You followed your gut. You let someone go. And now you’re staring down the barrel of a Fair Work claim.
Unfair dismissal is one of the most common and costly HR mistakes in Australia — not because employers are evil, but because they’re uninformed.
Here’s what the Fair Work Commission (FWC) actually examines when assessing an unfair dismissal — and how to protect your business from becoming the next cautionary tale.
First, the Legal Definition of Unfair Dismissal
According to the Fair Work Act, a dismissal is unfair if:
- It was harsh, unjust, or unreasonable
- It was not a genuine redundancy
- It was not consistent with the Small Business Fair Dismissal Code (if applicable)
That means even if the termination was technically legal, it can still be ruled unfair based on how it was handled.
The 6 Questions the Commission Asks
Let’s break down what the FWC actually looks for:
1. Was There a Valid Reason for the Dismissal?
This could relate to:
- Performance
- Misconduct
- Capacity (e.g. inability to fulfil role due to illness)
But a “valid reason” isn’t enough on its own. You must be able to prove it with:
- Evidence
- A consistent pattern or incident
- Communication leading up to dismissal
2. Was the Employee Notified of the Reason?
You can’t just fire someone on the spot and reveal nothing.
The FWC expects:
- A written or verbal explanation of the issue
- Specifics, not vague generalisations
- A formal meeting to communicate it (with notes taken)
3. Was the Employee Given a Chance to Respond?
Procedural fairness means:
- The employee gets to hear the allegations
- They’re given a reasonable opportunity to explain
- You genuinely consider their side
Skipping this step is one of the top reasons businesses lose unfair dismissal cases — even when the employee was clearly underperforming or misbehaving.
4. Was There Support or a Representative Allowed?
Employees have the right to bring a support person to any formal disciplinary or termination meeting — unless unreasonable (e.g. trying to bring a lawyer into a casual business).
Refusing this without cause can weigh against the employer.
5. Were Warnings or Performance Conversations Documented?
This is where most businesses fall apart.
The FWC looks for:
- Written warnings
- Documented performance reviews
- Notes from feedback meetings
- Timelines showing the employee was given a chance to improve
If you can’t produce these, you’re relying on hearsay — not evidence.
6. Was the Termination Harsh Given the Circumstances?
The Commission considers:
- The employee’s length of service
- Their record up to that point
- Whether the outcome was proportionate
- The personal impact of the dismissal
- Any mitigating factors
This means a first-time offence may not justify immediate termination — especially if it wasn’t intentional or didn’t cause harm.
Special Rule for Small Businesses
If you employ fewer than 15 people, you must follow the Small Business Fair Dismissal Code. It simplifies some procedures, but still requires:
- A valid reason
- Procedural fairness
- A clear record of why and how dismissal occurred
Most small businesses fail because they don’t document anything — or they assume “code” = “free pass.” It doesn’t.
What Happens If You Lose?
If the FWC finds the dismissal unfair, it can order:
- Reinstatement
- Compensation (up to 26 weeks’ pay)
- Back pay
- Public record of the decision
You’ll also burn time, reputation, and trust in your leadership.
How to Prevent It
- Get expert advice before making a termination decision
- Use a clear disciplinary process backed by policies
- Train managers on procedural fairness and documentation
- Run an internal HR check on compliance
And if in doubt, call someone before you act.
Hack Your HR provides support for:
- Disciplinary and termination process design
- Warning letter templates
- Performance improvement plans
- Risk assessments prior to dismissal
- Coaching managers through difficult conversations
Final Word
Unfair dismissal isn’t just about what you did — it’s about how you did it.
Get it wrong, and it doesn’t matter how valid your reasons were.
Process matters. Documentation matters. Fairness matters.
And if you’re not sure where you stand, it’s better to pause — and ask — than push forward blind.