Unfair dismissal and unlawful termination

If you don't follow dismissal and termination procedures correctly, you may be in breach of the legislation and subject to claims from employees– even though there may be good reason for the dismissal.

Employee rights

You cannot terminate or disadvantage an employee for:

• Reasons that breach discrimination laws
• Temporary absence for personal illness or injury (less than three months unpaid personal leave)
• Making an enquiry or complaint about their employment
• Exercising a workplace right, such as a right to carer’s or parental leave
• Absence due to a workplace injury (for a period of 12 months).

These restrictions apply even if your employee doesn’t meet the requirements for unfair dismissal.

Employee claims

An employee can make an unfair dismissal claim if they:

• Have been employed with your business for a minimum of 12 months (for small businesses with less than 15 employees) or six months (for all other employers)
• Are covered by a Modern Award or enterprise agreement
• Aren’t covered by an Award or agreement but earn less than $145,400 (rate at 1 July 2018).

A casual employee might claim unfair dismissal if they were employed on a regular basis and reasonably expected their employment to continue.

In addition, general protections laws protect workplace rights.  An employee can make an unlawful termination / general protections claim if they are dismissed for a prohibited reason (e.g. for exercising the right to take leave, or because of an employee’s sex, age, race, etc.)

Fair Work Commission assessment

To decide whether termination was unfair, the Fair Work Commission will consider the impact of the termination on the employee – taking into account their age, family responsibilities and prospects for re-employment. It will also consider whether:

• There was valid reason for dismissal based on the employee’s capacity or conduct
• The employee was notified of the reason for termination
• The employee was given an opportunity to respond to any allegations
• The employee was unreasonably refused a support person
• Warnings were given (if related to performance)
• An alternative to termination would have been more reasonable in the circumstances.

Small business dismissals

Businesses with less than 15 employees (including associated companies) can demonstrate that a dismissal is fair by following the steps outlined in the Small Business Fair Dismissal Code. However, following the Code does not protect against unlawful termination/general protections claims.

An employer doesn’t have to follow this code, but if the FWC is satisfied the dismissal is consistent with the code, the employee will not be unfairly dismissed.

Download the Small Business Fair Dismissal Code from the Fair Work Commission.

Serious misconduct

If you’re a small business operator you may be able to dismiss an employee without notice or warning if you reasonably believe the employee’s conduct is serious enough to justify immediate dismissal.

Examples of serious misconduct include sexual harassment, theft, fraud, violence or serious breaches of occupational health and safety procedures.