Unfair Dismissal in Australia: What You Need to Know

Being dismissed from your job can be stressful, frightening, and financially devastating — especially if you feel the dismissal was unjust. Australian law protects eligible employees from dismissal that is harsh, unjust, or unreasonable through the unfair dismissal system administered by the Fair Work Commission.

What Is Unfair Dismissal?

A dismissal is considered unfair if it was:

Harsh — the penalty was disproportionate to the conduct or performance issue
Unjust — the employee was not actually guilty of the alleged conduct
Unreasonable — the decision was not based on sound reasoning or evidence

The Fair Work Act also specifies that a dismissal is unfair if it was not a genuine redundancy, and the employer did not follow a fair process.

A fair process typically includes: telling the employee what is wrong, giving them an opportunity to respond, considering their response before making a decision, and allowing them to have a support person present during formal meetings.

Are You Eligible to Claim?

Not every dismissed employee can bring an unfair dismissal claim. To be eligible, you must meet all of the following:

Completed the minimum employment period — 6 months for businesses with 15 or more employees; 12 months for small businesses (fewer than 15 employees)
Be covered by the national employment system — most private sector employees qualify
Have been dismissed — resignation does not count, unless it was forced (constructive dismissal)
Earn below the high-income threshold — currently approximately $175,000 per year. Employees above this threshold who are not covered by an award or enterprise agreement are not eligible.

Casuals can claim unfair dismissal if they were employed on a regular and systematic basis and had a reasonable expectation of continued employment.

What Makes a Dismissal Unfair?

Courts and the Fair Work Commission look at a range of factors when assessing a claim:

Was there a valid reason for the dismissal related to the employee's conduct or capacity?
Was the employee notified of that reason?
Was the employee given an opportunity to respond?
Was the employee allowed to have a support person present?
Had the employer warned the employee about the performance or conduct issue prior to dismissal?
Was the size of the business considered in assessing whether the process was fair?

A dismissal can be harsh even if there was a valid reason, if the penalty was excessive relative to the conduct. For example, dismissing a long-serving employee with an otherwise clean record for a single minor mistake may be considered harsh.

The Fair Work Commission Process

If you wish to make an unfair dismissal claim, here is what happens:

Lodge an application — you must file your application with the Fair Work Commission within 21 days of the dismissal taking effect. Missing this deadline is very serious — extensions are rarely granted.
Conciliation — most cases go to a confidential telephone conciliation session with a Commission conciliator. Around 80% of unfair dismissal cases are resolved at this stage, often with a settlement payment.
Hearing — if conciliation fails, the case proceeds to a formal hearing before a Commissioner, who will hear evidence and make a binding decision.
Decision — the Commissioner will determine whether the dismissal was unfair, and if so, what remedy is appropriate.

The application fee is modest (and can be waived in cases of financial hardship). You do not need a lawyer to represent you at the Commission, though many people choose to have one.

Remedies

If the Fair Work Commission finds the dismissal was unfair, two remedies are available:

Reinstatement — you are returned to your former position (or an equivalent position). This is the primary remedy under the Act.
Compensation — if reinstatement is not appropriate (e.g., the employment relationship is irreparably broken, or the business has closed), the Commission can order compensation of up to 26 weeks' pay. Compensation is capped and cannot include pain and suffering or hurt feelings — it compensates for lost income only.

The Commission will consider your efforts to mitigate your loss (i.e., find alternative employment) when calculating compensation.

The 21-Day Time Limit

This cannot be emphasised enough: you must lodge your unfair dismissal application within 21 days of the dismissal taking effect. If you miss this deadline, you will almost certainly lose the right to make a claim. The Commission has very limited discretion to extend the time, and only does so in exceptional circumstances.

Start counting from the date your dismissal took effect — not the date you were told about it, and not your last day of work. If you are unsure when your dismissal took effect, seek advice immediately.

If you think you may have been unfairly dismissed, contact the Fair Work Ombudsman (fairwork.gov.au) or a lawyer as soon as possible.