Unfair dismissal law in plain English

What makes a dismissal unfair

Unfair dismissal is governed by Part 3-2 of the Fair Work Act 2009 (Cth). Under s 385, a person has been unfairly dismissed if the Fair Work Commission is satisfied of four things: they were dismissed; the dismissal was harsh, unjust or unreasonable; it was not consistent with the Small Business Fair Dismissal Code; and it was not a case of genuine redundancy.

Those three words cover different problems. A dismissal may be unjust if the employee did not do what they were accused of. It may be unreasonable if the employer reached its conclusion without evidence to support it. And it may be harsh if the punishment was out of proportion to what happened, or its effect on the employee was severe.

Who can make a claim

Not every employee is protected. Under ss 382 and 383 you must have completed the minimum employment period: 6 months, or 12 months if your employer is a small business. You must also be covered by a modern award or enterprise agreement, or earn less than the high income threshold, which is $190,100 for dismissals from 1 July 2026.

A small business employer is one with fewer than 15 employees, counted by headcount rather than full-time equivalents, and including employees of associated companies. Casual employees count only if they are employed on a regular and systematic basis.

Casual employees can claim too. A casual's service counts towards the minimum employment period only if they worked on a regular and systematic basis and had a reasonable expectation of continuing employment.

These rules apply to the federal (national) system. If your employer is a sole trader, a partnership or another unincorporated business, or a WA public sector or local government employer, your claim is likely to be in the WA state system instead, at the Western Australian Industrial Relations Commission, with a 28-day time limit.

What counts as a dismissal, including a forced resignation

Under s 386 you are dismissed if your employment was ended at your employer's initiative, or if you resigned because you were forced to by your employer's conduct or course of conduct. The second is often called constructive dismissal. A contract for a genuine fixed period or specific task that simply runs its course is generally not a dismissal.

Hobbs v Achilleus Taxation Pty Limited [2012] FWA 2907 shows how a forced resignation works. Mr Hobbs, an undergraduate accountant, was paid only $3,570 of the $11,647.75 he earned between July and November 2011, and he resigned after repeated requests for his wages drew no real answer. Commissioner Deegan accepted that he had been forced to resign by his employer's conduct, found the dismissal unfair, and ordered $14,241 (gross) compensation, equal to 15 weeks' pay. A Full Bench later refused the employer permission to appeal ([2012] FWAFB 5679).

What the Commission considers

Section 387 lists the matters the Commission must take into account in deciding whether a dismissal was harsh, unjust or unreasonable:

(a) whether there was a valid reason related to the employee's capacity or conduct, including its effect on the safety and welfare of other employees; (b) whether the employee was told that reason; (c) whether they had an opportunity to respond; (d) any unreasonable refusal to let them have a support person at discussions about the dismissal; (e) for unsatisfactory performance, whether they had been warned beforehand; (f) and (g) how the size of the business, and any lack of dedicated human resources staff or expertise, affected the procedures followed; and (h) any other matter the Commission considers relevant, such as length of service, a good work record, or whether others were treated differently.

If the employer is a small business, the Commission also asks whether it followed the Small Business Fair Dismissal Code. Where it did, the dismissal is not unfair.

Time limits, conciliation and hearings

An application must be lodged within 21 days after the dismissal took effect (s 394). The Commission can allow a late claim only in exceptional circumstances, so do not wait.

Most claims go first to a conciliation conference, usually by phone or video, run by a Commission conciliator. It is private and gives both sides a chance to settle. If the matter does not settle, it is listed before a member of the Commission, such as a Commissioner or Deputy President, for a conference or a formal hearing with evidence and submissions. Commission members are not judges, and the process is less formal than a court.

Remedies and legal costs

The primary remedy is reinstatement to the same job or one no less favourable (s 390). Where reinstatement is inappropriate, the Commission can order compensation instead. Compensation is capped at the lesser of 26 weeks' pay and half the high income threshold, which is $95,050 for dismissals from 1 July 2026. It does not include anything for shock, distress or humiliation.

In the Commission each side usually pays its own legal costs, whatever the result. Costs can be ordered against a party who made or responded to an application vexatiously, without reasonable cause, or with no reasonable prospect of success (s 611), or who caused the other side costs through an unreasonable act or omission in the proceedings (s 400A).

If you have been dismissed, or feel you have been pushed into resigning, it is worth getting advice quickly. The 21-day time limit is strict.