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 (ss 382, 385, 387, 392, 394) | Category: Termination
Current as at 15 September 2026. Figures apply to dismissals on or after 1 July 2026 and are indexed every 1 July.
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: $190,100 per year (from 1 July 2026, up from $183,100)
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). Reinstatement is not capped.
- Compensation: Up to 26 weeks’ pay or half the high income threshold ($95,050 from 1 July 2026), whichever is lower, minus any earnings since dismissal
What Changed in 2026
- 1 July 2026: High income threshold rose to $190,100. Compensation cap rose to $95,050. The Commission application fee rose to $92.70.
- 7 July 2026: The Building Cooperative Workplaces reforms gave the Commission power to decide unfair dismissal matters “on the papers” where appropriate and both parties consent, to deal with general protections and unlawful termination disputes without first deciding whether a dismissal occurred, and to block repeat applicants whose claims have been dismissed as frivolous or vexatious. These process changes generally apply to applications made on or after 7 July 2026.
- Since 26 August 2024: Casual status is assessed on the real substance of the relationship, not just the words in the contract. A worker labelled casual who is in practice permanent may have counted service towards the minimum employment period all along.
Key Points for Employers
- Applications must be lodged within 21 days. The deadline is strictly enforced and extensions require exceptional circumstances.
- 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. The $92.70 filing fee is the employee’s only real barrier to lodging.
- Genuine redundancy and dismissal consistent with the Small Business Fair Dismissal Code are excluded. Complete the Code checklist before the dismissal, not after.
- Check casual classification before terminating. Getting it wrong can hand an employee access to the jurisdiction you assumed they did not have.
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. A casual employee must complete the same minimum employment period as anyone else, 6 months or 12 months for a small business employer. Casual service only counts towards that period if the employment was regular and systematic and the employee had a reasonable expectation of continuing work on that basis. Since August 2024 the Commission looks at how the arrangement actually worked, not just what the contract called it.
What is the maximum compensation for unfair dismissal?
For dismissals on or after 1 July 2026, the maximum is the lesser of 26 weeks’ pay or $95,050, which is half the $190,100 high income threshold. Compensation is reduced by any money earned since dismissal and payment in lieu of notice received. Reinstatement orders are not subject to the cap.
How much does it cost an employee to lodge a claim?
The Fair Work Commission application fee is $92.70 from 1 July 2026. It is refunded if the matter settles or is withdrawn before hearing. The fee can also be waived in cases of serious hardship.
Can you claim unfair dismissal during probation?
No. Employees cannot claim unfair dismissal until they have completed the minimum employment period of 6 or 12 months. A contractual probation period does not change this. General protections claims can be made from day one.
