Unfair dismissal is dismissal that is harsh, unjust, or unreasonable, with remedies including reinstatement or compensation.
Legislation: Fair Work Act 2009 Part 3-2 | Category: Termination
What is Unfair Dismissal?
Unfair dismissal is dismissal that is harsh, unjust, or unreasonable. Eligible employees can apply to the Fair Work Commission within 21 days of dismissal for a remedy, which may include reinstatement or compensation (capped at 26 weeks’ pay or half the high income threshold, whichever is lower).
To be eligible, employees must have completed the minimum employment period (6 months, or 12 months for small business employers), and either be covered by an award or enterprise agreement, or earn below the high income threshold. Some dismissals are excluded, including genuine redundancy and dismissal consistent with the Small Business Fair Dismissal Code.
Key Compliance Points for Employers
- The Commission considers: whether there was a valid reason, whether the employee was notified and given opportunity to respond, whether a support person was refused, and whether warnings were given for poor performance
- Procedural fairness is critical — even a valid reason can be unfair if process was deficient
- Most claims settle at conciliation without proceeding to hearing
- The 21-day application period is strictly enforced — extensions are rare
- Defending claims is costly even when successful — prevention is better than cure
Frequently Asked Questions
How long do you have to work before you can claim unfair dismissal?
Employees must complete the minimum employment period: 6 months for most employers, or 12 months for small business employers with fewer than 15 employees at the time of dismissal.
Can casual employees 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 continuing employment.
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), minus any earnings since dismissal.
