Unfair dismissal claims, the process, the deadline and what they can cost

An unfair dismissal claim is an application to the Fair Work Commission by an employee who says their dismissal was harsh, unjust or unreasonable. The Commission decides whether the dismissal broke the Fair Work Act 2009 (Cth) and, if it did, orders a remedy. The scheme exists because most Australian employees can only be dismissed for a valid reason, through a fair process, and the Commission is the place where that is tested.

For a business, an unfair dismissal claim is often the first legal dispute that follows a termination. A former employee can lodge one cheaply within weeks of being dismissed, and even a weak claim must be answered properly or the employer can lose by default. Understanding who can claim, what makes a dismissal unfair, how the 21-day deadline works and what a successful claim can cost is therefore part of managing any workforce. This article walks through the scheme end to end.

Who does what in an unfair dismissal claim

An unfair dismissal claim involves four participants, each with a distinct role in the process:

Employee: the dismissed worker lodges the application with the Commission and carries the burden of showing the dismissal was unfair.
Employer: receives a copy of the application, must respond in writing within 7 days, and can either defend the dismissal or object to the claim on jurisdictional grounds such as time limits or genuine redundancy.
Fair Work Commission: the national workplace tribunal that runs the claim. Its conciliators try to settle it; its members decide contested matters.
Lawyer or agent: can represent either side at any stage, although neither side is required to have one.

The interests are in tension from the start. The employee wants the job back or money for losing it. The employer wants the claim dismissed, or settled for less than a hearing would cost. The Commission wants a fair outcome reached as quickly as possible, which is why most claims are pushed toward conciliation rather than a hearing.

Which employees can bring a claim

An employee is protected from unfair dismissal only if three things are all true at the time of the dismissal, under s 382 of the Fair Work Act 2009 (Cth). They must be an employee of a national system employer (which covers most private-sector employers in Australia), they must have completed the minimum employment period, and they must either be covered by a modern award or enterprise agreement, or earn less than the high income threshold.

Minimum employment period: 6 months of continuous service, or 12 months if the employer is a small business employer. A small business employer is one with fewer than 15 employees, counting casuals who work on a regular and systematic basis, and counting the employees of associated companies together (s 23 of the Act). Only continuous service counts, and casual service counts only where the employee worked regularly and systematically with a reasonable expectation of continuing employment (s 384).
High income threshold: $190,100 per year from 1 July 2026, indexed each 1 July. The threshold only matters for employees not covered by a modern award or enterprise agreement; a covered employee can claim whatever they earn. An award or agreement that covers the employee at the time of dismissal is enough.
Who cannot claim: independent contractors, because they are not employees at all, and employees who have not completed the minimum employment period. Employees of state and territory public sectors and some other employers outside the national system have their own, different arrangements.

A common misconception is that an employee on probation cannot claim. The Fair Work Act has no general probationary period exemption. What protects an employer in practice is the minimum employment period: a dismissal in the first 6 months (or 12 for a small business) cannot be challenged because the employee has not completed the qualifying period. Once that period is complete, calling the first part of the employment "probation" does not automatically stop a claim, although a probationary dismissal may still be easier to justify on the merits.

What counts as a dismissal

Section 386 of the Act says a person is dismissed in two situations:

Termination by the employer: the employer ends the employment on its own initiative. That covers being told the job is gone, whether for conduct, performance, redundancy or no stated reason at all.
Forced resignation (constructive dismissal): the employee resigns but was forced to do so by the employer's conduct. The classic example is the ultimatum: resign now or you will be sacked. The employee bears the burden of showing they had no real choice, which the Commission treats as a narrow question.

Some endings are not dismissals at all, and no claim can be made about them:

a fixed-term contract ending at the end of the term, a specified task being completed, or a season ending, although the Act catches arrangements whose substantial purpose is to dodge the unfair dismissal protections (s 386(3));
an apprenticeship or traineeship ending at the end of the training arrangement; and
a demotion that does not involve a significant reduction in pay or duties, where the employee remains employed.

What makes a dismissal unfair

Section 385 of the Act sets out four cumulative requirements. The person must have been dismissed, the dismissal must have been harsh, unjust or unreasonable, it must not have been consistent with the Small Business Fair Dismissal Code, and it must not have been a genuine redundancy. Any one of the last three defences, properly made out, defeats the claim.

In deciding whether a dismissal was harsh, unjust or unreasonable, the Commission must consider the factors in s 387:

whether there was a valid reason for the dismissal related to the employee's capacity or conduct;
whether the employee was notified of that reason;
whether the employee was given an opportunity to respond;
whether the employer unreasonably refused to allow a support person at discussions about dismissal;
whether the employee had been warned about unsatisfactory performance before a performance-based dismissal;
the size of the employer's enterprise and whether it has dedicated human resources expertise; and
any other relevant matter.

A dismissal can be harsh because the penalty is disproportionate, unjust because the employee did not do what they were accused of, or unreasonable because the evidence does not support the decision. It only needs to be one of the three.

Genuine redundancy is defined in s 389. A dismissal is a genuine redundancy only if the employer no longer required the job to be done by anyone because of changes in the operational requirements of the enterprise, and the employer complied with any consultation obligations in the applicable award or agreement. It is not genuine if it would have been reasonable to redeploy the employee within the business or an associated entity. A performance-based dismissal dressed up as redundancy is not a genuine redundancy, and that is one of the most common reasons redundancy dismissals fail.

For small business employers, s 388 provides a separate defence. If the employer is a small business employer and complied with the Small Business Fair Dismissal Code, the dismissal is not unfair. The Code requires a valid reason for the dismissal and, for performance issues, warning the employee and giving them a chance to improve before dismissal.

The 21-day deadline

An application must be lodged within 21 days after the dismissal took effect (s 394(2) of the Act). This is the deadline that defeats more claims than any other.

The day the clock starts depends on how the dismissal happened. A dismissal takes effect when it is communicated to the employee. If the employee works out a notice period, the dismissal generally takes effect at the end of that period. If the employer pays out the notice in lieu, it generally takes effect on the last day worked.

The Commission can allow a longer period only if there are exceptional circumstances, weighing the reason for the delay, when the employee became aware of the dismissal, any action taken to dispute it, prejudice to the employer, the merits and fairness to others in a like position (s 394(3)). "I did not know the deadline" is not an exceptional circumstance. Missing the 21 days usually ends the claim.

The practical consequence is that an employee should lodge early, with whatever information they have, and supplement it later. The Commission's own guidance is that an application can be lodged within the 21 days with basic details and supporting documents provided afterwards.

Lodging the application

The application is made on Form F2, available from the Commission's website. For 2026-27 the application fee is $92.70, indexed each 1 July, and an employee in serious financial hardship can apply to have the fee waived.

The form asks for:

contact details for the employee and the employer;
the dates employment started and finished;
the reasons the employer gave for the dismissal;
the employee's arguments about why the dismissal was unfair; and
the outcome the employee wants.

The Commission sends a copy to the employer, who must respond using Form F3 within 7 days. The response should set out the dates, the employer's reasons for the dismissal, a response to the employee's arguments, and any objections the employer wants to raise, such as the claim being out of time, the minimum employment period not being complete, genuine redundancy, or compliance with the Small Business Fair Dismissal Code. Documents such as written warnings and the dismissal letter can be attached. An employer who ignores the application forfeits the chance to object and the chance to settle cheaply.

What happens next

The Commission deals with jurisdictional objections before the merits. Under s 396 it must decide whether the application was made in time, whether the employee was protected from unfair dismissal, whether the dismissal was consistent with the Small Business Fair Dismissal Code, and whether it was a genuine redundancy, before considering whether the dismissal was harsh, unjust or unreasonable. If the employer has a good objection, this is where the claim dies without the merits ever being tested.

Claims that survive are listed for conciliation, usually about 5 weeks after the application. A conciliation is a confidential meeting of up to 90 minutes, typically held online, run by an independent conciliator who does not take sides. The conciliator helps the parties talk through the dismissal and negotiate a settlement, shuttling proposals between separate rooms if that helps. Around three out of four unfair dismissal claims are resolved at conciliation. Anything the parties agree is possible, which makes conciliation far more flexible than a hearing.

If no agreement is reached, the claim proceeds to a formal conference or hearing before a Commission member. The parties give evidence, can call witnesses and are expected to comply with directions, and the member decides the claim with reasons.

The remedies the Commission can order

The Act is prescriptive about outcomes at a hearing. The primary remedy is reinstatement (s 391): the employer must reappoint the employee to their old position, or to another position on no less favourable terms, and may be ordered to pay the remuneration lost between dismissal and reinstatement, so that continuity of service is restored.

Compensation is available only where reinstatement is inappropriate, for example where the business has closed or the relationship has broken down irretrievably (s 390 and s 392). In deciding the amount, the Commission considers the effect on the viability of the employer's enterprise, the length of service, the pay the employee would have received, the employee's efforts to find other work, and any income earned since the dismissal. There is no compensation for shock, distress or hurt feelings, and the amount is reduced if the employee's own misconduct contributed to the dismissal.

The amount is capped at the lesser of the remuneration the employee received, or was entitled to receive, in the 26 weeks before the dismissal, and half the high income threshold. With the threshold at $190,100, the cap is $95,050 for dismissals on or after 1 July 2026 (it was $91,550 for dismissals between 1 July 2025 and 30 June 2026). In practice most compensation orders are well below the cap because the calculation is driven by the lost income the employee can actually prove, net of what they earned or should have earned elsewhere.

A settlement at conciliation can include outcomes the Commission could never order at a hearing: a payment, an agreed reference or statement of service, an agreed characterisation of the departure, or confidentiality terms, usually recorded in a deed of release.

Alternatives to an unfair dismissal claim

An unfair dismissal claim is not the only way a dismissal can be challenged, and an employee who does not qualify for it, or who misses the deadline, may have another route.

General protections (adverse action): the employer must not dismiss an employee because of a workplace right, such as making a complaint or inquiry about their employment, or because of a protected attribute (Part 3-1 of the Act). This route also has a 21-day deadline for dismissal disputes, but it is not limited to employees covered by awards or under the high income threshold, and it can ultimately be pursued in court with penalties available.
Unlawful termination: the Act separately prohibits termination for discriminatory reasons, although this route is largely overtaken by the general protections regime.
Discrimination claims: state and territory anti-discrimination laws may also cover a dismissal motivated by an attribute such as age, disability or race.
Breach of contract: an employee can sue for contractual entitlements such as notice, bonus or commission, regardless of whether the dismissal was unfair.

One claim only: the Act prevents a person from pursuing an unfair dismissal application and a general protections application, or other dismissal-related actions, for the same dismissal (s 725). The employee must choose their route, and a lawyer's advice on which one fits the facts is often decisive.

Where employers get caught out

The most common failures, seen repeatedly in Commission decisions, are avoidable with a little process discipline:

calling a performance dismissal a redundancy, which fails the genuine redundancy test and invites findings that the reason was not genuine;
dismissing for performance without warnings or an opportunity to improve, which directly breaches the s 387 factors;
small businesses not following the Small Business Fair Dismissal Code, which is their only defence;
miscounting staff, because regular casuals count toward the 15-employee threshold and associated companies are counted together, so an employer that thinks it is a small business may not be;
assuming probation, fixed-term contracts or casual status automatically exclude claims, when each has limits the Act spells out; and
ignoring the application, which forfeits jurisdictional objections and the chance to settle.

When legal advice helps

The Commission cannot give legal advice to either side, and self-representation is allowed, but the process moves on fixed deadlines and the consequences of mistakes are final. Advice is most valuable at three points:

Before a dismissal: a lawyer can help design the process: identifying the valid reason, documenting warnings and consultation, and, for redundancies, checking consultation obligations and whether redeployment is a realistic alternative. Getting this right is what prevents a claim from succeeding.
When the application arrives: a lawyer can assess the jurisdictional objections within the 7-day response window, decide whether to fight on the threshold or the merits, and draft the Form F3 response so that objections are preserved.
At conciliation: a lawyer can value the claim against the likely hearing outcome, negotiate a settlement, and draft the deed of release that makes the settlement final. A well-drafted deed protects the business from later claims about the same dismissal.

The clock starts the day the employee is told

Every deadline in this scheme runs from the moment the dismissal is communicated: the employee's 21 days to apply, the employer's 7 days to respond, and the Commission's timetable after that. The most expensive mistakes are made before any claim exists, in the decision to dismiss and the way it is carried out, and in the first week after an application lands. For an employee, the lesson is to lodge early with whatever information is at hand rather than risk the deadline. For an employer, the leverage lies in responding within the 7 days, raising any jurisdictional objection while it can still kill the claim, and taking conciliation seriously, because most claims end there and a negotiated outcome is almost always cheaper than a hearing that can end in reinstatement or a capped compensation order. A short consultation at either end of the process costs a fraction of what a mishandled dismissal costs, and it is where the outcome is most often decided.