Unlawful Dismissal In Australia: Protecting Employees And Employers

Losing a job - or needing to let someone go - is stressful for everyone involved. On top of the personal impact, there are strict legal rules around when and how a dismissal can happen in Australia.

If you’re an employee wondering whether your dismissal was legal, or an employer aiming to do the right thing and reduce risk, it’s important to understand the difference between “unfair” and “unlawful” dismissal, the steps to follow, and the remedies that may apply.

In this guide, we’ll break down the essentials in plain English so you can understand your rights and obligations and take confident next steps.

What Is “Unlawful Dismissal” In Australia?

People often use “unlawful dismissal” as a catch‑all term, but in Australian law it usually refers to dismissals that are prohibited because of the reason for the dismissal (for example, discrimination).

There are two main legal pathways commonly raised after someone is let go:

• Unfair dismissal - the dismissal was “harsh, unjust or unreasonable” (usually a Fair Work Commission process).
• Unlawful termination/general protections (adverse action) - the dismissal was for a prohibited reason (for example, because of sex, race, union activity, a complaint or inquiry, or a temporary absence due to illness/injury), or because the employee exercised a workplace right.

Unlawful termination cases focus on whether the employer’s reason for dismissal was prohibited. Unfair dismissal focuses on the fairness of the decision and process.

In most cases, you have 21 days from the date the dismissal takes effect to start an application. Acting quickly is essential.

Unfair Dismissal Vs Unlawful Termination: What’s The Difference?

It helps to be clear about which pathway applies, because eligibility, process and remedies differ.

Unfair Dismissal (Fair Work Commission)

Unfair dismissal usually applies if you’ve been dismissed and the decision was harsh, unjust or unreasonable. The Fair Work Commission will look at a set of factors in section 387 of the Fair Work Act, including whether:

• There was a valid reason related to capacity or conduct.
• You were notified of the reason and given an opportunity to respond.
• Procedural fairness was followed (e.g. a support person allowed, proper warning for performance issues).

There are threshold requirements. For example, you usually need the minimum employment period (6 months, or 12 months if it’s a small business), and if your earnings are above the high income threshold, you typically need to be covered by an award or enterprise agreement to bring an unfair dismissal claim.

Unlawful Termination & General Protections (Adverse Action)

Unlawful termination claims arise where you’re dismissed for a prohibited reason (e.g. discrimination, temporary absence due to illness, union membership, or exercising a workplace right such as making a complaint). These claims sit under the Fair Work Act’s “general protections” regime.

Key points:

• The reason for dismissal is central. If part of the reason was prohibited, that can be enough.
• The minimum employment period and high income threshold do not apply to these claims.
• Remedies can include reinstatement, compensation, and civil penalties.

Redundancy: Genuine Or Not?

If your role is made redundant, the dismissal may be fair if it’s a genuine redundancy: the employer no longer needs the job done by anyone, consultation occurred under any award/EA, and redeployment was not reasonable. These criteria are set out in section 389.

If those steps aren’t followed, a “redundancy” could be challenged as an unfair dismissal.

Employee Checklist: What To Do If You’ve Been Dismissed

If you think your dismissal was unfair or unlawful, don’t panic - but do act quickly. Here’s a practical approach.

1) Confirm The Basics And Deadlines

• Note the date your dismissal took effect (your 21-day clock starts here).
• Check whether you meet the eligibility criteria (e.g. minimum employment period for unfair dismissal). For adverse action/unlawful termination, the minimum period doesn’t apply.
• Identify whether your dismissal was for alleged performance, conduct, redundancy, or another reason.

2) Gather Your Evidence

• Employment documents: your Employment Contract, policies, position description, warnings or performance plans.
• Communications: emails, meeting notes, text messages, calendar invites.
• Payroll records: payslips, rosters, timesheets.

Keep copies organised. Accurate records make your position clearer.

3) Consider The Right Avenue

• Unfair dismissal if the process or decision was harsh, unjust or unreasonable.
• General protections/unlawful termination if you were dismissed for a prohibited reason (e.g. a complaint you made, discrimination, temporary absence due to illness/injury).

You can’t run both claims to final determination for the same dismissal, so it’s important to choose the correct path.

4) Lodging Your Application And Possible Outcomes

Most disputes start with a conciliation conference. Many settle at this stage with an agreement such as compensation, a separation certificate, a statement of service, or sometimes reinstatement.

If the matter proceeds, potential remedies include reinstatement, compensation (capped in unfair dismissal), penalties (in general protections), and non-monetary orders.

5) Watch For Related Entitlements

Separate to the dispute, ensure your final entitlements are paid correctly (notice, accrued leave, and any redundancy pay if applicable). This is different from compensation for a dismissal claim.

Employer Guide: How To Dismiss Lawfully And Fairly

Most employers genuinely want to do the right thing. Lawful, well‑managed terminations protect your team, your brand and your business. Here’s a practical framework.

1) Start With The Right Foundations

• Clear job descriptions and measurable performance expectations.
• Up‑to‑date contracts and policies (for example, a strong Employment Contract and relevant workplace policies).
• Documented performance feedback and support, including warnings where appropriate.

When expectations and processes are clear, problems are easier to manage fairly.

2) Identify The Real Reason (And Check It’s Lawful)

Be honest about why you’re considering dismissal - performance, conduct, genuine redundancy, or another reason. Ensure prohibited reasons are not any part of the decision‑making. If an employee has made a complaint, taken a lawful entitlement, or is temporarily absent due to illness or injury, proceed with extra care and independent advice.

3) Follow A Fair Process

• Investigate any alleged misconduct properly and impartially. In some cases, consider whether to stand the employee down pending investigation if that’s permitted and reasonable.
• Invite the employee to a meeting, provide details of the concerns, allow a support person, and give a reasonable chance to respond.
• Use a show cause letter to outline the issues and potential outcome, and genuinely consider their response before deciding.

These steps go to procedural fairness - a key aspect of whether a dismissal is later viewed as harsh, unjust or unreasonable.

4) Choose The Right Path: Performance, Conduct Or Redundancy

• Performance: Provide clear feedback, improvement plans and reasonable time to improve. If there’s no improvement, you may proceed to termination following a fair process.
• Conduct: For serious misconduct (e.g. theft, fraud, violence), dismissal may be summarily (without notice) if properly established. For other conduct, warnings and support are still appropriate.
• Redundancy: Only where the job is no longer required by anyone, with required consultation and genuine consideration of redeployment. Align your approach with the genuine redundancy test.

5) Consider Alternatives To Immediate Termination

• Notice or payment in lieu of notice where appropriate.
• Garden leave (if the contract permits), where the employee serves notice away from the workplace - learn more about garden leave.
• Probation: If employment is within a probationary period, you still need to act fairly and pay the correct notice. See our guide on termination during probation.

6) Document The Decision

Keep a clear paper trail: investigation notes, invitations to meetings, responses, and reasons for the decision. This helps demonstrate a fair and lawful process if the decision is later challenged.

Legal Requirements At The Time Of Termination

Once a decision is made, the way you implement it matters. There are National Employment Standards (NES) and other obligations you need to meet.

Notice And Timing

• Give the correct notice period (or pay in lieu) based on the employee’s length of service and any additional contractual or award requirements.
• Notice can be withheld for proven serious misconduct, but ensure the threshold is met and the process is sound.

Final Pay And Entitlements

• Pay outstanding wages, accrued annual leave, and any other entitlements. In redundancy, include any applicable redundancy pay.
• Ensure calculations are correct and made within required timeframes. For a step‑by‑step outline, see calculating final pay.

Separation Documents And Records

• Provide a separation certificate if requested and required for government purposes.
• Update payroll and HR systems, revoke access, and collect company property respectfully.

Confidentiality And Post‑Employment Obligations

Remind the departing employee of confidentiality, IP ownership and any restraint clauses that apply (within legal limits). Ensure your contracts are well‑drafted so these obligations are clear from day one.

Common Pitfalls (And How To Avoid Them)

Even with good intentions, employers can stumble on the details. These are the frequent trouble spots we see - and how to steer clear of them.

Confusing Poor Process With “Genuine” Reasons

Even if there’s a valid reason, a poor process can make a dismissal unfair. Align your process with the factors in section 387 and give the employee a fair chance to respond.

Calling It Redundancy When It Isn’t

Redundancy is about the role, not the person. If the duties remain and you’re simply replacing the employee, that’s unlikely to be genuine. Check the elements of a genuine redundancy before proceeding.

Missing Prohibited Reasons In The Background

If an employee recently made a complaint, took parental leave or was off sick, make sure those factors play no part in the decision. Keep decision‑makers focused only on lawful, evidence‑based reasons, and document your reasoning.

Skipping Warnings Or Support In Performance Cases

For underperformance (not serious misconduct), most employees should receive clear expectations, support and reasonable time to improve - and be warned about the risk of termination if there’s no improvement.

Overlooking Contractual Options

Well‑drafted contracts can provide flexibility at the end of employment, including payment in lieu of notice or garden leave where appropriate. Ensure your template agreements are current and fit for purpose.

FAQs We’re Often Asked

Is A Dismissal During Probation Always “Safe”?

No. Probation helps assess suitability, but you still need to comply with notice requirements, anti‑discrimination laws and any applicable awards or agreements. A fair, simple process still applies. Our guide on termination during probation covers the essentials.

Do I Have To Hold A Formal Meeting Before Dismissal?

While there’s no rigid script, procedural fairness is critical. Generally, provide the concerns in writing, allow a support person, give a chance to respond, and genuinely consider that response before deciding. In misconduct cases, conduct an appropriate investigation first.

Can I Use Payment In Lieu Instead Of Working Out Notice?

Yes, if your contract or award allows it. Many employers prefer payment in lieu of notice or garden leave to reduce disruption and risk. Always check the legal basis before choosing either option.

What If I Need To Suspend Someone While I Investigate?

In some circumstances, you can stand someone down or suspend them while investigating alleged misconduct, but only if there’s a lawful basis and it’s reasonable. See our guidance on standing down an employee pending investigation for key considerations.

Key Takeaways

• “Unlawful dismissal” generally refers to dismissals for prohibited reasons, while “unfair dismissal” focuses on whether the decision and process were harsh, unjust or unreasonable.
• Act fast: most applications must be lodged within 21 days of dismissal taking effect.
• For employees, gather your documents, choose the correct avenue (unfair dismissal or general protections), and consider settlement options such as reinstatement or compensation.
• For employers, a fair, well‑documented process is essential: investigate, communicate concerns, allow a response, and document reasons.
• Redundancies must be genuine - consult where required and consider redeployment to meet the legal test.
• At termination, meet your NES obligations for notice, final pay and documentation, and ensure your contracts and policies provide clear options.

If you’d like a consultation on managing unlawful or unfair dismissal risks in your workplace, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.