Unfair Dismissal in Australia

Table of Contents

What is the meaning of 'Unfair Dismissal'?

Unfair Dismissal is provided for under Part 3-2 of the Fair Work Act 2009 (Cth) (the Fair Work Act).1

The Fair Work Act provides that a person is protected from a dismissal or temination where the dismissal meets the following criteria:

  1. A person is dismissed; and
  2. The dismissal was harsh, unjust or unreasonable; and
  3. The dismissal was not consistent with the Small Business Fair Dismissal Code;2 and
  4. The dismissal was not a case of genuine redundancy.3
An example of where a dismissal may be considered unfair is where an employer dismisses an employee under the guise of poor performance or underperformance.

Time Limits for Unfair Dismissal Claims

If you have been dismissed from your employment and have considered making an unfair dismissal claim against your previous employer, you need to act quickly. Under the Fair Work Act, you only have 21 days from the date the dismissal takes effect to make a claim (noting exceptions may apply in some circumstances).4

Wrongful dismissal vs Unfair Dismissal

Unfair dismissal should not be confused with wrongful dismissal. Unfair dismissal is a cause of action provided for under the Fair Work Act on the basis that the dismissal was excessively harsh, unjust or unreasonable, whereas wrongful dismissal is where an employer dismisses an employee in breach of the terms of the employment contract between the parties.

Grounds for Unfair Dismissal Claims

There are a number of factors that need to be satisfied in order to make a successful claim for unfair dismissal against an employer, including:

  1. Whether you are a ‘national system’ employee;5
  2. How long you were employed before being dismissed;6
  3. The basis of your employment; and
  4. Whether an award or enterprise agreement applied to your employment, or if not, whether your income was less than the high-income threshold.

Meaning of ‘national system’ employer and employee

An unfair dismissal claim can only be made if the employee bringing the claim is what is referred to as a ‘national system’ employee.7 A person will generally be considered a national system employee if they were an employee of:

  • The Commonwealth; or
  • A private enterprise.

However, State employees, such as employees of the State of Queensland or a local Government (e,g,  the Brisbane City Council) will generally not be classified as national system employees.

If you are an employee that does not fall into the category of a ‘national system’ employee because you were employed directly by the State of Queensland or a local government, you may not be covered under the Fair Work Act. However, you may still be able to make a claim through the Queensland Industrial Relations Commission.

Length of employment

The Fair Work Act provides that a person can only make a claim for unfair dismissal if they have been working for their previous employer for a minimum of:

  • 6 months for a large business employer; or
  • 12 months for a small business employer.8

A small business employer is defined as having fewer than 15 employees, whereas a large business employer will have 15 or more employees.9

The employment period is said to end either at the time when the employee is notified of the dismissal or at the time immediately before the dismissal (whichever is earlier).

Basis of employment

Where an employee has been employed as a part-time or full-time employee on a permanent basis, they will usually be entitled to bring a claim for unfair dismissal.

However, where an employee has only been employed on a casual basis, it could be assumed that they did not have an expectation of continuation of the employment, and as such, may not be entitled to bring  a claim for unfiar dismissal. There are some circumstances, however, where casual employees may still be able to make a claim, including if:

  • Their employment was on a regular and systematic basis; and
  • During the employee’s period of service, they can show that they had a reasonable expectation of continuing employment on a regular and systematic basis.10

With respect to persons working on a contractual basis (e.g. a monthly contract),  it is often difficult to establish an unfair dismissal claim as the Fair Work Act provies that an employee employed on a contractual basis (such as for a specified period of time) cannot technically be ‘dismissed’ for the purposes of the Act.

Award, Enterprise Agreement, or High Income Threshold

The final condition that must be met before a person can make a successful unfair dismissal claim is that they must have:

  • Been employed subject to an award and/or enterprise agreement; or
  • If not, had annual earnings below the High Income Threshold.

The High Income Threshold changes annually and is announced on or about 1 July each year.

The High Income Threshold for the period between 1 July 2020 and 30 June 2021 was $153,600.00.11 For claims brought after 1 July 2021, the new High Income Threshold is $158,500.00.

What if I cannot meet the criteria for bringing an Unfair Dismissal Claim?

If you do not meet the requirements for making a claim for Unfair Dismissal, you may still be entitled to bring a claim for Adverse Action under the Fair Work Act, or alternatively, through the Queensland Industrial Relations Commission (depending on the specific conditions that you have not met). Contact our employment team today to discuss your legal rights and options.

Harsh and unfair dismissal

Even where an employee is able to meet all the abovementioned criteria, there still needs to be some evidence showing that the dismissal is considered unfair. As noted above, the Fair Work Act provides that a person will only be considered to have been unfairly dismissed if the dismissal can be seen as harsh, unjust or unreasonable.12

Dismissal

Dismissal must be at the initiative of the employer, or alternatively at the initiative of the employee only if the employee was forced to resign because of the employer’s conduct.13 The latter is sometimes referred to as ‘constructive dismissal’.

Dismissal will generally not apply to persons who are in a training arrangement or who have been employed under a contract for a specified period.14

Harshness of the Dismissal

The Fair Work Commission may consider a multitude of factors in deciding whether a dismissal was harsh, unjust or unreasonable.

Some of the factors that may be taken into account include, but are not limited to:

  • Whether a valid reason exists for the dismissal (such as the safety and welfare of other employees);
  • Whether t he employee was notified of the reason for the dismissal;
  • The opportunities given to the employee to respond to the reasons for the dismissal;
  • The employee’s access to a support person to assist in discussions;
  • Whether the employee was given warnings about unsatisfactory performance before being dismissed; and
  • The size of the employer’s business and its effect on the procedures followed after the dismissal.

Small Business Fair Dismissal Code

The ‘Small Business Fair Dismissal Code’ condition only applies to small business employers (i.e. employers with less than 15 employees) at the time the notice of dismissal was given to the employee, or alternatively at the time the actual dismissal occurred (whichever is earlier).15

For a dismissal to be in breach of the Fair Dismissal Code, the small business employer must have breached the code speccifically in relation to the dismissal – in other words, if the dismissal was consistent with the code, it is unlikely that the dismissal will be considered harsh, unjust or unreasonable.

You can view a copy of the Small Business Fair Dismissal Code by going to the Unfair Dismissal page on the Fairwork Ombudsman website.

Difference between Genuine Redundancy and Unfair Dismissal

Lastly, unfair dismissal can only occur if your case was not a genuine redundancy.

A genuine redundancy is where:

  • The employer no longer needs amyone to perform a particular job or role because of changes in the employer’s operational requirements; and
  • The employer has complied with its obligations under any relevant modern award and/or enterprise agreement in relation to the redundancy.16

However, the rwdundancy would not be considered a genuine redundancy if the employee could have been redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer.17

Application and Remedies

Where all the criteria outlined under the Fair Work Act are satisfied, a person will generally be in a position to make an application for unfair dismissal with the Fair Work Commission.18

The remedies an employee bringing an unfair dismissal claim may be able to seek include:

  1. Reinstatement;19 and
  2. Compensation.

However, it is important to note taht the Fair Work Commission can only order compensation if it is satisfied that reinstatement is inappropriate, or if it considers compensation is appropriate in all the circumstances of the case.20

Reinstatement

The Fair Work Commission has the power to order an employer to reinstate a person who has been unfairly dismissed. The position for which the employee is to be reinstated can be:

  • The same position which the person was employed in immediately before the dismissal; or
  • Another position on terms and conditions that are no less favourable to the employee than the previous position in which they were employed.21

In addition, the Fair Work Commission can make orders:

  • For the continuity of the person’s employment;22 and
  • That the employer compensate the employee for any loss suffered as a result of the dismissal.23

Compensation

The Fair Work Commission will only award compensation if it is satisfied that reinstatement is inappropriate, or alternatively that compensation is appropriate in the circumstances.

The Fair Work Commission will generally exercise discretion in awarding compensation and will consider a number of factors in order to exercise this discretion, including:

  1. Whether the person contributed to the dismissal through misconduct;24
  2. The difficulty or ease of finding a role of similar status and pay in the current job market;
  3. The effect of the order on the employer’s enterprise;
  4. The length of the person’s service with the employer;
  5. The remuneration that the employee would have or would likely have received had he or she not been dismissed;
  6. The employee’s efforts to mitigate its loss by applying for new jobs;
  7. How much the employee has been earning in income after being dismissed (if applicable); and
  8. Any other matter that the Fair Work Commission considers relevant.25

The amount awarded in compensation will not take into account the pain or suffering (if any) caused to the employee. Rather, the objective is to compensate the employee for any loss of income incurred.

Additionally, the maximum amount that can be ordered by the Fair Work Commission is 26 weeks’ (6 months’) worth of remuneration based on the person’s recent remuneration, being a maximum of half of the high-income threshold (i.e., currently $79,250.00 being half of $158,500.00).

For Employers - Has a claim for Unfair Dismissal been made against you by a previous employee?

If you are an employer and a previous employee has made an unfair dismissal claim against you or your company, we may be able to act on your behalf subject to the permission of the Fair Work Commission.26

Our employment team is experienced in a wide range of employment matters and have acted for clients various different types of unfair dismissal claims. At Gibbs Wright, we can provide you with advice on the risks involved in your particular matter and your rights and obligations in the circumstances. We are here to fight vigorously for you – whether that be to have the entire claim dismissed (if possible) or to negotiate a reasonable settlement with the claimant.

Legal Costs in Unfair Dismissal Claims

Under Australian law, ‘costs’ generally refers to legal costs incurred in making or defending a claim. The Fair Work Commission has the discretion to order costs against another party if it is satisfied that a party unreasonably caused the costs to be incurred.

This means that you may be enetitled to have part of your legal costs paid for by the other party,27 or in some circumstances, by the other party’s lawyer or paid agent,28 if you are the successful party in the proceeding, whether that be that your brough a strong unfair dismissal claim, or you sucessfully defended a poor claim made against you,  Whether legal costs will be awarded or not is at the discretion of the Commissioner and will vary on a case-by-case basis.

It is important to keep in mind that if you are an employee who makes an unsubstantiated claim against a previous employer, or you are an employer who is found to have unreasonably defended a previous employee’s claim against you, you may be liable to pay some or all of the other party’s costs in the proceeding.

The Fair Work Commission can only make an order for costs if the successfy party, or the successful party’s lawyer, make an application for costs under the Fair Work Act.2

Related Matters

Adverse Action

If you have been dismissed, demoted, discriminated against, had your salary cut, or something similar that may be in breach of a workplace right, you may be entitled to seek damages from your employer.

Support Persons

If you are required to attend a meeting or conference in relation to your employment, such as a meeting with your employer or HR team, you may be entitled to have a lawyer accompany you. Call Gibbs Wright Litigation Lawyers today for a free and confidential consultation with one of our employment lawyers about your employment dispute.

Frequently Asked Questions

A person is considered to have been dismissed if the person’s employment with their employer has been terminated on the employer’s initiative (e.g. if a person has been fired or sacked).

A person is said to have been ‘constructively dismissed’ if the person has resigned from his or her employment, but they were forced to resign because of the conduct, or a course of conduct, engaged in by their employer. ‘Conduct’ in this regard refers to any act or omission (i.e. a failure to act) by the employer. Common situations where this arises include where an employee is effectively instructed to resign under the threat of dismissal, or the employee quits in response to conduct engaged in by their employer that effectively forced them to resign.

Yes, you can bring a claim for unfair dismissal if you have been fired unfairly, provided you satisfy the following four requirements:

  1. You are a ‘national system employee’;
  2. You were employed for more than 6-months;
  3. You were a full-time or part-time employee; and

An award or enterprise agreement applied to your employment.

A person has been ‘unfairly dismissed’, or their employment has been unfairly terminated, if the Fair Work Commission is satisfied that:

  1. The person has been dismissed; and
  2. The dismissal was harsh, unjust or unreasonable; and
  3. The dismissal was not consistent with the Small Business Fair Dismissal Code; and
  4. The dismissal was not a case of genuine redundancy.

In determining whether a dismissal can be considered as harsh, unjust or unreasonable, the Fair Work Commission must take into account:

    1. 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); and
    2. Whether the person was notified of that reason; and
    3. Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
    4. Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
    5. If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
    6. The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
    7. 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; and
    8. Any other matters that the FWC considers relevant.

The time limits for making an unfair dismissal application are very strict. If you have been dismissed and intend to make an unfair dismissal claim against your previous employer, you only have 21 days from the date the dismissal takes effect to make a claim (with limited exceptions).

In the event you fail to bring a claim within 21 days from the date the dismissal takes effect, the Fair Work Commission may allow a further period within which to make a claim if they are satisfied that exceptional circumstances apply. In making this decision, the Commission make take into account a variety of factors, including:

  1. The reason for the delay; and
  2. Any action taken by the person to dispute the dismissal; and
  3. Prejudice to the employer (including prejudice caused by the delay); and
  4. The merits of the application; and
  5. Fairness as between the person and other persons in a like position.

Due to the strict limitation periods that apply, if you have received notice from your employer that your employment has been terminated and you consider the dismissal was unfair, you should immediately seek legal advice to determine whether you are eligible to make an unfair dismissal claim against your employer.

A small business employer is simply defined as an employer with fewer than 15 employees, whereas a large business employer will have 15 or more employees. The Fair Work Commission will determine whether an employer is ‘small’ or ‘large’ based on a simple head count.

It is important to note that despite the fact that the claimant’s employment has been terminated, the claimant should be included in the head count determining the number of employees employed by the employer, and will further include other employees terminated at the same time (if any).

There is a practical difference between small business employers and a large business employers with respect to unfair dismissal claims in that the Fair Work Act provides that a person can only make a claim for unfair dismissal if they have been working for their previous employer for a minimum of 6 months for large business employers, or 12 months for small business employers.

Whilst it can be somewhat difficult for casual employees to bring an unfair dismissal claim, casual employees may have the right to do so in some circumstances.

If you are an employee that were on a casual basis, there is a presumption that you did not have an expectation of continuation of your employment. However, you may still be able to make an unfair dismissal claim if you can show that:

  1. Your employment was on a regular and systematic basis; and
  2. During your period of service, you had a reasonable expectation of continuing employment on a regular and systematic basis.

In satisfying these criteria a casual employee may only make a claim provided they satisfy the other requirements outlined in FAQ “Can I bring a claim for unfair dismissal if I believe I have been fired unfairly?”

It is relevant to note that if you were employed on a contractual basis (e.g. a monthly contract), it will generally difficult establish a strong unfair dismissal as the Fair Work Act provides that an employee under a contract cannot technically be ‘dismissed’.

A wrongful dismissal is when an employer terminates an employee’s employment contract, and the termination breaches the terms of the employment contract. Conversely, unfair dismissal is a right of action employees have under the Fair Work Act on the basis of a harsh, unjust or unreasonable dismissal.

If you believe you have been wrongfully dismissed, see our Breach of Employment Contract article for more information

The remedies that a person can seek if they have been unfairly dismissed are generally reinstatement or compensation.

However, the Fair Work Commission can only order compensation if it is satisfied that reinstatement is inappropriate or if it considers compensation is appropriate taking into account all the circumstances that pertain to each individual case. Furthermore, employees can only be awarded compensation in an amount equivalent of up to 26 weeks’ pay.

The Fair Work Act strictly provides that the amount awarded in compensation will not be reliant any pain and suffering caused to the employee. Instead, the objective will be to compensate the employee for any loss of income.

The Fair Work Commission will generally exercise discretion in awarding compensation and will take into consideration a number of factors, including:

  1. Whether the person contributed to the dismissal through misconduct;
  2. The difficulty or ease of finding a role of similar status and pay in the current job market;
  3. The effect of the order on the employer’s enterprise;
  4. The length of the person’s service with the employer;
  5. The remuneration that the employee would have or would likely have received had he or she not been dismissed;
  6. The employee’s efforts to mitigate its loss by applying for new jobs;
  7. How much the employee has been earning in income after being dismissed (if applicable); and
  8. Any other matter that the Fair Work Commission considers relevant.

In calculating the amount of compensation to be awarded, there are a number of factors that the Fair Work Commission must take into account, including whether compensation should appropriately be awarded at all. As such, there is no real ‘average payout’ as each claim will be individually assessed on a case-by-case basis. However, the maximum payout or amount of compensation that can be awarded is capped at the lesser of:

  1. The total amount of remuneration received by the person, or to which the person was entitled to receive (whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; or
  2. Half the amount of the high income threshold before the dismissal (which is increased annually).

Costs may be awarded to the successful party in unfair dismissal proceedings. If you are an employee who has brought a strong claim for unfair dismissal against your employer and you are successful in your claim, or if you are an employer who have successfully depended a poor claim made against you, you may be entitled to part or most of your legal costs from the other party, or alternatively by the other party’s lawyer or paid agent. Whether or not to award legal costs is at the discretion of the Commissioner and will be assessed on a case-to-case basis.

[1] Fair Work Act 2009 (Cth) Part 3-2.

[2] Fair Work Act 2009 (Cth) s 388.

[3] Fair Work Act 2009 (Cth) s 385.

[4] Fair Work Act 2009 (Cth) s 394(2)(a).

[5] Fair Work Act 2009 (Cth) s 380.

[6] Fair Work Act 2009 (Cth) s 382(a).

[7] Fair Work Act 2009 (Cth) s 380.

[8] Fair Work Act 2009 (Cth) s 382.

[9] Fairwork Ombudsman – Unfair Dismissal

[10] Fair Work Act 2009 (Cth) s 384(2)(a).

[11] Fairwork Commission – High Income Threshold

[12] Fair Work Act 2009 (Cth) s 385.

[13] Fair Work Act 2009 (Cth) s 386(1).

[14] Fair Work Act 2009 (Cth) s 386(2).

[15] Fair Work Act 2009 (Cth) s 388.

[16] Fair Work Act 2009 (Cth) s 389(1).

[17] Fair Work Act 2009 (Cth) s 389(2).

[18] Fair Work Act 2009 (Cth) s 394(1).

[19] Fair Work Act 2009 (Cth) s 390(1).

[20] Fair Work Act 2009 (Cth) s 390(3).

[21] Fair Work Act 2009 (Cth) s 391(1).

[22] Fair Work Act 2009 (Cth) s 391(2).

[23] Fair Work Act 2009 (Cth) s 391(3).

[24] Fair Work Act 2009 (Cth) s 392(3).

[25] Fair Work Act 2009 (Cth) s 392(2).

[26] Fair Work Act 2009 (Cth) s 596.

[27] Fair Work Act 2009 (Cth) s 400A.

[28] Fair Work Act 2009 (Cth) s 401.

[29] Fair Work Act 2009 (Cth) s 402.

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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