Section 772 of the Fair Work Act: What Employers Need to Know

If you’re hiring in Australia (even just your first employee), termination risk is something you can’t afford to ignore.

One provision employers should keep on their radar is section 772 of the Fair Work Act. It sits in the Fair Work Act’s unlawful termination framework and sets out certain reasons an employee generally can’t be dismissed.

For startups and small businesses, section 772 can be easy to miss because the headlines often focus on unfair dismissal or general protections. But section 772 still matters because it can apply even when you think you’ve done everything “by the book” (for example, you’ve paid notice and followed your contract).

Below, we break down what section 772 of the Fair Work Act means in practical terms, how it differs from other claims, and what you can do to reduce the risk of an unlawful termination allegation.

What Is Section 772 of the Fair Work Act?

Section 772 is part of the Fair Work Act’s unlawful termination regime. In plain English, it means there are certain reasons for dismissal that are generally not allowed.

This is different from “Was the termination fair?” (unfair dismissal) and different again from “Were workplace rights breached?” (general protections). Section 772 is more like: you generally can’t terminate for certain reasons.

There are important statutory qualifications and exceptions (including that some situations are dealt with under other laws or other parts of the Fair Work Act, and some employees/situations can be excluded). But as an employer, you should still treat section 772 as a high-risk list. If any of these reasons might be in the background of a termination decision, you should slow down, document carefully, and get advice.

Common Unlawful Termination Reasons Under Section 772

Section 772 prohibits dismissal for particular reasons, including (among other things) reasons connected to:

• Temporary absence due to illness or injury (but “temporary absence” has a specific meaning and conditions under the Fair Work Regulations, including around evidence like medical certificates and time limits).
• Trade union membership or non-membership, or union participation (for example, being a member, not being a member, or taking part in union activities in certain circumstances).
• Making a complaint or participating in proceedings under workplace laws (for example, an employee makes a complaint or takes part in a process and is then dismissed because of that).
• Protected attributes (for example, race, sex, sexual orientation, age, disability, marital status, family or carer responsibilities, pregnancy, religion, political opinion, national extraction, or social origin).

The key point for business owners is that section 772 focuses on the real reason for termination. If a prohibited reason is a substantial and operative reason for dismissal, you may have a problem even if you also had other performance or operational concerns.

Why Startups Often Get Caught Out

In a startup, decisions move fast. Roles change quickly, cash flow changes quickly, and team dynamics can be intense.

That’s often when terminations happen with:

• minimal paper trail,
• unclear performance expectations, or
• informal management conversations that later get reinterpreted as “the real reason”.

That’s why the best time to manage section 772 risk is before you’re under pressure.

Section 772 vs Unfair Dismissal vs General Protections: What’s The Difference?

It’s common for employers to hear “Fair Work claim” and assume it must be unfair dismissal. In practice, there are different types of claims, and a single termination scenario can trigger more than one (including claims outside the Fair Work Act, like discrimination claims under State or Federal legislation).

Unfair Dismissal (Broadly: Was It Harsh, Unjust or Unreasonable?)

Unfair dismissal is about the overall fairness of the dismissal process and outcome (including whether there was a valid reason and whether procedural fairness was given).

It also has eligibility criteria (including minimum employment period thresholds). Some smaller employers assume this is the only “termination risk” to worry about. It isn’t.

General Protections (Broadly: Was A Workplace Right Breached?)

General protections claims are often about “adverse action” taken for a prohibited reason (like exercising a workplace right), and they can cover a wide range of prohibited reasons (including some that overlap with section 772).

These claims are often heavily litigated because the legal tests can be complex, and the “reason” for dismissal becomes central.

Unlawful Termination Under Section 772 (Broadly: Was The Termination For A Prohibited Reason?)

Section 772 sits in the unlawful termination framework and targets particular “no-go” reasons for dismissal.

From an employer perspective, the practical lesson is:

• don’t rely on a “we paid notice, so it’s fine” mindset, and
• don’t assume probation or casual status automatically makes termination risk-free.

If you’re unsure which framework a situation might fall under, it’s often worth getting advice early, because your strategy (including what you say in writing) can affect your risk profile later.

When Can Section 772 Risks Come Up For Employers?

Most section 772 issues aren’t caused by employers deliberately trying to do the wrong thing. They come up when your business has a legitimate management issue, but the timing and context creates doubt about the “real reason”.

Here are common high-risk scenarios.

1) Terminating Soon After a Complaint

If an employee complains about underpayment, safety, bullying, discrimination, leave, or workload, and then is terminated shortly after, a regulator or tribunal may ask:

Was the complaint a reason for the termination?

Even if performance was genuinely an issue, the lack of documentation (or a rushed process) can make it look like the dismissal was retaliation.

2) Terminating During or After Sick Leave

Temporary absence due to illness or injury is a classic section 772 risk area.

It’s not unusual for a small business to feel operational strain when someone is away, especially in a lean team. But acting purely because the absence is inconvenient can create legal exposure.

If health issues are affecting capacity long-term, there may be lawful ways to manage it, but you’ll want a careful process and clear evidence. These situations can also overlap with discrimination and reasonable adjustments obligations.

3) “We Just Need To Move Fast” Terminations

Startups often terminate because the business is changing direction or the role is no longer needed. That may be a genuine redundancy situation (or it may not, depending on what happens next).

But section 772 risk can still arise if, for example, the employee had recently raised concerns, taken sick leave, or engaged in union activity and you didn’t clearly separate the decision-making from those events.

4) Probation Terminations Without Process

Probation is a useful tool, but it’s not a “free pass”.

You can generally terminate during probation more easily, but you should still:

• be clear on the reason,
• avoid prohibited reasons, and
• document the performance issues or operational reasons you relied on.

If probation is relevant to your situation, it’s worth reviewing your approach to termination during probation to make sure your process matches your risk profile.

Practical Steps To Reduce Section 772 Unlawful Termination Risk

If you want to protect your business, the goal isn’t to create bureaucracy. It’s to create clarity.

Here are practical, startup-friendly steps that make a big difference if a termination is later challenged.

1) Get The Foundations Right From Day One

A strong paper trail starts with having the right documents in place before issues arise.

• An Employment Contract that clearly sets expectations, probation terms (if any), notice requirements, and key policies.
• Clear performance expectations (even a short role description and KPIs can help).
• Written policies on conduct, leave processes, and complaints handling (so employees know how to raise issues and you can show you took them seriously).

When termination becomes necessary, you’ll be relying on these documents to demonstrate that your decision was based on legitimate business grounds, not a prohibited reason.

2) Separate “Events” From “Reasons”

Section 772 risk often comes down to this: a protected event happens (like sick leave or a complaint), and then termination follows.

To manage that risk, you want to be able to show:

• what the performance/role concerns were,
• when they were identified,
• what support or feedback was given, and
• why termination was ultimately decided.

That doesn’t mean you need months of documentation. But you do want your records to align with reality.

3) Use A Fair Process (Even If You Think You Don’t Have To)

A fair process won’t automatically prevent a claim, but it often reduces disputes and makes it easier to defend your decision.

For performance or conduct issues, a common approach includes:

• explaining the concern clearly,
• giving the employee a chance to respond, and
• confirming expectations and consequences in writing.

Many employers formalise this using show cause letters in more serious situations (for example, where misconduct is alleged or where termination is being considered).

4) Be Careful With Termination Communications

In section 772 disputes, what you said (and what you wrote) can matter just as much as what you did.

A few practical tips:

• Keep termination letters factual and consistent with your documented reasons.
• Avoid emotional language or references to protected events (like “we can’t keep covering your shifts while you’re sick”).
• Don’t “pad” the reasons with unnecessary allegations you can’t prove.

And if you’re ending employment and paying out notice rather than requiring the employee to work it, make sure you handle payment in lieu of notice correctly (including checking the contract and any applicable award).

5) If It’s A Redundancy, Treat It Like One

Sometimes termination really is about the role no longer being required. In that case, you’ll want to ensure:

• your decision is genuinely about operational requirements,
• you’ve considered redeployment (where relevant), and
• you follow consultation obligations (which can apply under awards and enterprise agreements).

It also helps to get your numbers right early. Many employers use a redundancy calculator as a starting point when estimating entitlements (then confirm final figures based on the specific circumstances).

What Should You Do If You’re Considering Terminating Someone In A High-Risk Situation?

If you’re reading this while actively managing a difficult employment issue, you’re not alone. It’s common to feel stuck between protecting the business and doing the right thing by your team.

In a section 772 context, “high-risk” usually means there’s a protected reason in the background, such as:

• recent sick leave or injury,
• a workplace complaint,
• union involvement, or
• a protected attribute/discrimination-related issue.

In these cases, the safest approach is usually to pause and map the situation before acting. For example:

• What is the legitimate business reason you would rely on?
• What evidence supports it (emails, KPIs, warnings, meeting notes, restructure documents)?
• What process have you followed so far, and what is missing?
• What are the alternatives to termination (training, role adjustment, mediation, a managed exit)?

Sometimes a structured exit is the best way forward for everyone, especially where the employment relationship has broken down but you want to minimise dispute risk. Depending on your circumstances, this might involve a deed. It’s worth considering whether a mutual separation agreement is appropriate (particularly where you want clear terms around final payments, return of property, and confidentiality).

Just be careful: you don’t want to pressure an employee into an agreement, and you’ll want to ensure any deed is properly drafted and executed.

Key Takeaways

• Section 772 of the Fair Work Act forms part of the unlawful termination regime and sets out specific prohibited reasons for dismissal.
• Section 772 issues often arise where termination happens soon after a complaint, during sick leave, or in other “sensitive timing” situations where the real reason may be questioned.
• Even if you’re confident termination is justified, a rushed process and weak documentation can increase the risk of a claim.
• Strong foundations like a clear Employment Contract, written expectations, and fair performance processes make it easier to show your reasons were lawful.
• Where termination is being considered, careful written communication (and correctly handling notice and entitlements) can reduce dispute risk.
• If the role is no longer required, treat it as a genuine redundancy process and confirm consultation and payment obligations.

If you’d like help managing a termination risk issue or setting up your employment documents properly, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.