Unfair Dismissal

Unfair Dismissal

How can I avoid a costly claim?

The definition of unfair dismissal relates to when an employee’s employment is ended at the direction of the employer and when the reason for the termination is deemed to be harsh, unjust or unreasonable.

If a claim brought to the Fair Work Commission (FWC) is substantiated, possible remedies may include reinstatement of employment. If this is not deemed suitable, such as if the relationship between the employer and the employee has broken down and is not reparable, then compensation to the employee may be ordered.

Unfair Dismissal claims that are presented to the FWC can be a costly exercise for any business. The FWC states that the median rate of compensation is between 5 and 7 weeks’ pay. The maximum rate that can be ordered which is indexed in July annually is the lesser of $83,750 (2023-24) or half of the employee’s annual wage.

A dismissal may be deemed to be unfair if any, one, two or three of the following are substantiated, for example:
  • Harsh – if it appears to be an extreme response to a situation and significantly impacts on the employee.
  • Unjust – if the employee is not guilty of the behaviour or action for which they are accused.
  • Unreasonable – if there is insufficient evidence to support the decision to dismiss the employee.

Tips to avoid receiving a costly claim?

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Avoid being reactive in your approaches to discipline.
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Comply with the relevant policies in your workplace.
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Be sure you follow procedural fairness.
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Seek advice and support from your HR team or external provider prior to making a final decision.

Dismissing an employee due to poor performance

Dismissing an employee due to poor performance requires a reasonable process to be followed which includes providing an opportunity for the employee to improve their performance prior to being dismissed.

Any warnings that are issued to employees should clearly articulate that if the behaviour or conduct or performance concern continues or is repeated then the employee’s employment may be impacted, including possible termination of employment.

Can HR Advice Online support businesses who receive an Unfair Dismissal Claim?

Yes, for support responding to an Unfair Dismissal claim, you can speak with our team for information and advice by contracting us at: [email protected] or 1300 720 004.

Information in HR Advice Online guides and blog posts are meant purely for educational discussion of human resources issues. It contains general information about human resources matters and due to factors, such as Government legislation changes, may not be up to date at the time of reading. It is not legal advice and should not be treated as such.


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