When ending an employment relationship, employers must follow a fair and lawful process. 

Unfair dismissal claims are one of the most common matters handled by the Fair Work Commission (FWC) and the consequences of getting it wrong can be significant—both to an employer’s finances and to their reputation. 

What is unfair dismissal? 

Unfair dismissal occurs when an employee is dismissed from their job in a way that is harsh, unjust or unreasonable. 

It does not apply to every dismissal—specific criteria must be met for a claim to proceed under the Fair Work Act 2009, such as: 

• the employee was not dismissed for a valid reason, eg, performance or conduct
• the dismissal process was procedurally unfair—for example, the employee wasn’t given an opportunity to respond to the reason for dismissal
• the dismissal was not a case of genuine redundancy, meaning that the role could have continued or proper consultation was not carried out. 

Who can make a claim? 

Not all employees are eligible to make an unfair dismissal claim. 

To be eligible, the employee must: 

• be employed by a national system employer, such as a company or Commonwealth authority or, for those in Western Australia, an incorporated business entity (eg, a proprietary limited)
• have completed the minimum employment period—six months for larger businesses (15 or more employees) or 12 months for small businesses (fewer than 15 employees)
• earn less than the high-income threshold (currently $175,000 as of 1 July 2024) if not covered by an award or enterprise agreement
• be either a permanent (part-time or fulltime) employee or a casual worker who is employed on a regular and systematic basis, with a reasonable belief that this will continue. 

It’s also worth noting that employees must lodge their claim within 21 days of the dismissal taking effect, unless exceptional circumstances apply. 

The unfair dismissal claim process 

If an employee believes they have been unfairly dismissed, they can apply to the FWC. 

The process is designed to encourage early resolution where possible, with the following steps. 

Application lodged 

The employee completes and submits Form F2–Unfair dismissal application to the FWC. 

This must be done within 21 days of their dismissal taking effect. 

Employer notified 

The FWC sends a copy of the application to the employer, alongside a notice of listing and Form F3—Respond to a claim for unfair dismissal. 

Employer response and objection 

The employer has seven calendar days to complete and return Form F3. 

In their response, the employer can respond to the claims made or raise a jurisdictional objection if they believe the employee is not eligible to make an unfair dismissal claim. 

Objections may be based on grounds such as the application being lodged late, the employee not meeting the minimum employment period or the employee not being covered by the unfair dismissal provisions. 

Raising an objection does not stop the application from proceeding. 

The FWC will consider the objection either during conciliation (if both parties agree to participate) or in a jurisdictional hearing before the matter continues to a full hearing. 

Conciliation conference 

The matter is usually scheduled for a telephone conciliation, where an independent conciliator helps both parties explore a resolution. 

Settlements may involve a financial payment, a statement of service or other terms. 

Hearing or conference 

If the matter isn’t resolved at conciliation, it may proceed to a formal hearing or arbitration. 

The FWC will consider all evidence and arguments before making a decision. 

Decision issued 

If the FWC finds the dismissal was unfair, it may order a remedy. If not, the application will be dismissed. 

Possible outcomes and remedies 

If the FWC finds in favour of the employee, they may order that the employee be allowed to return to their previous role, but this is a rare outcome. 

They may also order that compensation be paid. 

This payment is limited to 26 weeks’ pay or half the high-income threshold, whichever is lower. 

However, if the dismissal is found to be fair, no further action is taken. 

The FWC aims to resolve matters fairly and efficiently, but the best outcome is often an agreement reached during conciliation without needing a formal hearing. 

Employer considerations 

Avoiding unfair dismissal claims starts with following a fair and reasonable process. 

Even if there is a valid reason for dismissal—such as poor performance or misconduct—it must be handled correctly. 

Key elements of procedural fairness include: 

• clearly communicating the reason for dismissal to the employee
• giving the employee a chance to respond to allegations or concerns
• allowing a support person to be present at meetings, if requested
• keeping thorough documentation of all performance issues, disciplinary actions and meetings. 

For small businesses, following the Small Business Fair Dismissal Code can help ensure compliance with the Fair Work Act. 

Practical tips for employers 

• Have clear policies and procedures in place for performance management and disciplinary action.
• Train managers on how to conduct fair disciplinary processes and difficult conversations.
• Always provide warnings and opportunities to improve, especially for performance-related concerns.
• Seek advice from the HR advisory service before dismissing an employee—particularly if the situation is complex or high-risk.
• Respond promptly to any FWC correspondence to ensure you meet required deadlines and present your case effectively.

Conclusion 

Understanding the unfair dismissal process is essential for all employers. 

By following fair procedures, documenting concerns and approaching terminations with care, employers can reduce the risk of disputes and protect their business from legal and reputational harm. Content supplied. 

The HR in Practice specialist workplace relations and work (occupational) health and safety advisory is operated by Wentworth Advantage. 

The APA HR in Practice service is an exclusive member benefit for APA Business Premium Principal members. For more assistance, contact the HR in Practice Service on 1300 138 954 or hrinpractice@australian.physio

Disclaimer: The material contained in this publication is general comment and is not intended as advice on any particular matter. No reader should act or fail to act on the basis of any material contained herein. The material contained in this publication should not be relied on as a substitute for legal or professional advice on any particular matter. Wentworth Advantage Pty Ltd, expressly disclaim all and any liability to any persons whatsoever in respect of anything done or omitted to be done by any such person in reliance whether in whole or in part upon any of the contents of this publication. ©Wentworth Advantage Pty Ltd 2025