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Unfair Dismissal

Unfair dismissal is dealt with in Part 3-2 of the Fair Work Act 2009 (the Act). An employee is protected from unfair dismissal provided they have completed the minimum employment period and there is no genuine redundancy and:

  • They are covered by a modern award, or
  • An enterprise agreement is in operation, or
  • They earn less than the high-income threshold.

What is Unfair Dismissal?

A dismissal is unfair if it is "harsh, unjust or unreasonable." In considering whether a dismissal is harsh, unjust or unreasonable Fair Work Australia (FWA) must take into account:

    (a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

    (b) whether the person was notified of that reason; and

    (c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

    (d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

    (e) if the dismissal related to unsatisfactory performance by the person-whether the person had been warned about that unsatisfactory performance before the dismissal; and

    (f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

    (g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

    (h) any other matters that FWA considers relevant.

Jurisdictional requirements that must be met before an unfair dismissal application will be considered

An application for an unfair dismissal remedy must be lodged within 14 days of the dismissal.

The minimum employment period that an employee has to work before being entitled to bring an unfair dismissal claim is six months, or one year in the case of a small business employer. This time period irrespective of what a contract or private agreement might otherwise stipulate. A small business employer is now one with fewer than 15 employees at the relevant time. This includes any employees in the process of being dismissed and also employees at any 'associated entity'. After the minimum employment period has passed, a small business employer will have to comply with the Fair Dismissal Code for Small Business.

Fixed term, fixed task or seasonal employees also have unfair dismissal remedies, although simply because they have not been re-hired at the end of the period for which they were engaged will not constitute a dismissal and will therefore mean the remedy of unfair dismissal is not available.

To rely on the genuine redundancy provision or defence an employer must have complied with any consultation obligations in an applicable award or enterprise agreement, and there must have been no reasonable opportunity for the employee to be redeployed.

If a fact, which is unrelated to the actual merits of the application, such as there being a genuine redundancy, is contested FWA may resolve the matter by private conference or by way of a formal hearing.

Remedies

The available remedies are reinstatement or compensation. Compensation is capped at the lesser amount of either 26 weeks salary or half the amount of the high-income threshold.

The primary remedy once an unfair dismissal has been established is reinstatement. Compensation is only to be ordered in circumstances where it is considered inappropriate for a reinstatement order to be made. There is no guidance as to what should be considered in determining whether a reinstatement order is inappropriate.

In determining the amount of compensation FWA must take into consideration:

  • the effect of the order on the viability of the employer’s enterprise; and
  • the length of the person’s service with the employer; and
  • the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
  • the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
  • the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
  • the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
  • any other matter that FWA considers relevant.

A reduction in the amount of compensation to be awarded can be made if the former employee was guilty of some misconduct leading to the dismissal. There is also a prohibition on the award of compensation for emotional distress.

Note that if it is not possible to reinstate the employee to the position, or comparable position, that they were in prior to their dismissal, FWA can order the employee to be appointed to a similar position with an associated entity if such a position is available.



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