What is Unfair Dismissal and How Does an Unfair Dismissal Matter Work?

Unfair dismissal refers to a legal claim made by an employee when they have terminated from their job in a manner which they believe is “harsh, unjust or unreasonable”. In such circumstances the aggrieved employee can file an application with the Fair Work Commission (FWC) seeking certain remedies from the employer. Ultimately, however not every dismissal is unfair and not all employees are eligible to make an unfair dismissal claim. To simplify it, we have set out a summary below of everything you need to know on the topic.

Who is eligible to make an unfair dismissal claim?

Not all employees are automatically protected from unfair dismissal. To be eligible to make an unfair dismissal claim, an employee must:

1. Have been dismissed from their employment (or forced to resign, also known as ‘constructive dismissal’);
2. have completed at least 6 months continuous service with the employer, or 12 months if the employer is a small business employer with fewer than 15 employees; and
3. have been earning less than the ‘high income threshold’. This figure is updated annually and is $162,000.00 per annum for the 2022-2023 financial year. It is usually increased on 1 July each year.

There are other circumstances where an employee is ineligible to make an unfair dismissal claim, for example, certain employers like state governments and local councils are not covered by the Fair Work Act 2009 (Cth).

When is a dismissal unfair?

Section 387 of the Fair Work Act 2009 (Cth) sets out criteria that the FWC must take into account when considering whether a dismissal was “harsh, unjust or unreasonable”. The criteria is:

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);
2. whether the person was notified of that reason;
3. whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;
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;
5. if the dismissal related to unsatisfactory performance by the person, whether the person had been warned about that unsatisfactory performance before the dismissal;
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;
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.

Of course, not all of these matters will be relevant in every case, or will have equal importance, but the FWC is required to take them into consideration.

Time limits

The most important thing to know about unfair dismissal claims is that strict time limits apply. An employee must make an application to the FWC within 21 days of the dismissal taking effect or the FWC may refuse to hear the application. Only in very limited and discrete circumstances will the FWC grant an extension of time to file the application.

What should an employer do if an employee has filed an unfair dismissal application?

For many employers it can come as a shock to find themselves the subject of an unfair dismissal application. It is important to contact a lawyer as soon as possible, because if the employee has made an unfair dismissal application which is of no merit, or which they are not entitled to make, you can save yourself a lot of time and stress by getting advice early. For example, if an employee has not been employed for more than 6 months, they cannot make an unfair dismissal application. In this case, a “jurisdictional objection” can be made, meaning that the application is invalid. This can save employers a great deal of stress and cost in defending an otherwise baseless claim.

 The Conciliation Conference

 Most matters that are brought before the FWC are resolved at a “conciliation conference”. The conciliation is facilitated by a mediator from the FWC who will permit the parties to each make a statement before proceeding to give the parties to privately discuss. The mediator will then move between the two parties and convey any offers and discuss progress. If the parties settle, then the FWC will provide a standard form settlement agreement. The parties will generally negotiate on an amount of compensation or other non-monetary consideration, such as a reference or statement of service.

The conciliation is designed to allow the parties to come to an agreement without having to incur the stress and expense of proceeding to a conference or hearing on the matter. If the parties can come to an agreement then the FWC will provide standard terms of settlement which will provide for the settlement of the matter through compensation or some other non-monetary means, and will also provide strict conditions of confidentiality and non-disparagement. Conciliation is confidential and does not involve the presenting of evidence or making complex legal submissions. It is not designed to test the law or make a factual finding on what happened, rather the purpose is to amicably resolve the issues so that both parties can move forward with their lives. The conciliator does not act as a judge or arbitrator and does not comment on the merits of any particular argument. Their role instead is to allow the parties to have a productive discussion and work towards a resolution. Conciliation is compulsory before matters can proceed to a hearing, however if it is clear at the conciliation that the parties are either unwilling or unable to come to any resolution, then the matter will be listed for a hearing date.

Proceeding to Hearing

If the matter fails to settle at a conciliation conference, then the matter will be listed for a further hearing date before a member of the FWC. The hearing will be more formal in nature and similar to a court trial, where the parties will be required to give evidence and there will be an opportunity for the parties to cross-examine witnesses and make legal submissions to the presiding member. If the matter goes to a hearing, then the FWC member will make and publish a formal decision after the hearing.

Chamberlains can assist with representation and advice at all stages of the process. If a matter has progressed to a hearing, then it is essential to get legal support and representation as the hearing will involve complicated questions of law, much the same way a court trial would. Although a hearing is intended to be more informal and cost effective than a court proceeding, it is still a specialised matter requiring specialist advice.

Next Steps

If you are involved in an unfair dismissal application, it is important to act quickly to receive legal advice to ensure that any necessary applications can be filed within 21 days. The experienced Chamberlains Workplace Law Team offer a free consultation to discuss your case and advise you on the best options for your circumstances.

In addition to providing advice on your case, we will also discuss with you the options for remedies and the outcome that you are seeking.