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If you’re running a business and employ staff in Australia, one of the biggest challenges is ensuring you follow the right legal processes – especially when difficult decisions like letting someone go arise. Unfair dismissal claims can catch employers by surprise, and with strict time limits attached, a simple oversight can quickly lead to legal headaches or even costly payouts.
In this guide, we’ll break down everything you need to know about the unfair dismissal claim time limit – including what unfair dismissal means, how long employees have to lodge a claim, what steps you need to take as an employer, and how to set up your business practices to minimise risk. We’ll look at the process clearly, step by step, so you have the confidence to manage your team the right way.
Whether you’re a small business owner managing your first staff, or growing fast and starting to set up employment policies, this article will help you avoid some of the most common mistakes, and get on top of the deadlines that matter most.
Let’s dive in.
What Is Unfair Dismissal?
Unfair dismissal refers to a situation where an employee has been dismissed from their job and believes the dismissal was harsh, unjust or unreasonable. The Fair Work Commission (FWC) is the main body dealing with unfair dismissal claims in Australia.
To bring an unfair dismissal claim, an employee generally needs to show that:
- They were dismissed (not resigned or made redundant lawfully);
- They were employed for the minimum period (generally 6 months, or 12 months for small businesses); and
- The dismissal was “harsh, unjust or unreasonable”.
If the Commission finds in favour of the employee, remedies may include reinstatement to their job, compensation, or other orders.
It’s important to note that unfair dismissal is different to unfair business practices under the Australian Consumer Law or wrongful termination. The focus here is on the fairness of the dismissal process and circumstances.
What Is the Unfair Dismissal Claim Time Limit?
When it comes to unfair dismissal claims, time is not on your side. The unfair dismissal claim time limit is very strict, and both employers and employees need to be aware of it.
Currently, the time limit for making an unfair dismissal application to the Fair Work Commission is 21 days after the dismissal takes effect. This is usually calculated from the date employment is terminated, which is often the last day the employee works.
This means that if an employee believes they have been unfairly dismissed, they must lodge their application within 21 days. If the application is late, the Commission will only accept it in exceptional circumstances.
Why Are Time Limits So Strict?
The Commission takes these time limits seriously to ensure quick resolution of workplace disputes. Delays can make it more difficult to gather evidence, remember events, and resolve issues fairly. That’s why, as an employer, you need to know what’s coming and respond quickly if an application is filed.
Are There Any Exceptions?
Applications lodged outside the 21-day window are generally not accepted unless the employee can prove “exceptional circumstances” – for example, serious illness or another situation that genuinely prevented them from applying. These exceptions are rare and only granted in very limited circumstances.
It’s best to work on the basis that the 21-day time limit is a hard deadline. If you’re not sure when the time limit expires, or how to respond if you receive a claim, getting quick legal advice can help you avoid costly delays or mistakes.
Who Can Make an Unfair Dismissal Claim?
Understanding who is eligible to make an unfair dismissal claim helps you assess risk and prepare defensible procedures.
To be eligible, generally an employee must:
- Have completed the minimum employment period: 6 months for most employers, or 12 months if your business has fewer than 15 employees.
- Earn less than the high-income threshold (updated annually; check the current high-income threshold details).
- Not be a casual employee, unless they’ve been employed regularly and systematically with a reasonable expectation of ongoing work.
- Be covered by the national workplace relations system (which is most employees in Australia).
Remember, contractors and gig workers are usually not covered by unfair dismissal laws, but you should be mindful of the difference between contractors and employees to avoid issues.
What Happens If an Unfair Dismissal Claim Is Filed Late?
If an employee tries to lodge an unfair dismissal claim after the time limit, the Fair Work Commission will first consider whether to accept the application at all.
They will look at:
- The reason for the delay (illness, misinformation, etc.);
- Whether the employee took action promptly when they could;
- The merits of the claim itself; and
- Any prejudice or disadvantage to the employer or employee in allowing a late claim.
In most cases, if an employee simply forgot, didn’t know about the time limit, or was busy looking for a new job, that’s not enough for the Commission to grant an extension.
For employers, this means you’re unlikely to have to defend claims made outside the strict time window – but you still need to handle all dismissals thoroughly and keep good records in case a valid claim does arise.
How to Respond to an Unfair Dismissal Application
If an employee makes a claim, you’ll receive formal notice from the Fair Work Commission, usually within a few days of them lodging the application. Here’s what to do as an employer:
- Don’t ignore the claim. You only have a short window to respond – usually 7 days from receiving notice.
- Gather documentation. Collect contracts, warnings, performance reviews, emails, and anything else related to the dismissal.
- Submit your response. You’ll need to use the correct form and explain your reasons for the dismissal. The quality of your response impacts how the case is handled.
- Consider settlement. Many unfair dismissal claims are resolved by mediation or conciliation before getting to a formal hearing. Think about whether you’re willing to negotiate a solution.
- Get legal advice. If you’re unsure about what to include, how to handle the process, or what your chances are, it’s a good idea to speak with a workplace lawyer early.
The key is to act promptly and professionally. Delays or vague responses can be costly and make it harder to defend your case.
Best Practices to Minimise Unfair Dismissal Risks
While no business is completely safe from claims, good processes go a long way in reducing risk and making any claims easier to respond to. Here are some best practices:
- Document everything: Keep clear, dated records of all warnings, performance issues, meetings, and improvement plans.
- Follow a fair process: Give employees a fair chance to respond to concerns and improve, and keep them informed about potential consequences.
- Issue consistent communication: Use formal letters for warnings and terminations, referencing relevant workplace policies.
- Use written employment contracts: Have robust employment contracts in place, outlining notice periods, expectations, and grounds for termination.
- Understand your obligations: Stay up to date with Fair Work legislation and the National Employment Standards (NES).
- Train your managers: Make sure anyone involved in workforce management knows how to handle difficult discussions and follow fair process.
- Regularly review policies: Update workplace policies to reflect current law and industry standards (a staff handbook can help).
If you’re unsure whether your process is compliant, or want a legal health check, Sprintlaw can review your documents and policies for peace of mind.
What Legal Documents Should Employers Have in Place?
Having the right documents will make it much simpler to manage dismissals the right way, and to respond to any claims if they arise. Here are some essentials:
- Employment Agreement: Sets out duties, notice periods, grounds for termination, and other key conditions. Read more about what should be included here.
- Performance Management Policy: Outlines the steps for raising and addressing underperformance, including warnings and improvement plans. This underpins fair process.
- Termination Letter Template: Ensures any dismissal or redundancy is communicated clearly and in writing.
- Workplace Policies and Staff Handbook: Covers conduct, anti-discrimination, grievance and dispute processes – and keeps your business up to date with laws.
- Redundancy Policy/Checklist: If you ever need to let staff go for operational reasons, this helps distinguish a lawful redundancy from a dismissal.
You may also need a Non-Compete Agreement for certain positions, or a detailed redundancy letter if restructuring. These should be tailored to your business needs.
Remember, generic templates are rarely enough. Documents should always be updated to reflect the latest legal requirements and your real business practices.
How Can I Avoid Unfair Dismissal Claims in My Business?
While you can’t always avoid claims being made, there’s a lot you can do to reduce your exposure and be ready if a claim arises.
- Always give clear, written warnings and opportunities to improve before resorting to dismissal (except in cases of serious misconduct, where summary dismissal may be justified).
- Consult the Fair Work Ombudsman and your own policies to check recommended processes for warnings, notice, and grievance handling.
- Consider offering mediation or settlement discussions early if a dispute arises, rather than letting matters escalate to formal claims.
- Stay proactive – periodically run a legal health check on your operations and contracts.
Finally, open communication and respect go a long way in preventing disputes, as does seeking tailored advice before big employment decisions.
Common Mistakes Employers Make With Unfair Dismissal Time Limits
Many unfair dismissal risks can be avoided simply by knowing and respecting the time limits involved. Watch out for these common mistakes:
- Assuming employees will not act quickly – many do, and claims are often lodged right before the 21-day window closes.
- Failing to document every step – lack of evidence can make it hard to defend your position if a claim is made.
- Relying on oral warnings – these are difficult to prove; always confirm warnings and outcomes in writing.
- Not updating contracts or policies as the law changes – staying up to date is crucial for compliance.
- Missing Fair Work notifications – if you receive claim paperwork, don’t ignore or delay your response!
If you think you’ve made a mistake, or if a claim is already in motion, get advice quickly. Sprintlaw’s employment lawyers can step in at any stage of the process.
Key Takeaways
- The current unfair dismissal claim time limit in Australia is 21 days from the date of dismissal.
- Extensions to this time limit are rare and only granted in exceptional cases – assume the deadline is firm.
- Employers should act promptly if notified of an application, with a well-prepared written response.
- The best way to avoid unfair dismissal claims is a consistent, documented and fair process for performance management and terminations.
- Having up-to-date employment contracts, policies, and procedures is critical for defence and compliance.
- Regular legal health checks and proactive advice can help you stay on top of your obligations and reduce risk.
If you would like a consultation on managing unfair dismissal claims or setting up compliant staff processes for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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