Unfair dismissal

What you need to know about unfair dismissal

Dismissal or termination of employment happens when your employment has been terminated by your employer, or when you have been forced to resign due to some action by your employer. If you think such a dismissal or termination is unfair or unlawful, you have a number of options to protect your rights and to pursue remedies for damage suffered.

Have you been unfairly dismissed?

Unfair dismissal and termination can involve complex legal matters and need to be dealt with by experts. Our dedicated and highly experienced employment lawyers can assist and advise you on matters such as unfair dismissal applications, Fair Work Commission conferences and hearings, and claims for damages and compensation.

We can help you understand and decide on the best course of action to follow, including whether to pursue a claim for compensation for wrongful dismissal or for breach of an employment contract. Even if you're unable to make an unfair dismissal claim, you may be able to make an unlawful dismissal claim or a general protections claim.

We are the nationally recognised experts in employment law and can achieve the best result for you. If you have been dismissed, contact us today to discuss how we can help you.

Frequently Asked Questions

What is the definition of dismissal?

A person is dismissed if the person’s employment with his or her employer has been terminated on the employer’s initiative. A person is also considered to have been dismissed if the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

A person is not considered to have been dismissed if they were employed under a contract for a specified period of time, to complete a specified task or for the duration of a specified season, and the employment was terminated at the end of the period, task or season.

However, the Fair Work Act 2009 states that if a person was on a contract and the substantial purpose of the contract was to avoid obligations to not unfairly dismiss the employee then the employee is not precluded from making an unfair dismissal application.

An employee is not considered to be dismissed if they were on a training arrangement and the employment terminated at the end of the training arrangement.

A person is also not dismissed if they have been demoted unless the demotion involves a significant reduction in remuneration or duties.

What is constructive dismissal?

The Fair Work Act states that a person has, in effect, been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. This is commonly known as constructive dismissal.

The definition of 'conduct' includes both an act and a failure to act, and includes situations in which the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal, or the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.

What is the difference between unfair dismissal and termination?

Wrongful dismissal differs from unfair dismissal.

Wrongful dismissal involves a breach of the employment contract and is a matter of common law.

Unfair dismissal describes a right of action that employees may have under the Fair Work Act 2009 (Cth) or similar state legislation. This section focuses on wrongful dismissal.

What are the legal remedies for wrongful dismissal?

There are two major remedies for wrongful dismissal: specific performance of the contract (which requires the parties to abide by the contract), and compensation for loss and damage.

Specific performance of an employment contract is rarely awarded by the courts. The courts are reluctant to force unwilling parties to continue an employment relationship. However, there can be special occasions where a court reinstates an employee if they have a special position.

Compensation is the most common remedy for wrongful dismissal. The purpose of compensation is to put the injured party in the same position as if the contract had been performed according to its terms.

Can I make an unfair dismissal application?

Most employees who are employed by incorporated companies are considered 'national system employees'. In Victoria almost all employees are considered national system employees. These employees are able to bring an unfair dismissal claim, provided they are not caught by one of the exclusions.

There are a number of exclusions that apply to when a person can make an unfair dismissal application.

The following employees are excluded from bringing an unfair dismissal claim:

  • Employees who have been employed for less than six months, unless the employer is a small business employer—in which case less than 12 months.
  • Employees whose dismissals are consistent with the Small Business Fair Dismissal Code ('the code').
  • Employees who are genuinely made redundant.
  • Employees who resigned but were not forced to do so because of conduct, or a course of conduct, engaged in by the employer
  • Employees whose annual rate of earnings is more than an amount set out in the regulations ($142,000, as of 1 July 2017). However, these employee may bring an unfair dismissal claim if a modern award covers the employee or an enterprise agreement applies to the employee’s employment

What about casual employees' unfair dismissal rights?

For casual employees, their service does not count towards the 6 or 12 month qualifying period unless they were employed on a regular and systematic basis and had a reasonable expectation of continuing employment on a regular and systematic basis.

Small Business Fair Dismissal Code

A dismissal is consistent with the Small Business Fair Dismissal Code if two threshold requirements are met:

  • Immediately before the dismissal or at the time of notice of dismissal (whichever happens first), the person's employer was a small business employer.
  • The employer complied with the code in relation to the dismissal.

The code initially requires the employer to identify:

  • the number of employees
  • whether the employee being dismissed has been employed as a permanent employee or a regular casual for more than 12 months
  • whether the employee is being dismissed due to redundancy or serious misconduct.

If the employee has been employed for over 12 months and has not been made redundant or dismissed for serious misconduct, then the employer is required to:

  • warn the employee
  • provide the employee with a reasonable amount of time to improve performance or conduct
  • give the employee a reasonable chance to rectify the problem
  • advise the employee of the reason for dismissal and give the employee an opportunity to respond.

What is a small business employer?

A small business employer is defined as an employer that employs fewer than 15 people at the relevant time. This calculation is based on a simple head count.

At the time of a worker's employment being terminated, the worker should be counted when determining the number of employees, as are any other employees who are terminated at the same time.

What things does the Fair Work Commission consider in an unfair dismissal case?

When considering whether a termination of employment was harsh, unjust or unreasonable, Fair Work Commission (FWC) will consider:

  • 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 an opportunity to respond to any reason related to the capacity or conduct of the person
  • any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal
  • if the dismissal related to unsatisfactory performance by the person—regardless of whether the person had been warned about that 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 dismissing the employee
  • the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal
  • any other matters that FWC considers relevant.

What are the time limits for making an unfair dismissal application?

It is important to note that there is a 21-day time limit for making an unfair dismissal application. In limited circumstances, the time may be extended if the Fair Work Commission (FWC) is satisfied that there are exceptional circumstances. These include:

  • the reason for delay
  • whether the person first became aware of the dismissal after it had taken effect
  • any action taken by the person to dispute the dismissal
  • prejudice to the employer including prejudice caused by the delay
  • the merits of the application
  • fairness between the person and other people in a similar position.

Before dealing with the merits of the application the FWC is required to decide whether the application was made in time, whether the person has jurisdiction to make the application, whether the dismissal is consistent with the code (if the employer is a small business) and whether it was a case of genuine redundancy.

What are unfair dismissal conferences and hearings?

The Fair Work Commission (FWC) must conduct a conference or hold a hearing in relation to the application if the matter involves disputed facts.

As a first step, a conference is conducted over the phone with a conciliator appointed by the FWC. If the matter cannot be resolved at that stage, it is allocated to a member of the FWC who will conduct a hearing in the matter.

What remedies are available in unfair dismissal proceedings?

If the Fair Work Commission (FWC) finds that a dismissal is harsh, unjust or unreasonable it may order that:

  • the employee be reinstated
  • the employee be awarded compensation not exceeding 26 weeks of pay.

The Fair Work Act explicitly states that the FWC cannot—as part of any compensation—include a component for shock, distress or humiliation, or other damages caused by the manner of the dismissal.

Can costs be awarded in unfair dismissal cases?

Costs are only awarded where the Fair Work Commission (FWC) is satisfied that a party started an application or responded to an application vexatiously or without reasonable cause, or where it should have been apparent that the application or response had no reasonable prospects of success.

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