Summary dismissal for serious misconduct and what Australian employers must do

What the law requires when you dismiss an employee on the spot

When an employee commits theft, assault, or fraud, the instinct is to end the employment immediately and without notice. Australian law gives you a pathway to do that: summary dismissal for serious misconduct. Section 123 of the Fair Work Act 2009 (Cth) (the Fair Work Act) removes the usual notice obligations where employment ends because of serious misconduct, which is what makes an "on the spot" dismissal lawful in the first place.

But the word "summary" describes the absence of notice, not the absence of process. The Fair Work Commission (the FWC) will scrutinise both the reason for the dismissal and the way you handled it. If either fails, the dismissal can be found unfair, with reinstatement or compensation orders against your business. This guide sets out the obligations you take on the moment you decide to dismiss an employee immediately: the threshold the conduct must meet, the fair process you must run first, how to manage the employee while you investigate, what you must pay, and the consequences of getting it wrong.

Who these obligations apply to and when they bite

These obligations apply to every employer in the national workplace relations system, which covers most private-sector businesses in Australia, from sole traders to large companies. The obligation to act fairly on dismissal is not limited by business size: the FWC adjusts its expectations for smaller employers, but it does not excuse the basics.

The trigger is specific. You are dismissing an employee without notice because you claim their conduct amounts to serious misconduct. Three thresholds shape what you can do:

• The serious misconduct threshold: section 12 of the Fair Work Act defines serious misconduct by reference to the regulations. In practice, it means deliberate behaviour that is fundamentally inconsistent with continuing employment, such as theft, fraud, assault, sexual harassment, causing serious and imminent risk to health and safety, or refusing a lawful and reasonable instruction that is part of the job, as the Fair Work Ombudsman explains.
• Minimum employment period: under section 383 of the Fair Work Act, an employee needs at least 6 months' service (or 12 months if you are a small business employer) to bring an unfair dismissal claim. Service limits do not apply to general protections claims, so a short-service employee can still challenge the dismissal on other grounds.
• Small business employer status: under section 23 of the Fair Work Act, a small business employer employs fewer than 15 employees, counting regular casuals and associated entities. Small business dismissals must also be consistent with the Small Business Fair Dismissal Code under section 388, or they can be found unfair even with a sound reason.

The first duty: a valid reason based on serious misconduct

Before you dismiss anyone summarily, you must have a valid reason related to their conduct or capacity, and for immediate dismissal that reason must cross the serious misconduct threshold. The conduct must be deliberate or wilful, and so inconsistent with the employment relationship that it would be unreasonable to keep the person employed even for a notice period. Failing that test, the correct response is a warning or a dismissal with notice, not a summary dismissal.

The threshold matters because it is narrower than ordinary misconduct. Repeated lateness, minor policy breaches, rudeness, or poor performance are frustrating, but they are not serious misconduct and they do not justify immediate dismissal. Misclassifying them is one of the most common ways employers turn a manageable situation into a claim.

The FWC decides whether the conduct occurred on the balance of probabilities, which means your conclusion must rest on evidence, not suspicion. CCTV footage, emails, system logs, delivery records, and signed witness statements all count. Hearsay and gut feeling do not. If you cannot substantiate the conduct, you do not have a valid reason, no matter how strongly you believe it happened.

The second duty: a fair process before you decide

Fairness is not optional, and section 387 of the Fair Work Act sets out the criteria the FWC applies when deciding whether a dismissal was harsh, unjust or unreasonable. In summary, the Commission must consider whether:

• there was a valid reason related to the employee's capacity or conduct, including its effect on the safety and welfare of other employees;
• the employee was notified of that reason;
• the employee was given an opportunity to respond to the reason;
• you unreasonably refused to allow a support person at discussions relating to the dismissal;
• the employee had been warned, where the dismissal related to unsatisfactory performance;
• the size of your enterprise affected the procedures you followed; and
• the absence of dedicated human resources expertise affected those procedures.

The s 387 checklist is the process. In practice, a defensible process has four steps.

Investigate promptly and objectively

Secure the evidence before you do anything else: preserve CCTV, export email and system logs, take signed statements, and hold physical evidence. Your goal at this stage is to establish what happened, not to confirm what you already suspect. If the allegation is sensitive or witnesses are reluctant, consider an external investigator. Keep a record of every step.

Put the allegations to the employee

Write to the employee setting out the alleged conduct, when and where it happened, and the policies, contract terms, or award provisions you say were breached. Attach or refer to the key evidence so the employee can meaningfully respond. Invite a written response by a reasonable deadline and offer a meeting with a support person present. This letter, often called a show cause letter, gives the employee a genuine chance to explain their side.

Weigh the response and decide proportionately

Assess the response against the evidence. Is the explanation credible? Are there mitigating factors, such as miscommunication, lack of training, or provocation? Does the employee's length of service or prior record matter? Consider whether a lesser outcome, such as a final warning with conditions, still manages the risk. If you decide the conduct does amount to serious misconduct, record your reasons and the evidence you relied on before you communicate the decision.

Communicate the decision and confirm it in writing

Hold an outcome meeting with a support person offered, then confirm the decision in writing. The letter should state the findings, the reasons, the effective date, what will be paid, what property must be returned, and any continuing obligations such as confidentiality or post-employment restraints. If new information comes up during the meeting, pause and investigate it rather than pressing on.

The third duty: manage risk without standing the employee down

Where there is a live safety or business risk, you do not have to leave the employee at work while you investigate. The standard approach is a precautionary suspension with pay: the employee remains employed and paid while you gather facts. That keeps the workplace safe without prejudging the outcome, and it avoids a dispute about whether you effectively dismissed the employee before deciding.

Standing an employee down without pay is a different and much narrower tool. Under section 524 of the Fair Work Act, you may stand down an employee only where they cannot usefully be employed because of industrial action, a breakdown of machinery or equipment, or a stoppage of work for which you are not responsible. Investigating misconduct is not one of those circumstances, so do not use a stand down as a way to stop paying someone under investigation.

The fourth duty: pay everything that is owed

Summary dismissal removes the obligation to give notice, but it does not remove any other obligation. Section 123 of the Fair Work Act confirms that the notice of termination provisions do not apply when employment is terminated because of serious misconduct. Everything else stays the same:

• Wages: pay all wages up to and including the final day of employment.
• Annual leave: under section 90 of the Fair Work Act, you must pay out any accrued but untaken annual leave when employment ends.
• Long service leave: check the long service leave legislation in the state or territory where the employee works; accruals are generally payable on termination.
• Superannuation: your usual superannuation obligations apply to ordinary time earnings, including the final payment.
• Final pay timing: the deadline for paying final entitlements depends on the applicable award, enterprise agreement, or state law, so confirm what applies before you process the payment.

If the conduct turns out not to meet the serious misconduct threshold, the notice obligation returns. You must then give the minimum notice period under the National Employment Standards, which increases with length of service and may be longer under an award, agreement, or contract, or pay in lieu of notice so the employee leaves immediately but is paid for the notice period.

What happens if you get it wrong

The main exposure is an unfair dismissal claim. Under section 385 of the Fair Work Act, a dismissal is unfair if it was harsh, unjust or unreasonable, or not consistent with the Small Business Fair Dismissal Code. The employee must apply to the FWC within 21 days of the dismissal taking effect under section 394. If the claim succeeds, the FWC can order reinstatement or, under section 392, compensation capped at 26 weeks' remuneration and at half the high income threshold, which changes each year. Notably, the FWC must reduce compensation where the employee's own misconduct contributed to the dismissal, so a genuine finding of misconduct still protects you at the remedy stage.

A separate risk is a general protections claim under Part 3-1 of the Fair Work Act. Dismissing someone because they exercised a workplace right, made a complaint, or because of a protected attribute is unlawful regardless of the seriousness of their conduct. These claims are not subject to the minimum employment period, and they can be brought against small businesses too.

Beyond money, there is the practical cost: the investigation becomes a record that the FWC can examine, witnesses are re-interviewed, and the rest of your team watches how you treat people. A defensible process protects the business as much as the decision.

A compliance checklist for immediate dismissal

Before you dismiss anyone immediately, work through each step so nothing is missed:

• Confirm the threshold: is the conduct deliberate and fundamentally inconsistent with the employment relationship, and can you prove it with evidence?
• Check your documents: review the employment contract, the applicable award or enterprise agreement, and your policies for definitions or examples of serious misconduct.
• Manage risk first: consider a paid suspension while you investigate; do not stand the employee down without pay.
• Run the process: notify the allegations in writing, allow a response with a support person, and weigh mitigating factors.
• Document everything: keep notes of your investigation, preserve evidence, and record your reasons before you decide.
• Pay correctly: wages to the last day, annual leave payout, any long service leave, and superannuation, all on time.
• Be consistent: treat employees who commit similar conduct similarly, and record why if you depart from a past decision.

Where a lawyer earns their fee

Immediate dismissal is where employment mistakes are most expensive, so advice is worth taking before you act in a few situations: where the conduct is borderline rather than clear cut, where the allegation involves sexual harassment, discrimination, whistleblowing, or protected industrial activity, where the employee has long service, or where you are a small business relying on the Fair Dismissal Code. A lawyer can assess whether the conduct crosses the serious misconduct threshold, pressure-test the process before you run it, and draft the show cause and outcome letters so the written record supports the decision you make.

Give the employee a genuine opportunity to respond

Of all the s 387 criteria, the one employers most often skip is the opportunity to respond: dismissing an employee without first putting the allegations to them and hearing their side. It is also the criterion the FWC treats as central, because it goes to whether the outcome was fair or predetermined. If you take one action before your next immediate dismissal, make it this: insist that the allegations go in writing, that the employee be given a reasonable deadline and a support person, and that their response be genuinely considered before the final decision. A strong process does not guarantee the outcome you want, but a fair one is the difference between a defensible dismissal and a claim you have to answer.