a valid reason for the dismissal related to capacity or conduct?
- Was the employee notified of the reason and given an opportunity to respond?
- Was the employee allowed a support person at meetings?
- For performance issues, were warnings given?
- Was the dismissal consistent with how other employees were treated?
- The size of the business and HR resources available
Remedies for Unfair Dismissal
- Reinstatement: Return to the former position (or suitable alternative)
- Compensation: Up to 26 weeks’ pay or half the high income threshold ($87,500), whichever is lower, minus any earnings since dismissal
Key Points for Employers
- Applications must be lodged within 21 days — this is strictly enforced
- Procedural fairness is critical — even a valid reason can be unfair if process was deficient
- Most claims settle at conciliation without proceeding to hearing
- Defending claims is costly even when successful
- Genuine redundancy and dismissal consistent with the Small Business Fair Dismissal Code are excluded
Frequently Asked Questions
How long do you have to work before you can claim unfair dismissal?
Employees must complete the minimum employment period before they can claim unfair dismissal: 6 months for most employers, or 12 months for small business employers with fewer than 15 employees at the time of dismissal.
Can casuals claim unfair dismissal?
Yes, casual employees can claim unfair dismissal if they have completed 12 months of regular and systematic employment with a reasonable expectation of ongoing work. They must also meet the other eligibility requirements.
What is the maximum compensation for unfair dismissal?
The maximum compensation is the lesser of 26 weeks’ pay or half the high income threshold ($87,500 for 2024-25). Compensation is reduced by any money earned since dismissal and payment in lieu of notice received.
Can you claim unfair dismissal during probation?
No, employees cannot claim unfair dismissal until they have completed the minimum employment period (6 or 12 months). A contractual probation period does not change this. However, general protections claims can be made from day one.
