Understanding unfair dismissal

The number of unfair dismissal applications lodged last year suggests that employers are still struggling with unfair dismissal laws.  Around 14,800 unfair dismissal claims were filed in 2015 and while most cases were settled before a formal hearing, they do create an unproductive distraction for employers.

Australia’s unfair dismissal jurisdiction does not cover all workers; employees that earn over $133,000 per year cannot access unfair dismissal laws unless they are covered by an award or enterprise agreement.  On the other hand, casual employees who have worked on a regular and systematic basis for more than six months can access unfair dismissal.

For an employee to be covered by the unfair dismissal laws they must be employed for either six months (for most employers) or twelve months (for small business).

An employee’s termination is considered to be unfair if it is “harsh, unjust or unreasonable”. The Fair Work Commission (FWC) considers the following factors when determining whether the termination was unfair;

  • if an employer has a valid reason based on the employee’s conduct or capacity
  • if an employee was notified of that reason and provided an opportunity to respond before a decision was made to terminate
  • if the reason for dismissal is for unsatisfactory performance, whether the employer gave any warning about it

While the majority of employers understand that there must be a valid reason for the dismissal of an employee, it appears that they fail to realise that a termination can be considered harsh even when a valid reason exists.

Employers must be able to demonstrate that they have taken careful consideration of an individual incident and any surrounding or mitigating circumstances before dismissal.