Unfair Dismissal in Australia

Table of Contents

Unfair Dismissal is provided for under Part 3-2 of the Fair Work Act 2009 (Cth) (the Fair Work Act).1 In essence, it provides that a person is protected from unfair dismissal which occurs if:

  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

Time Limit

If you have been dismissed and have considered making an unfair dismissal claim against your previous employer, you need to do so quickly. Under the Fair Work Act, you have 21 days from the date that dismissal takes effect to make a claim (although exceptions may apply).4

Requirements

There are several factors that need to be satisfied before you can make a claim for unfair dismissal against an employer. This includes:

  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

A claim for unfair dismissal can only be made if you are what is referred to as a ‘national system’ employee.7 You would most likely be a national system employee if you were an employee of:

  • The Commonwealth; or
  • A private enterprise.

However, if you were an employee of the State of Queensland, or a local Government (for example, the Brisbane City Council), it is unlikely that you would be considered a national system employee.

If you do not fall into the category of a ‘national system’ employee because you were employed by the State of Queensland or a local government, then you may not be covered under the Fair Work Act. Nonetheless, 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 has 15 or more employees.9

The employment period ends either at the time when the employee is notified of the dismissal or at the time immediately before the dismissal (which happens earliest).

Basis of employment

If you were employed as a part-time or full-time employee on a permanent basis, then you will usually be able to claim for unfair dismissal.

Similarly, if you were employed on a casual basis, it could be assumed that you did not have an expectation of continuation of your employment. However, if you were employed on a casual basis, you may still be able to make a claim if:

  • Your employment was on a regular and systematic basis; and
  • During your period of service, you had a reasonable expectation of continuing employment on a regular and systematic basis.10

If you worked on a contractual basis (e.g. a monthly contract), then it is difficult to claim unfair dismissal because under the Fair Work Act, an employee under a contract cannot technically be ‘dismissed’.

Award, Enterprise Agreement, or High Income Threshold

The final condition that must be met before a person can make a 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 for the period 1 July 2019 and 30 June 2020 is $148,700.00.11 This will likely change after 1 July 2020.

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

If the conditions above are not met

If you do not meet the above requirements for making a claim for Unfair Dismissal, you may still be entitled to a claim for Adverse Action under the Fair Work Act, or alternatively, a claim through the Queensland Industrial Relations Commission (depending on which conditions were not met).

Harsh and unfair dismissal

If the above requirements for making a claim for Unfair Dismissal are satisfied, you will still need to show that you were unfairly dismissed. As previously mentioned, the Fair Work Act provides that a person has been unfairly dismissed if:

  • The person has been dismissed; and
  • The dismissal was harsh, unjust or unreasonable; and
  • The dismissal was not consistent with the Small Business Fair Dismissal Code; and
  • The dismissal was not a case of genuine redundancy.12

Dismissal

Dismissal must be at the initiative of the employer; or if not, at the initiative of the employee in circumstances where 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 are employed under a contract for a specified period.14

Harshness

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

These factors include, but are not limited to:

  • Any valid reason for your dismissal (such as the safety and welfare of other employees);
  • Whether you were notified of the reason for your dismissal;
  • The opportunities you were given to respond to the reasons for your dismissal;
  • Your access to a support person to assist in discussions;
  • If you were given warnings about unsatisfactory performance before being dismissed; and
  • The size of the employer’s business and its effect on the procedures followed after making the dismissal.

Small Business Fair Dismissal Code

This condition only applies if the employer was a small business employer (i.e. less than 15 employees) at the time the notice of dismissal was given to the employee or at the time the actual dismissal occurred (whichever was earlier).15

The small business employer needs to have breached this code in relation to the dismissal – if the dismissal was consistent with the code, it is unlikely that it 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 Fairwork Ombudsman website.

Genuine Redundancy

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

A genuine redundancy is where:

  • The employer no longer needs your job performed by anyone 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 your redundancy.16

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

Application and Remedies

If the criteria outlined under the Fair Work Act has been satisfied, then a person can make an application with the Fair Work Commission.18

The remedies that a person can seek include:

  1. Reinstatement;19 or
  2. 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 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 can be:

  • The same position which the person was employed as immediately before being dismissed; or
  • Another position on terms and conditions that are no less favourable than the previous position.21

In addition, the Fair Work Commission can make orders:

  • For the continuity of the person’s employment;22 and
  • That the employer pay the person for any amounts lost because of the dismissal.23

Compensation

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

The Fair Work Commission will generally exercise discretion in awarding compensation, which will depend on factors such as:

  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 in compensation does not depend at all on any pain and suffering caused to the employee. Instead, the objective is to compensate for loss of income.

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 or half of the high-income threshold (i.e., currently $74,350.00 being half of $148,700.00).

For Employers - Has a claim been made against you?

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

Given our knowledge of unfair dismissal and employment law, we can provide advice on the risks involved in your matter, fight vigorously to have the claim dismissed (if possible) or negotiate a reasonable settlement with the claimant.

Costs

Under Australian law, ‘costs’ usually refers more specifically to legal costs incurred in making or fighting 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.

If you have a strong claim for unfair dismissal and you win in your claim, or if a poor claim was made against you, you may be able to have part or most of your legal costs paid for by the other party27 or by the other party’s lawyer or paid agent.28 This decision is at the discretion of the Commissioner, so it will depend on a case-to-case basis.

This also means that if you make an unsubstantiated claim against a previous employer, or if you unreasonably defend a previous employee’s claim against, you may be liable for the other party’s costs.

The Fair Work Commission can only make an order for costs if you or your lawyer makes an application for costs under the Fair Work Act.29

Related Matters

Adverse Action

If you have been dismissed, demoted, had a salary cut, or something similar in breach of a workplace right or in relation to discrimination, you may be entitled to damages.

Genuine Redundancy

Have you been made redundant? Know your rights.

Support Persons

If you are having conferences in the employment area with your employer or HR, you may be entitled to have a lawyer accompany you.

[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.

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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