Dismissal–when is it ‘fair’, and when is it not?

What is unfair dismissal?

Unfair dismissal is when the termination of an employee is deemed by the Fair Work Commission to be harsh, unjust or unreasonable.

This may include circumstances where:

  • The termination was without good cause; or
  • The employee was not given sufficient warning and opportunity to remedy issues.

Is ‘unlawful termination’ different?

Yes. Unlawful termination is where an employee is terminated due to a discriminatory reason – for example, on the grounds of an employee’s race, age, marital status, pregnancy or religion, or because of their temporary absence from work because of illness or injury.

Unfair dismissal is more common than unlawful termination.

There are strict time limits for starting a claim for unlawful termination of employment so you need to act quickly and get legal advice.  An unlawful termination application to the Fair Work Commission must be lodged within 60 days of the dismissal taking effect.

What does the Fair Work Commission look at when deciding if a dismissal was unfair?

The Fair Work Commission will consider factors such as:

  • Whether there was a valid reason for the dismissal related to the employee’s capacity or conduct;
  • If a valid reason, whether the employee was notified of that reason at the time of dismissal, and whether the employee was given an opportunity to respond;
  • Whether the employee had been warned about that unsatisfactory performance before the dismissal;
  • Circumstances surrounding the actual dismissal (i.e. what procedure was followed); and
  • The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.

I am an employer. How do I safeguard myself against unfair dismissal claims by ex-employees?

As an employer, it is important to implement and enforce procedures for dealing with the termination of a staff member.

We recommend using a written warning system whereby an employee is given written warnings for poor performance or minor misconduct. These warnings can be later used as evidence to rebut any unfair dismissal claims.

Employers should also show that an employee has been given adequate opportunity to respond to and address the issue the subject of a warning prior to being terminated for that reason.

In short, you need to be open, honest, direct and fair. Dismissal should not come as a surprise.

I run a small family business and I only employ 5 staff members – do the same rules apply to me?

No. ‘Small business employers’, being employers who employ less than 15 non-casual workers, have greater leniency when it comes to termination of employees.

This is because small business employers are not expected to have the resources to be able to put into place comprehensive HR policies and procedures.

However, a small business employer will still be expected to demonstrate that the termination was for good cause and (for performance-based termination) that the terminated employee was given at least 1 warning prior to the termination.

I’m an employee and I was forced to resign – can it still be unfair dismissal?

Yes. If you were forced to resign in circumstances where there was no alternative (i.e. resign or be fired), your resignation is what is known as “constructive dismissal”, and it may be deemed unfair dismissal by the Fair Work Commission if it satisfies the other relevant criteria.

I have been demoted. If I resign, can I claim that I was constructively dismissed?

Not usually. Demotion is only seen as a dismissal if there has been a significant reduction in remuneration or duties.

However, demotion can sometimes be used to orchestrate constructive dismissal, which may be harsh, unjust or unreasonable.

Can I be dismissed if I am away from work sick?

Potentially. Dismissal in the context of illness is a delicate issue.

As a general rule you cannot be dismissed due to temporary absence due to illness. This is workplace right, and termination would be unlawful.

However, if you are sick for more than 3 months within a 12 month period, then your employer may have reason to consider you to be permanently unable to perform your duties, and therefore have reasonable grounds for your dismissal.

You need to clearly communicate with your employer, and provide them with reasonable evidence of your sickness.

You can generally not be terminated while claiming Workcover.

My boss told me I have been ‘summarily dismissed’ – what does that mean?

‘Summary dismissal’ is when an employee is terminated ‘on the spot’ due to serious misconduct. This most commonly involves a criminal offence (such as theft, fraud or violence), or conduct that puts the safety and welfare of staff or clients at risk (which usually involves a breach of OHS&W laws or policies).

Summary dismissal takes effect immediately, without notice or payment in lieu of notice.

From an employer’s perspective, it is important to have clear behaviour and workplace safety policies in place, as well as training, so that summary dismissal will not come as a surprise to an employee.

What should I do if I think I’ve been unfairly dismissed?

It is important that you get legal advice as soon as possible. Time limits apply. Call us on 1300 654 590.

If you think you have been unfairly dismissed, you can lodge a claim with the Fair Work Commission provided you meet certain eligibility criteria.

These are:

  • You must have completed a minimum period of service of 6 months with your employer (12 months for a small business employer); and
  • You are covered by an Award or Enterprise Agreement, or you earn less than the threshold amount (which is currently $123,300 per annum); and
  • It is not a case of genuine redundancy.

For casual employees, you have to have been employed on a regular and systematic basis and had a reasonable expectation of continuing employment on a regular and systematic basis to be eligible to make an unfair dismissal claim.

I am a ‘casual’ employee, but I have been working for the same employer for 3 years. Can I be unfairly dismissed?

If you are a genuine causal worker, the unfair dismissal laws are not available to you. However, if you have been working for more than 6 months, and you have a reasonable expectation of continued employment, then you may be able to bring a claim for unfair dismissal.

I have been a contract worker for 3 years, with my annual contract being rolled over. I have been told that my contract will not be renewed. Can I bring a claim for unfair dismissal?

There is a difference between a ‘contractor’, and an employee on a ‘fixed term contract’.

If you are a genuine contractor, then you cannot claim unfair dismissal.

If you are an employee on a fixed term contract, then you can generally not claim unfair dismissal if your contract is not renewed. This is particularly so if you have been employed for a particular purpose, e.g. covering someone’s maternity leave, seasonal work, etc.

However, if you continue working after a fixed term then you may become a general employee, and termination after than time may be harsh, unjust or unreasonable.

What is ‘genuine redundancy’?

Genuine redundancy occurs when an employee is terminated because the employer no longer needs the employee’s work to be done (i.e. the job position will no longer exist), or because the employer becomes bankrupt or insolvent.

Employees that are made redundant are not eligible to make an unfair dismissal claim, but they are entitled to receive redundancy pay (which is calculated based on years of service).

However, small business employers are not obliged to pay redundancy pay.

How do I lodge a claim for unfair dismissal?

You must lodge a claim with the Fair Work Commission by completing a Form F2 – ‘Application For Unfair Dismissal Remedy’ form and submitting it within 21 days of the dismissal coming into effect.

The application form can be downloaded from the Fair Work Commission website. The application fee must also be paid upon submission – it is currently $70.60 (current at 1 September 2017).

The time for lodging a claim may be extended if the Fair Work Commission is satisfied that there are exceptional circumstances.

What is the process once a claim is lodged?

After the claim is lodged, the Fair Work Commission checks the application to ensure that the application is valid (i.e. made in time), and that the form has been fully completed.

The Fair Work Commission will then notify the employer of the claim, and the employer is required to prepare and file a response, and give a copy of the response to the employee.

Next, the Fair Work Commission arranges a conciliation conference (often conducted by telephone) to try to have the parties agree to a resolution of the claim. The Fair Work Commission’s statistics show that 81% of all unfair dismissal claims for the 2011-2012 period were settled during the conciliation conference stage.

If no resolution is reached at the conciliation conference, the unresolved claim will be listed to be determined by the Fair Work Tribunal.

I am not confident applying to the Fair Work Commission. Can I get a lawyer involved?

The idea is for unfair dismissal claims to be handled in an informal way. Accordingly, a lawyer cannot appear in a hearing before the Fair Work Commission without the Fair Work Commission’s consent.

It is a good idea to consult a lawyer before lodging a claim, because you should get a second opinion on whether you have been unfairly dismissed.

What are the likely outcomes of an unfair dismissal?

The most common outcome is a compensation order against the employer.

However, civil penalties and reinstatement orders are also possible. These are more common for larger employers.

If I don’t like the Fair Work Commission’s decision, can I appeal?

As a general rule the decision of the Fair Work Commission is final. You can only appeal on very limited grounds where there has been an error of law, or if there has been a gross error of fact.

This applies to both the employee and the employer.

What other options do I have?

In addition to remedies under the Fair Work Act, you may also have remedies for:

  • An equal opportunity or anti-discrimination claim; or
  • A breach of contract claim.

If you need some assistance with any of these issues or another employment law issue, call us on 1300 654 590.


These materials are for demonstration purposes only and do not constitute legal advice. Before acting on any of our views expressed in this publication, careful consideration of the case specific facts should be undertaken by a qualified professional.

If you would like to reproduce any of this material for redistribution, we are happy for you to do so, provided that you let us know beforehand – in case there have been any material changes to the law.

The information contained in this post is current at the date of publishing – 1 November 2012

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