Unfair Dismissal

Unfair dismissal generally refers to a situation where there is a problem with the manner or reason for an employee’s dismissal, such that the dismissal is considered harsh, unjust or unreasonable.

Common situations include:

a small business employer did not handle the dismissal in accordance with the applicable rules.

Unfair dismissal cases generally consider both the “reason” and the “process”. Whether the employer had a reason to dismiss the employee is one part; how the employer made its decision, how it notified the employee, and whether the employee was given an opportunity to respond are also important to the assessment.

An employee is not automatically entitled to make an unfair dismissal application simply because they have been dismissed. Generally, the minimum period of employment requirement must first be met.

In general, an employee must have worked continuously for the same employer for at least 6 months. If the employer is a small business, the employee will usually need to have worked for at least 12 months.

A small business is generally one with fewer than 15 employees. In determining whether a business is a small business, it may be necessary to take into account the employees of associated entities and casual employees who work on a regular and systematic basis.

Whether an employee is protected from unfair dismissal may also depend on their level of earnings and whether a Modern Award or Enterprise Agreement applies.

If an employee is covered by a Modern Award or an Enterprise Agreement, they may still be eligible to apply even if their earnings are relatively high. For employees who are not covered by a Modern Award or an Enterprise Agreement, further consideration must be given to whether their earnings exceed the high income threshold.

The high income threshold is adjusted periodically. When assessing eligibility, the threshold applicable at the time of the dismissal should be used.

The position of casual employees, fixed-term employees and employees on probation requires particular assessment.

Casual employees who work for an employer on a regular and systematic basis and who have a reasonable expectation of continuing employment may, in some circumstances, be eligible to apply. A fixed-term contract that comes to an end naturally on its expiry is generally different from being actively dismissed by the employer; however, if the contract is terminated early, further analysis may be required.

A probationary period does not in itself mean that an employer may dismiss an employee at will. Even where an employee’s employment is terminated during a probationary period, it is still necessary to consider the minimum period of employment, the terms of the contract, the reason for the dismissal and the relevant legal avenues in order to determine whether any other claim exists.

An unfair dismissal application generally must be lodged with the Fair Work Commission within 21 days after the dismissal takes effect.

This time limit is very short. After receiving notice of dismissal, an employee should confirm the following as soon as possible:

After the 21 days have passed, the Fair Work Commission may only accept a late application in exceptional circumstances. An employee who is considering making an application should not wait until communications with the employer have proven unsuccessful before beginning to prepare.

If you have been dismissed, asked to leave immediately, or have just received notice of termination of employment, NS Legal can assist you in reviewing the dismissal documents, confirming the key dates, and determining whether an application needs to be lodged within the 21-day time limit.

When an employer dismisses an employee, there generally needs to be a reason relating to the employee’s capacity, conduct, or the operational requirements of the business. A dismissal based simply on personal dislike, poor communication, the absence of a clear factual basis, or a failure to specify the reason may give rise to a dispute.

A valid reason must relate to the position, performance, conduct or business needs. The employer should also be able to demonstrate the basis for the dismissal decision through documents, records or evidence.

If an employee is dismissed for poor performance, the employer generally needs to explain what the performance issues are and give the employee a reasonable opportunity to respond or improve.

Common disputes include:

the same kind of issue was not dealt with in the same way for other employees.

After receiving a warning, a performance improvement plan, or notice of a disciplinary meeting, an employee should organise their work records, emails, client feedback, appraisal documents and related communications as early as possible.

Serious misconduct may involve theft, fraud, violence, serious safety breaches, serious harassment or other major breaches of discipline. In such cases, an employer may consider summary dismissal.

Even where serious allegations are involved, an employer should still handle the investigation, the evidence and the process carefully. The employee should generally have an opportunity to understand the allegations and to respond. Allegations that have not been verified, an unfair investigation process, or a dismissal that is disproportionately severe may all become focal points of a dispute.

Redundancy is different from an ordinary dismissal. A redundancy occurs where, because of business restructuring, a downturn in operations, the abolition of a position, technological change or cost adjustments, the employer no longer requires anyone to continue performing the work of that position. Accordingly, in determining whether a redundancy is genuine, regard must be had to whether the position itself is genuinely no longer required, whether the process was correct, and whether there were other reasonable opportunities to redeploy the employee.

If the redundancy is genuine and the employer has followed the necessary procedures, it is generally more difficult for an employee to challenge the dismissal decision through the unfair dismissal process. However, if the so-called redundancy is merely used to substitute for an ordinary dismissal, or to disguise a targeted, retaliatory or discriminatory decision, it may give rise to an unfair dismissal or other employment law dispute.

A genuine redundancy generally needs to satisfy several core conditions.

First, the business genuinely no longer requires the position to continue to exist. For example, a reduction in business, departmental restructuring, outsourcing, automation, technological change or a change in the operating model results in the work of the original position no longer needing to be performed by anyone.

Secondly, the employer must comply with any applicable consultation obligations. For employees covered by a Modern Award or an Enterprise Agreement, the employer generally needs to consult with the employee before making a final decision, explaining the reasons for the change and its likely effects, and hearing the employee’s views.

Thirdly, the employer must consider whether there are any reasonable redeployment opportunities. If there is a suitable position within the business or an associated entity, the employer generally needs to give genuine consideration to whether the employee could be redeployed to another position rather than having their employment terminated outright.

After being told that their position has been abolished, an employee should pay attention to the employer’s subsequent arrangements. Common disputed redundancy situations include:

the final termination payments, notice period, annual leave, long service leave or redundancy pay were calculated incorrectly.

These situations do not automatically mean that the redundancy is unlawful, but each requires further review. This is particularly so where an employee is suddenly made redundant shortly after making a complaint, taking sick leave, becoming pregnant, requesting flexible working arrangements, or having a dispute with management — in such cases the timeline itself needs to be examined carefully.

On redundancy, what an employee generally needs to confirm is not only whether the dismissal can be challenged, but also whether the final termination payments are correct. Payments commonly requiring verification include:

additional payments or restrictive conditions in a deed of release.

Not all employees are necessarily entitled to statutory redundancy pay. Casual employees, employees with less than one year of service, employees of small business employers, and some fixed-term or particular types of employees may be subject to different rules. However, even where no redundancy pay is payable, the employer must still ensure that the reason for the redundancy is genuine and that the process has been handled correctly.

If there are other suitable positions within the business, the employer generally needs to give genuine consideration to whether the employee could move into such a position. Whether an alternative position is reasonable cannot be judged by the job title alone; it also requires consideration of the duties, remuneration, location, working hours, skill requirements, training needs and the employee’s individual circumstances.

An employee may decline an unsuitable redeployment opportunity, but whether they remain entitled to redundancy pay, or whether this affects any subsequent dispute, needs to be assessed in light of the particular position and the communications involved.

For this reason, after being told of a redundancy, an employee should keep all documents relating to alternative positions, internal recruitment, redeployment communications and termination payments.

For employers, before making redundancies a business should generally first confirm the business reasons, the affected positions, whether consultation is required, whether there are positions available for redeployment, how termination payments are to be calculated, and how the relevant documents are to be prepared. During the redundancy process, particular attention should be paid to the following:

whether the employee is being asked to sign a deed of release or a document waiving their rights.

If a redundancy is handled improperly, it may subsequently give rise to unfair dismissal, general protections applications, discrimination complaints, unpaid wage claims or contractual disputes at the same time.

Some employees nominally resign but in fact leave because they have been forced to do so by the employer’s conduct. For example, the employer tells the employee to “resign, or be dismissed”, substantially reduces their pay or position, persistently creates an environment in which it is impossible to continue working, or unilaterally changes core terms of employment.

Such situations may involve forced resignation or constructive dismissal. Whether they can be dealt with as an unfair dismissal needs to be assessed in light of the employer’s conduct, the circumstances of the resignation, the written communications and the timeline.

After being dismissed, an employee does not necessarily have only the single option of unfair dismissal.

Depending on the particular circumstances, the following may also be relevant:

Different legal avenues have different application requirements, time limits, scope of compensation and handling strategies. Some avenues may affect one another. Before lodging an application, an employee should first confirm that the procedure they have chosen is the most appropriate one.

When considering an unfair dismissal application, an employee should organise the relevant materials as soon as possible.

Materials commonly required include:

details of final wages, annual leave, redundancy pay and termination payments.

The focus in organising these materials is to reconstruct the timeline before and after the dismissal: when the employer raised concerns, whether the employee was aware of the specific allegations, whether there was an opportunity to respond, and how the dismissal decision was made.

After receiving an unfair dismissal application from the Fair Work Commission, an employer needs to act promptly. The time allowed to respond is usually short, and delay may affect the subsequent process.

An employer will generally need to organise:

For employers, the focus of a response is generally not simply to state that “the employee performed poorly” or that “the company had the right to dismiss”, but rather to demonstrate the reason for the dismissal, the process followed and the documentary basis. If a matter proceeds to conciliation or a hearing, the initial response materials will directly affect the direction of the subsequent process.

After an unfair dismissal application is lodged, the Fair Work Commission will generally notify the employer and require the employer to lodge a response.

Many matters first proceed to conciliation or a telephone conference. The aim of conciliation is to help the parties reach a resolution before a formal hearing. Common forms of resolution include compensation, amending the separation record, providing a statement of service, confidentiality clauses, and arrangements under which neither party pursues the matter further.

If the matter cannot be resolved through conciliation, it may proceed to further steps in which the Fair Work Commission makes a decision based on the materials and evidence.

The outcome of an unfair dismissal matter may include reinstatement, compensation or another settlement arrangement.

Reinstatement is a legally available outcome, but in practice it is not always appropriate in matters where the relationship between the parties has already broken down. Compensation is generally subject to a statutory cap, and also takes into account the period the employee has been out of work, their efforts to find new work, the employee’s own conduct, loss of income and other factors.

Many matters are ultimately resolved through conciliation. For employees, beyond the amount of compensation, they may also be concerned with the separation record, a statement of service, confidentiality arrangements and the effect on future job applications. For employers, resolving a dispute sensibly also helps to manage time costs, commercial risk and management pressure.

NS Legal can assist both employees and employers in dealing with unfair dismissal and related termination-of-employment disputes.

We can assist clients to:

assist employers in improving their performance management, redundancy and dismissal processes.

Unfair dismissal matters are often time-pressured, document-heavy and fast-moving. Depending on where the client currently stands, NS Legal can help to determine how the next step should be handled and provide clear, practical legal advice.