What is unfair dismissal and how can I avoid it as the employer?

1. What is unfair dismissal?

The Fair Work Act 2009 (s385) sets out the requirements for a dismissal to be unfair. A dismissal may be unfair if: 

• the employee was dismissed, and
• the dismissal was harsh, unjust or unreasonable, and
• the dismissal was not a genuine case of redundancy, and
• where the employee was employed by a small business, the dismissal was not consistent with the Small Business Fair Dismissal Code.

Unfair dismissal is the most common claim submitted to the Fair Work Commission (the Commission) each year. An employee is eligible to make a claim if they: 

• Have at least 6 months of service (where the employer employs 15 employees or more); or
• Have at least 1 years’ service (where the employer employs fewer than 15 employees (a small business)) and
• Earn less than $183,100 per year (although this amount changes on 1 July each year) or if they are covered by a modern award or enterprise agreement. 

If a claim is successful, the employer may be ordered to pay the employee compensation or to give them their job back. Compensation is capped at 26 weeks.

2. Common mistakes

Managing employees can be challenging, and issues often build up over time rather than from a single incident. Many unfair dismissal claims stem from avoidable mistakes, including but not limited to: 

• avoiding putting concerns in writing;
• failing to hold performance reviews;
• avoiding difficult conversations about behaviour or performance;
• treating employees like friends or family; and
• failing to treat employees consistently.

If unacceptable behaviour is not addressed at the time it occurs, it can become normalised and is likely to be repeated by the employee. Without clear communication and documented warnings, it becomes difficult for the employer to demonstrate that the unacceptable behaviour amounts to a valid reason for dismissal when it was not addressed previously.

To successfully defend an unfair dismissal claim, documentation is critical. Many employers have strong grounds for dismissal but lack the evidence to support their decision. A clear paper trail can make or break a case.

3. What makes a dismissal “unfair”?

     a)   Was there a valid reason?

The Commission’s focus is not specifically about what the employer thought about the dismissal but rather the Commission will solely consider whether there was a valid reason for dismissal.

The Commission describes a valid reason as one which is sound, defensible and well founded. Examples include serious misconduct, repeated poor performance and genuine redundancies. 

It is much harder to satisfy the Commission that a personality clash, a single foolish act or workplace gossip amounts to a ‘valid reason’ for dismissal.

     b)   Was the employee informed of the concerns and given the opportunity to respond? 

In order to provide the employee with a clear understanding as to the allegation; employers should undertake an investigation into the allegation(s) beforehand. This ensures that the employer fully understands the breadth of the issue when putting it to the employee.  

Investigations may involve gathering witness statements, reviewing performance data, or assessing relevant documents. Further investigation may be required after the employee has provided their responses, but the majority should be completed in advance of a meeting. 

Allegations against employees must be clear and specific. Employees should be provided with enough information to ensure they can comprehensively respond. 

Clear and appropriate
✓  On 1 February 2026, it is alleged that you engaged in behaviour which is inconsistent with company values. It is alleged that you pushed John Smith against the wall in the kitchen and told him that you would “see [him] outside after work”.

Too vague
×  It is alleged that you pushed and threatened John.

Clear and evidence based
✓  It is alleged that for the month of February 2026 you have failed to achieve your target of calling 7 businesses per day. Attached is a spreadsheet confirming the number of calls made each day in February 2026.

Too broad
×  It is alleged that you have failed to reach your KPI’s in February 2026. 

The employee should be afforded the opportunity to respond to the allegations during a meeting, and their responses must be considered before any decision is made. 

The Commission will expect that the employee be given warnings, where appropriate. This is particularly relevant when addressing performance related concerns. An employee should be put on notice of the relevant concerns, should be given a reasonable opportunity to improve and should be on notice that a failure to improve may put their employment position in jeopardy. 

The employer must not pre determine the outcome before hearing the employee’s explanation. For example, a drop in performance may relate to personal circumstances or a medical condition, in which case a performance improvement plan may be more appropriate than dismissal.

    c)    Was the employee unreasonably refused a support person?

There is no positive obligation on an employer to offer an employee the opportunity to be accompanied to a disciplinary meeting. However, if the employee requests that a support person accompany them, this should not be unreasonably refused. 

A ‘support person’ is there to support the employee, not to act as an advocate or speak on the employee’s behalf. If the support person acts outside the scope of their role, the employer may ask them to step out of the meeting.  However, employers need to be conscious that new delegates rights provisions in modern awards and enterprise agreements do confer certain prescribed union delegates with the right to represent employees in disciplinary meetings.

Reasonable efforts should be made to allow the support person to attend. A short delay (for example, a few days to allow a union representative to attend) is generally acceptable, but lengthy delays are not.

4. How to avoid unfair dismissal claims?

There is no way to prevent an employee from lodging a claim with the Commission, but employers can significantly reduce the risk of the claim being successful.

Many employers are surprised to receive notice of an unfair dismissal claim, particularly when they believe they had a ‘good reason’. The reality is employers need more than a good reason, they need to follow a fair, transparent and well documented process. 

Key steps include:

• Having clear policies in place and following them;
• Documenting concerns and addressing these in real time;
• Setting expectations;
• Issuing warnings;
• Avoiding assumptions; and
• Preparing the supporting evidence in relation to the allegations before you draft the allegation.

5. What happens if I receive a Form F2?

If you receive a Form F2 Unfair Dismissal complaint, it is important that you act quickly. The Commission requires a response within 7 days of the employer receiving the notification. Missing the deadline may result in the matter progressing without your input. 

Due to the short timeframe, we recommend seeking legal advice as soon as possible to ensure you have time to prepare a strong response. 

If you need assistance with any of the issues raised within this article, please get in touch on 1300 565 846 or email info@ablawyers.com.au.