What is Unfair Dismissal?

Unfair dismissal Australia laws protect employees from being dismissed in a harsh, unjust or unreasonable manner, while also outlining obligations for employers. This article explains how unfair dismissal works in 2026, who can make a claim, and how both employers and employees should respond.

An unfair dismissal is when an employee’s job with their employer is terminated in circumstances where that termination harsh, unjust or unreasonable.

Employers must ensure that any termination of employment is based on lawful reasons and sufficient notice is given to the employee of the termination.

Examples of ‘dismissal’

‘Dismissal’ occurs when the employer informs the employee that their employment is being terminated.

Examples of a dismissal include, where the employer terminates an employee’s employment:

• with or without warning for serious types of behaviour (usually referred to as serious misconduct);
• because the employee’s performance is not sufficient; or
• where their job is no longer required to be performed by anyone, otherwise known as ‘redundancy’.

In some cases, if the employer’s behaviour causes s an employee to resign, this can also amount to an unfair dismissal, if it can be regarded as a forced resignation.

What is not dismissal?

When an employee chooses to resign, this is not dismissal of their own free will, they have not been dismissed and thus, cannot bring an unfair dismissal claim.

Certain other examples arise where an employee is not deemed to have been dismissed. These include

• when a fixed term employment contract comes to its pre-determined end, and the employer choose not to renew the contract;
• the employee has completed the specified task they were employed to complete;
• the employee was only employed for seasonal work and the season ends; or
• the employee is a casual employee, with no fixed or guaranteed right to employment with the employer.

What makes a dismissal ‘unfair’

Not all dismissals are unfair. In certain cases situations, the termination of an employee’s employment might be reason.

Generally, a dismissal will not be unfair if:

• the termination was not harsh, unjust or unreasonable;
• if it was a case of a genuine redundancy; or, in the case of a small business
• it complied with the Small Business Fair Dismissal Code

Unfair Dismissal is defined in section 385 of the Fair Work Act 2009.

Examples of ‘harsh’, ‘unjust’ and ‘unreasonable’ dismissal

A dismissal may be unfair if it is either, or a combination of more than one of the following: harsh, unjust or unreasonable.

Facts and matters which must be taken into account by the Fair Work Commission in determining whether an employee’s termination i.e., dismissal, was harsh, unjust or unfair, are set out in section 387 of the Fair Work Act.

Examples dismissals which may be contrary to section 385 of the Fair Work Act

Examples of situations where a dismissal may be unfair, and contrary to section 385 of the Fair Work Act, include, but are not limited to:

• unjust because the employee was not guilty of the alleged misconduct
• unreasonable because the evidence or material before the employer did not support the conclusion
• harsh on the employee due to the economic and personal consequences resulting from being dismissed, or
• harsh because the outcome is disproportionate to the gravity of the misconduct (the punishment does not fit the crime.

When can a business terminate a worker’s employment?

If you want to dismiss an employee who has been with you for more than 12 months and you are a small business employer, then you must follow the Small Business Fair Dismissal Code. If you have complied with the code, in most cases, the dismissal will not be considered unfair.

The Code says that you need to have a valid reason to terminate a worker’s employment based either on their capacity to work or conduct.

If you are dismissing a worker for poor performance or conduct, you first need to let them know what the problem is as well as how they can rectify it. This is usually then followed up with a performance management plan for a period of time, which is put in place to help the employee become more efficient and better at their job. You must also tell them that they risk being dismissed if their performance does not improve during the performance management period.

You should always do this in writing, and you must always allow them to have a support person present at any meeting where you discuss the likelihood of termination. You must also provide the employee with the opportunity to respond to the warning. These are not strictly matters set out in the Fair Work Act, but they are regarded and taken into account in determining whether the termination was unfair, based upon procedural fairness.

If you are dismissing a worker because the operational requirements of your business have changed, you should first find out whether any modern awards or enterprise agreements cover the worker’s employment. If the award or enterprise agreement contains provisions relating to genuine redundancy, these provisions should be followed, which normally includes an obligation to consult the employee about the change and the redundancy, before making it effective.

You will also need to consider whether the employee can be re-deployed within the enterprise elsewhere. If you fail to meet these tests, the employee may have 21 days to bring an unfair dismissal claim in the Fair Work Commission. Not all employees can bring an unfair dismissal claim. One specific exemption is where the employee is paid a salary which exceeds the high income threshold.

What about employees of less than 12 months?

Your employees can not bring an unfair dismissal claim in the first 12 months of their employment (or 6 months if the business is not a small business employer) which means they cannot take you to the Fair Work Commission simply because they believe their dismissal was harsh, unjust or unreasonable during this period of time. This is because a business will usually want to test the employee’s skills and experience and their performance during their probationary period.

However, this does not mean you can dismiss an employee for any reason, even in the first 12 months of employment. For example, they can not be dismissed contrary to the general protections provisions or certain other prohibited reasons (for example, discrimination on the basis a personal attribute e.g., race, religion, political conviction, sex, etc).

Why do small businesses have different standards?

The law makes exceptions sometimes for small businesses, as it understood that they do not have access to same degree of resources as larger businesses.

Your business will fall under the small business fair dismissal code if it (and any associated entities) employ fewer than 15 people. This includes full-time, part-time and permanent employees, but not independent contractors and some casual employees (who have not been employed on a regular and systemic basis).

Can a worker bring an unfair dismissal claim if they resign?

Generally, no.

However, exceptions do exist, these are known as:

• Forced resignations; or
• ‘heat of the moment resignations’.

A forced resignation occurs where an employee was ‘forced’ to resign, because of conduct on the part of the employer or another employee of the employer, which left the employee with no other choice but to resign (and that they did resign).

This is often referred to as construction dismissal and it can be difficult to establish.

What is a general protections (unlawful termination) claim?

A general protections claim is a different concept to unfair dismissal. The general protections provisions, which apply to all workers (regardless of their length of employment), and prohibit an employee from engaging in adverse action, which includes dismissal, on prohibited grounds. Some of the grounds which are prohibited include:

• Because of their race, colour, sex, sexual orientation, age, religious beliefs, mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin (although it makes an exception if it is an inherent requirement of the job);
• Because they have been away from work due to illness or injury;
• Because they are or aren’t a member of an industrial body or union;
• Because they are on parental leave, paid or unpaid;
• Because they have filed a complaint or started proceedings against you or someone you employ (being an exercise of an employee right).

General protections claims fall into two (2) categories: general protections (non-dismissal) and general protections (dismissal). General protections (dismissal), are subject to a 21 day time frame in which to bring the action, and thus, should be acted on quickly. General protections (non-dismissal), do not have a similar time constraint.

When can a business dismiss a worker without notice?

An employee can only be terminated immediately and without notice in limited circumstances. This is usually where they have engaged (or there are reasonable grounds to suspect that they have engaged) in serious misconduct, such as:

• Theft
• Fraud
• Violence; or
• Any other serious safety breaches.

If you have clear evidence that gives you reasonable grounds that they have stolen, assaulted someone or engaged in other criminal behaviour it is sufficient (although not essential) for a dismissal to be deemed fair if you report the incident to the police before you dismiss them for serious misconduct.

If you have clear evidence and reasonable grounds to believe an employee has committed theft, assaulted someone, or engaged in other criminal behaviour, you may be justified in dismissing them for serious misconduct. While it is not required, reporting the matter to the police before dismissal can help demonstrate that the dismissal was fair.

What happens if an employee brings an unfair dismissal or a general protections (unlawful termination) claim?

If an employee lodges an unfair dismissal claim against you, you will need to lodge a written response, setting out why you say the dismissal was not unfair. Before terminating an employee’s employment however, regard should be had to the Small Business Fair Dismissal Checklist.

Tips for businesses to reduce the risk of an unfair dismissal claim

1. Consider implementing a workplace policy

One way to reduce the risk of an unfair dismissal is to have a written policy which clearly sets out what steps should be taken if there is an issue with an employee’s conduct or behaviour. The policy should cover the consultation process, provide for procedural fairness to the employee, and include acceptable disciplinary procedures which may be available (before dismissal), in certain circumstances.

The policy helps ensure that the law is followed, and that procedural fairness is afforded to the employee.

2. Consult with the employee

If a performance issue arises, schedule a meeting with the employee to discuss the issue with them, and to provide them with an opportunity to respond. It may be the case that after the discussion, you find that the employee has some personal issues affecting their work, or that they require more training or resources to better perform their job.

Ensure that detailed notes are taken, recording what was discussed, and that the duration and times are also recorded.

3. Written warnings

If a warning is required, the warning must be in writing. If it is given orally during the meeting, it should be reduced to writing as soon as possible after the meeting concludes. This ensures that there is a paper trail which can be relied upon in the event an unfair dismissal claim is made against the business, indicating what steps the employer took, and that the warning was actually given.

How Allen Law can help

If you are a small business owner considering terminating a an employee’s employment, or if you are an employee in need of advice about an unfair dismissal claim, contact Allen Law today. We can help by:

• Advising you on the process you should follow to minimise risk;
• Advising you on entitlements;
• Advising you on any alternatives to dismissal;
• Advising and representing you in unfair dismissal or general protections claims.