Top 10 tips to avoid an unfair dismissal claim.

8 August 2016 | Reading time: 3 minutes

When is a dismissal unfair?

Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner. In the case of small businesses unfair dismissals may occur where the dismissal was inconsistent with the Small Business Fair Dismissal Code.


The main remedies for unfair dismissal are:

  • reinstatement; or
  • monetary compensation for lost wages – with the maximum amount of compensation payable capped at either half the high income threshold (ie $68,350) or 6 months of the dismissed employee’s wage (whichever is less).

Handy tips.

Unfair dismissal claims should be avoided as they can be a very expensive experience for the employer. To mitigate the risk of unfair dismissal claims, employers should consider the following tips:

1. Act quickly:

Don’t wait until it’s too late – employers should act quickly when an employee exhibits performance related issues or engages in inappropriate workplace behaviour. Even if the employer has a valid reason for dismissing the employee, significant delays in raising inappropriate workplace behaviour can make a dismissal unfair.

2. Be thorough:

Carry out a thorough and fair investigation of inappropriate workplace behaviour – an investigation that was conducted in accordance with procedural fairness and relied upon documentary evidence in dismissing the employee will assist the employer with its legal defences in the event of an unfair dismissal claim.

3. Detailed records:

Keep detailed written records of the disciplinary and termination process. Keeping detailed records of the termination process can mean the difference between success and failure when defending an unfair dismissal claim.

4. Crime and punishment:

Ensure that the crime fits the punishment. Employers should ensure that it has a substantive reason for dismissing an employee. Substantive fairness requires that an employer has a valid reason for dismissing the employee, such as wilful or deliberate misconduct or consistent poor performance. 

5. Procedural fairness:

Throughout the disciplinary process an employee should be afforded procedural fairness. This means that the employer should show no favouritism and apply the disciplinary process fairly and consistently to all employees. The Fair Work Act 2009 (Cth)[1], requires that the employee be:

  1. notified of the allegations raised against them;
  2. provided with an opportunity to respond to the allegations;
  3. provided with written warnings prior to dismissal (except where it is appropriate to summarily dismiss an employee); and
  4. afforded the opportunity to attend a disciplinary meeting with a support person.

6. Don’t prejudge:

Employers should not predetermine the outcome of disciplinary proceedings. It is important that employers keep an open mind and carefully consider the employees response to the allegations, including any mitigating factors, before making a decision to terminate.

7. Contributing factors:

Where an employee has raised bullying, harassment or discrimination, or where an employee has raised illness as a contributing factor to their performance related issues, the employer should seek legal advice before dismissing the employee. In addition to an unfair dismissal claim, the employer may be potentially facing an adverse action claim[2], temporary absence claim [3]or discrimination claim[4].

8. Policies and procedure:

Employers should strictly follow their own workplace policies and procedures during the disciplinary process. Failing to follow their own disciplinary policies can result in the employer’s dismissal being overturned by the Fair Work Commission and the employee being award compensation.[5]

9. Redundancy:

When dismissing an employee due to redundancy the employer should take extreme care to ensure that there is a genuine basis for the redundancy. A position is made redundant when the employer no longer requires it to be filled by anyone. An employer may be exposed to an unfair dismissal claim should it back-fill an employee’s position shortly after the employee has been dismissed due to redundancy.[6]

10. Loose lips sink ships:

It is important to ensure that the issues surrounding the disciplinary and termination process remain strictly confidential. The employer should not discuss the employee’s work performance and the reasons for the employee’s termination with third parties before or after the termination. Such conversations may adversely affect workplace culture and can be used as evidence against the employer in an unfair dismissal claim.

Employers should avoid costly and disruptive unfair dismissal claims by adopting the above 10 tips and recommendations when performance managing an employee for inappropriate workplace behaviour or poor performance. In the event that an unfair dismissal claim cannot be avoided, these tips will put the employer in a stronger position to defend the unfair dismissal claim.

[1] Section 387 of the Fair Work Act 2009 (Cth)
[2] Section 351 Fair Work Act 2009 (Cth).
[3] Section 352 Fair Work Act 2009 (Cth).
[4] Federal or stated based anti-discrimination legislation (eg Disability Discrimination Act 1992 (Cth) or Equal Opportunity Act 1984 (WA)).
[5] Romero v Farstad Shipping (Indian Pacific) Pty Ltd [2014] FCAFC 177
[6] Section 389 Fair Work Act 2009 (Cth)