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Unfair Dismissal

Published June 23, 2017 (last updated on April 18, 2024) | Adam Wyatt - Content Writer

Corporate employee is flustered and upset at meeting table

What is unfair dismissal?

An employee has been dismissed if the employee’s employment is terminated by the employer, or if the employee resigns because they were forced to do so because of the conduct of the employer (known as constructive dismissal).

A person has been unfairly dismissed when the Fair Work Commission is satisfied that:

  • the person has been dismissed

  • the dismissal was harsh, unjust or unreasonable

  • the dismissal was not a case of genuine redundancy

  • where the employer is a small business, the dismissal was not consistent with the Small Business Fair Dismissal Code

Who can make an unfair dismissal claim?

A person can make an unfair dismissal claim if they have:

  • completed the minimum employment period

  • are covered by a Modern Award (or award-based transitional instrument) or if an enterprise agreement (or agreement-based transitional instrument) applies to the person

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What is the minimum employment period?

Employees must have served a minimum employment period before they can make an unfair dismissal claim. Minimum employment periods are:

  • one year for employees of a small business (a business with less than 15 employees)

  • six months if the employer is not a small business

What constitutes harsh, unjust or unreasonable?

Employers need to ensure procedural fairness is applied when dismissing an employee. When considering whether a dismissal was harsh, unjust or unreasonable, the Fair Work Commission will look at all of the following factors:

  • whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)

  • whether the person was notified of that reason

  • whether the person was given any opportunity to respond to that reason

  • any unreasonable refusal by the employer to allow the presence of a support person for any discussion relating to the dismissal

  • if the dismissal was related to unsatisfactory performance, whether the employee had been warned about the unsatisfactory performance before the dismissal

  • the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in making the dismissal

  • the degree to which the absence of dedicated human resource management specialists or expertise in the employer’s enterprise would be likely to impact on the procedures followed in the dismissal

  • any other matters the Fair Work Commission considers relevant

What is the Small Business Fair Dismissal Code?

The Small Business Fair Dismissal Code is a legislative instrument declared by the Minister for Employment.

After conducting a thorough investigation, it is fair for a small business employer to dismiss an employee without notice or warning when the employer has reasonable grounds to believe the employee was guilty of serious misconduct. Serious misconduct includes theft, fraud, violence and serious breaches of work health and safety procedures. For a dismissal to be deemed fair, it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. The employer must base this report on reasonable grounds.

In other dismissals, an employer must give the employee a valid reason based on their capacity or conduct to do the job if they are at risk of being dismissed. The employee must be warned in writing that they risk being dismissed if there is no improvement. Further, the employer must provide the employee with an opportunity to respond to the warning, giving them a reasonable chance to rectify the problem. Rectifying the problem might involve the employer providing additional training and ensuring the employee clearly understands their job expectations.

If the employee makes an unfair dismissal claim to the Fair Work Commission, the employer will be required to provide evidence of compliance with this Code. This evidence may include the warning that has been given (except in cases of summary dismissal), a completed checklist, copies of written warning(s), and a statement of termination or signed witness statements.

Follow the correct procedures

All businesses should have employment contracts and clearly outline business policies and procedures in an employee handbook. Both should also define the terms and conditions of employment and provide clear disciplinary rules and procedures for dismissal. It is wise to have new employees sign their employment contract, handbook and induction checklist to show they have read them. Then you need to enforce those rules and procedures consistently and fairly.

Always follow correct procedure and have all the facts before you dismiss an employee. Employsure are specialists in all aspects of fair and unfair dismissals. Call us today on 1300 651 415 for specialist advice.

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Call Our Team of Advisers Who Will Help You with Your Workplace Questions.

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Frequently Asked Questions

Can a casual employee claim unfair dismissal?

Casual employees can access an unfair dismissal claim if their employment is: 

  • regular and systematic 
  • there is a reasonable expectation of ongoing employment 

The Fair Work Commission will consider the type and frequency of the work carried out by the casual employee. However, the Fair Work Commission would also need to be content with other eligibility criteria. For example, they would need to be satisfied that the casual employee was dismissed and had served the minimum qualifying period. 

How much is a payout for unfair dismissal?

The Fair Work Act has rules about how much compensation an employer may be ordered to pay. An employee can only receive compensation for lost income. An employee does not always receive compensation, even if the dismissal was unfair.

Most employees only receive a small amount of compensation for unfair dismissal. The median is between 6-8 weeks of pay. 

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