Everything employers need to know about unfair dismissal

Learn what it is and how to avoid it in your business

First published on Friday, Jun 21, 2024

Last updated on Friday, Jun 21, 2024

When you’re running a business, difficult conversations will be necessary at one point or another.

One difficult conversation is bound to centre on employee dismissal.

An employee is dismissed when an employer terminates the employee’s employment or if the employee is forced to hand in their resignation as a result of the employer’s conduct. The latter is known as constructive dismissal.

In this article, we’re going to unpack a specific type of dismissal known as unfair dismissal. From it’s definition and consequences to how you can avoid accidentally engaging in an unfair dismissal.

What is unfair dismissal?

First things first, an unfair dismissal is determined by the Fair Work Commission. A few factors they check and confirm are:

  • The person was dismissed

  • Their dismissal was either unjust, harsh or unreasonable

  • Their dismissal did not stem from a genuine redundancy

  • The dismissal did not align with the Small Business Fair Dismissal Code in the event that the former employer was a small business

But in order to determine that a dismissal is unfair, how do the Fair Work Commission know when to step in?

An employer and employee sat at a desk discussing an unfair dismissal case.

Who is authorised to make an unfair dismissal claim?

Unfair dismissal claims are often made by the former employees themselves who believe that their dismissal was unjustified or unfair.

There are, however, eligibility requirements that an individual must meet in order to lodge a claim to the Commission.

They must have completed the minimum period of their employment. For employees who worked at a small business, which is a company that has less than 15 employees, they must have been employed for one year. For employees who worked at non-small business employers, the timeframe they must have been employed for is six months.

And they must fall under a Modern Award or industrial instrument. Award-free employees can lodge a claim if they fall under the high-income threshold.

What makes a dismissal harsh, unjust, or unreasonable?

It may seem like most former employees will take issue with their dismissal enough to lodge an unfair dismissal claim.

Here’s what the Fair Work Commission will consider to deem whether a dismissal is unfair:

  • Was there a valid reason for the dismissal? Whether this was in line with the person’s conduct at work, capacity or capability. As well as how these factors may have affected other employees.

  • Was the individual notified of the reason for their dismissal?

  • Was the individual given an opportunity to respond to their employer’s reason for dismissing them?

  • Did the employer unreasonably refuse to allow a support person to be present at any discussions regarding the dismissal?

  • Was the dismissal in response to an unsatisfactory performance from the employee, and if so, was the employee given sufficient warning prior to their dismissal?

  • How big of an impact, if any, would the absence of an HR specialist during the dismissal procedure or proceedings have?

  • Anything else the Fair Work Commission would consider relevant to the issue

A stressed businessman in a suit sits at a desk, his head buried in his hands, reflecting unfair dismissal

How to ensure you don’t accidentally engage in an unfair dismissal

Businesses must ensure that any dismissal is backed by valid reasoning, proper communication, and done by following a compliant, legal, documented process.

In Australia, there are four valid reasons for employee termination. They are:

  • When an employee shows they lack the ability or the capacity to fulfil the requirements of their role.

  • When an employee’s performance is unsatisfactory even after they have been notified and given the opportunity to rectify their conduct.

  • When an employee isn’t meeting workplace standards or is involved in serious misconduct.

  • When an employee’s role is no longer necessary or if process advancement has made their role obsolete, a redundancy may take place.

If your employee dismissal doesn’t align with one of these reasons, there’s a much greater likelihood that your former employee may lodge an unfair dismissal claim against you. An exception to the above is if the employee is engaging in repeated, serious, and gross misconduct.

Even in instances of serious misconduct, however, it’s important to follow compliance procedures to make sure you’re doing the right thing.

How can BrightHR help you lower your risks and stay compliant?

In every aspect of the employment relationship, it’s important that you follow due process, and applicable employment laws, and act as fairly as possible. This protects you, your employees, and your business.

But while this is a great rule of thumb and seems straightforward enough, the employment relations landscape in Australia is anything but straightforward. This means that employers like you have your work cut out to ensure that you’re staying compliant with the latest rules and obligations at all times.

With several, and sometimes high profile, unfair dismissal cases coming to light, it’s important for businesses to remain cautious and seek expert support.   

That’s where BrightHR can support you with an extensive library of HR document templates as well a 24/7 phone advice line connecting you directly to a team of employment relations advisers.

Juan Galang

Bright Service Manager Australia New Zealand

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