Unfair Dismissal Cases in Australia: Examples and Lessons

As a small business owner, managing staff is one of the most important - and sensitive - parts of running your business.

When a working relationship isn’t working out, you may need to end employment. However, if that process isn’t handled correctly, you could face an unfair dismissal claim at the Fair Work Commission (FWC).

In this guide, we’ll walk through real‑world style unfair dismissal cases examples from an employer’s perspective, explain what the FWC looks for, and share practical steps to reduce your risk while keeping your workplace fair and compliant.

What Is Unfair Dismissal (For Employers)?

Unfair dismissal happens when an employee is dismissed in a way the FWC considers harsh, unjust or unreasonable under the Fair Work Act 2009 (Cth).

Generally, an employee must have completed the minimum employment period and be covered by the national system to bring a claim. For small businesses (fewer than 15 employees), the minimum period is usually 12 months; for others, it’s 6 months.

There are also strict timeframes (usually 21 days from dismissal) for lodging claims. Even if an employee isn’t eligible for unfair dismissal, other risks can still arise (for example, general protections claims), so it’s important to approach any termination carefully and professionally.

Unfair Dismissal Cases: Common Examples Employers Should Know

Every case turns on its facts, but certain patterns come up repeatedly in unfair dismissal matters. Here are practical, real‑world style examples to help you spot and avoid risk.

1) Performance Dismissal Without Warnings Or Process

Scenario: An employee has ongoing performance issues (missed deadlines, poor quality work). Their manager is frustrated and dismisses them on the spot without prior warnings or a chance to improve.

Risk: The FWC often finds this type of dismissal unfair because the employee wasn’t given clear feedback, reasonable performance goals, or time to improve. A lack of documentation (e.g. written warnings or a performance plan) makes an employer’s case harder.

Employer lesson: Use a structured performance management process - set expectations in writing, issue formal warnings, offer support or training, and allow time for improvement. A clear Employment Contract and robust performance policies help set the foundation.

2) Misconduct Allegation Without A Fair Investigation

Scenario: A staff member is accused of misconduct (for example, breaching safety rules or mistreating a customer). The business relies on hearsay, doesn’t investigate, and dismisses immediately.

Risk: If you have no proper investigation, you may not have a valid reason connected to the employee’s conduct. Not giving the employee a reasonable chance to respond is also a common procedural flaw.

Employer lesson: Run a fair, timely investigation. Put the allegations in writing, give the employee a chance to respond, and consider their explanation before deciding. A formal Show Cause Letter is a simple, effective way to manage this step.

3) “Redundancy” That Isn’t Genuine

Scenario: A role is labeled redundant to remove a difficult employee, but the duties are still required and are given to someone else shortly after.

Risk: The FWC will look past labels. If a redundancy is not genuine - for example, the role still exists - a dismissal can be unfair. Even genuine redundancies must be procedurally fair (e.g. consultation requirements under the relevant award or agreement).

Employer lesson: Ensure redundancies are genuine, consult as required, and document the business case. If you’re weighing redundancy vs performance management, it can help to revisit the difference between redundancy and termination to choose the right path for your situation.

4) Dismissal During Probation Without Basics Of Fairness

Scenario: An employee on probation isn’t the right fit and is let go immediately, with no discussion or consideration of notice terms.

Risk: While many probationary employees won’t be eligible for unfair dismissal (minimum employment periods apply), you still need to follow the contract and minimum notice obligations. Failing to do so can fuel other claims and disputes.

Employer lesson: The probation period can assist you to test suitability, but it’s still wise to meet, explain concerns, and follow the contract. For more on this, see our guide on termination during probation.

5) Abrupt Termination With No Opportunity To Respond

Scenario: An employee is criticised for attitude issues and dismissed in the same meeting without being told the precise reasons or given time to respond or bring a support person.

Risk: Even with valid concerns, the FWC often focuses on procedural fairness. If you don’t outline the concerns, give a fair opportunity to respond, and allow a support person (if requested), the dismissal may be deemed harsh or unreasonable.

Employer lesson: Be clear and transparent. Provide specific issues in advance, consider a reasonable response, and document your process.

6) Notice And Exit Mismanaged (PILON, Garden Leave, Handover)

Scenario: An employer terminates immediately without paying out notice or considering contract options, then refuses the employee access to work to complete a handover.

Risk: If the contract or award requires notice, failure to pay it can lead to claims. Mishandling the exit can also heighten the chances of an unfair dismissal dispute.

Employer lesson: Check the contract and the National Employment Standards before you act. Where appropriate, you can use payment in lieu of notice or, in some cases, place the employee on garden leave to protect your business while ensuring entitlements are met.

What Does The Fair Work Commission Consider?

When deciding unfair dismissal cases, the FWC weighs a number of factors set out in section 387 of the Fair Work Act. In simple terms, the Commission will ask questions like:

• Was there a valid reason related to the employee’s conduct or capacity?
• Was the employee notified of the reason and given an opportunity to respond?
• Did the employer refuse an employee’s request to have a support person present (unreasonably)?
• Was there any prior warning about unsatisfactory performance?
• How large is the business and what HR expertise was available?
• Were the dismissal procedures fair in the circumstances?

For more detail on these statutory factors, see our breakdown of section 387 of the Fair Work Act.

Small businesses should also be aware of the Small Business Fair Dismissal Code. If you comply with the Code (and can evidence your compliance), it can be a strong defence to unfair dismissal claims.

How To Reduce Your Risk Before You Dismiss Someone

The best way to manage unfair dismissal risk is to plan ahead and follow a consistent, documented process. Here’s a practical checklist that works for most scenarios.

1) Start With Contracts And Policies

• Contracts: Ensure every employee has a clear, up‑to‑date Employment Contract covering notice, misconduct, confidentiality and performance expectations.
• Policies: Keep a current set of workplace policies - for example, performance and conduct, investigations, and grievance processes. If you need a starting point, see our Workplace Policy support.

2) Document Performance Concerns

• Record specifics: Dates, missed targets, client feedback, and examples.
• Be clear and fair: Communicate concerns promptly, set achievable goals, and provide reasonable timeframes.
• Use warnings: Written warnings show you’ve flagged the issues and given a chance to improve.

3) Investigate Allegations Of Misconduct Properly

• Write to the employee: Outline allegations and potential outcomes in a Show Cause Letter.
• Offer a support person: If requested, don’t unreasonably refuse it.
• Consider all evidence: Interview relevant witnesses and review documents before deciding.

4) Check Eligibility And Risks

• Eligibility: Consider the employee’s length of service and whether minimum employment periods apply.
• Other risks: Discrimination or adverse action risks can arise regardless of service length - take extra care where health, safety complaints, parental leave or other protected attributes/activities are involved.

5) Decide The Exit Path And Get The Mechanics Right

• Notice: Follow contract and statutory notice. If needed, consider payment in lieu of notice.
• Garden leave: Where the contract permits, garden leave can protect relationships and information during notice.
• Handover: Plan access, return of property, and client communications to avoid disruption.

6) Use Clear Documentation At Each Step

• Meeting invites and notes
• Warnings and performance plans
• Show Cause and outcome letters
• Termination letter and final pay calculation

Having a well‑organised termination pack saves time and reduces disputes. Many employers benefit from a structured suite of templates tailored to their business and industry.

What To Do If An Unfair Dismissal Claim Is Filed

If an employee files an unfair dismissal application, here’s how to respond constructively.

1) Act Quickly And Gather Documents

FWC deadlines are tight. Pull together the contract, policies, warnings, meeting notes, investigation materials, and correspondence. The strength of your documentation often decides the outcome.

2) Prepare Your Response

Address each allegation clearly and factually. Explain the valid reason for dismissal and the steps you took to ensure procedural fairness (warnings, opportunity to respond, support person considerations, and so on).

3) Consider Early Resolution

Conciliation is common, and many matters settle with agreed outcomes such as a deed, reference wording, or payment in lieu of reinstatement. If you’re exploring resolution, a carefully drafted deed can finalise the dispute and protect your business.

4) Be Open To Process Improvements

Whatever the outcome, use the experience to improve your policies, manager training and record keeping. Small, consistent improvements reduce future risk and create a fairer workplace.

Key Takeaways

• Unfair dismissal risk usually comes down to two things: whether you had a valid reason and whether your process was fair and reasonable in the circumstances.
• Common trouble spots include “no‑warning” performance terminations, misconduct decisions without proper investigation, and redundancies that aren’t genuinely required.
• The FWC considers clear statutory factors, including notice of reasons, an opportunity to respond and prior warnings - see the section 387 criteria for guidance.
• Reduce risk by setting strong foundations (clear contracts and policies), documenting issues, using Show Cause Letters, and getting the mechanics right on notice, handover and exit documentation.
• If a claim is filed, act fast, compile your evidence, and consider pragmatic resolution options where appropriate, balanced against the merits of your case.
• Proactive training for managers and consistent documentation will save time, stress and cost - and help you build a fair, compliant workplace.

If you’d like a consultation on handling unfair dismissal risks or setting up the right termination documents and processes for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.