What is unfair dismissal – and what isn’t?

‘Unfair dismissal’ is a familiar term in the world of work. But what actually constitutes as unfair?

As an employer, it’s important to know where you stand legally and the steps you can take to ensure dismissals are fair and reasonable.

Benjamin Baumgarten, a solicitor specialising in employment law with Colin Biggers & Paisley Lawyers, says: “Employment law is incredibly complex, and it's very easy to make mistakes when you have the best intentions in mind.

“You should always seek advice from an expert in that field such as an employment lawyer when deciding whether or not to dismiss an employee.”

Was the dismissal harsh, unjust or unreasonable?

Businesses need to make sure that all dismissals are fair and reasonable under the Fair Work Act.

“If there was a dismissal and elements of the dismissal were harsh, unjust or unreasonable, then it increases the likelihood of being an unfair dismissal,” Baumgarten says.

“An employer wants to ensure that there is a valid reason for dismissal and that the employee has been treated in a procedurally fair manner.”

An employee may be able to claim unfair dismissal if:

  • A valid reason related to the employee’s conduct or capacity was not provided
  • They weren’t notified of the reason and given a chance to respond
  • They weren’t given the opportunity to have a support person at meetings
  • They weren’t warned about underperformance before dismissal (if the dismissal is related to performance).

However, it generally won’t be unfair dismissal if:

  • An employee is dismissed after you have given them multiple written warnings
  • The employee was given a chance to respond to the allegations.

Has the employee resigned due to the employer’s conduct?

In some cases, an employee doesn’t need to be dismissed by an employer to claim unfair dismissal, Baumgarten says.

It might seem counter-intuitive, but even a resignation could give rise to an unfair dismissal.

“An employee may have resigned because they were left with no choice but to leave the workplace because of the conduct of the employer and that's called a ‘constructive dismissal,’” he says.

How to make sure dismissals are fair and reasonable

Businesses can take steps to ensure any dismissals are dealt with as fairly as possible:

  1. Have workplace policies in place. The policies should state what can and can't be done in the workplace, as well as disciplinary procedures. “If you ensure that you're following those policies when dismissing an employee, it supports the business's position that they're being procedurally fair when dismissing that employee,” Baumgarten says.
  2. Hold meetings and take notes. If a performance issue arises, schedule meetings that give the employee an opportunity to respond. Take notes during disciplinary meetings, detailing what was said and how long the meetings lasted to form a paper trail. If a claim is made against the business and it goes to the Fair Work Commission, these notes will become part of your evidence, Baumgarten says.

    “An employee might say they just had a two-minute meeting where the employer said ‘Bob, you're dismissed’. But if you've got notes to show that you explained what the issue was to Bob and gave him the chance to put forth his side of the story, that's showing you're being procedurally fair in not rushing to a predetermined decision.”
  3. Give written warnings. Having warnings in writing is important when dismissing someone for performance issues. “You simply can't pull someone into the office one day and say, ‘look, you've underperformed for the last three years and you're getting dismissed today,’” Baumgarten says.

    “You want to make sure that they've been issued with recent warnings and they've been given plenty of time to rectify their performance. And if they haven't, then if you've done all those steps there, you've had meetings, then more often than not, the Fair Work Commission will dismiss that unfair dismissal case.”

Redundancy isn’t dismissal

A genuine redundancy isn’t considered a dismissal. Under the Fair Work Act, a genuine redundancy occurs when:

  • The job doesn't need to be done by anyone else for operational reasons
  • The employee has been consulted with
  • It was not reasonable to redeploy the employee.

Small businesses have different rules

Businesses with fewer than 15 employees need to follow the small business fair dismissal code.

When this code is followed, the employer won’t need to prove that the dismissal was not harsh, unjust or unreasonable.

For more information on unfair dismissal, you can refer to the Fair Work Ombudsman.

Information provided in this article is general only and it does not constitute legal advice and should not be relied upon as such. SEEK provides no warranty as to its accuracy, reliability or completeness. Before taking any course of action related to this article you should make your own inquiries and seek independent advice (including the appropriate legal advice) on whether it is suitable for your circumstances.