Unlawful firing in Australia and the employer's obligations explained

"Unlawful firing" is not a defined legal term in Australia. It is a catch-all for the rules that stop an employer from ending someone's employment for the wrong reason, or without a fair process. Two legal regimes sit behind it: the general protections in Part 3-1 of the Fair Work Act 2009 (Cth) (the Act), which look at why you dismissed someone, and unfair dismissal, which looks at how you did it. Get either wrong, and a dismissed employee can lodge a claim with the Fair Work Commission within 21 days of the dismissal taking effect.

This guide sets out the five duties that sit on every employer who ends someone's employment: never dismiss for a prohibited reason, have a genuine reason, run a fair process, give the right notice, and pay what is owed. It also covers who the duties apply to, what non-compliance costs, and where a lawyer earns their fee.

Who these obligations apply to

The duties in the Act apply to employers covered by the national workplace relations system, which is almost every private sector business in Australia. Within that, the key thresholds to know are:

Employees, not contractors: Unfair dismissal protection applies to employees. Genuine independent contractors are outside it, although the general protections also prohibit some adverse action against contractors and prospective employees.
Minimum employment period: To be protected from unfair dismissal, an employee must have completed 6 months' service, or 12 months if you are a small business employer (s 383 of the Act).
The high income threshold: An employee who is not covered by a modern award or enterprise agreement must earn less than the high income threshold to claim unfair dismissal. In the 2026-27 financial year that threshold is $190,100, and it is indexed each 1 July (s 382 of the Act).
General protections have no thresholds: A general protections claim for dismissal applies from an employee's first day, whatever their income. That catches many employers by surprise.
Small business: A small business employer has fewer than 15 employees at the time of dismissal, counting regular and systematic casuals and employees of associated entities. Small businesses face lighter unfair dismissal exposure through the Small Business Fair Dismissal Code, discussed below.

Duty one: never dismiss for a prohibited reason

The first and most important duty is negative: you must not dismiss someone because of a protected matter. The general protections provisions make it unlawful to take adverse action against an employee, and dismissal is the clearest form of adverse action, for any of these reasons:

A workplace right: An employee has a workplace right if they can make a complaint or inquiry about their employment, participate in processes under a workplace law or instrument, or are entitled to a benefit under one. Dismissing someone because they complained about pay, requested leave, asked about their entitlements, or discussed their wages with colleagues can breach s 340 of the Act.
Discrimination: s 351 of the Act prohibits dismissal because of race, colour, sex, sexual orientation, age, disability, marital status, pregnancy, family or carer's responsibilities, religion, political opinion, or national extraction or social origin, among other attributes.
Temporary absence for illness or injury: s 352 of the Act prohibits dismissing an employee because they are temporarily absent from work due to illness or injury. This is a common trap when an employee is on a period of sick leave.
Union membership and industrial activity: Employees are protected from dismissal because they belong to, or take part in the lawful activities of, a trade union or other industrial association.

The risk sits in the proof. Under s 361 of the Act, if a dismissed employee alleges the dismissal was for a prohibited reason, the law presumes that was the reason, and the employer must prove otherwise. A general protections claim can succeed even where your process was otherwise careful and fair, because this regime targets the reason for the decision, not the procedure around it.

Duty two: have a genuine and lawful reason

Termination is lawful when there is a genuine reason that is not connected to a protected attribute or workplace right. The recognised categories are:

Performance or conduct: Dismissal for underperformance or misconduct is lawful where you have clear evidence, communicated expectations, and have given the employee a chance to improve or respond.
Serious misconduct: Theft, fraud, assault, sexual harassment and serious safety breaches can justify summary dismissal without notice. You still need to make reasonable inquiries and keep records of what you found.
Genuine redundancy: A redundancy is genuine under s 389 of the Act when the job is no longer required to be performed by anyone because of changes in operational requirements, and you have complied with any consultation obligations in the applicable award or enterprise agreement. The dismissal also needs to be one where redeployment was not reasonable in the circumstances.
Capacity: Where an employee cannot perform the inherent requirements of the role due to illness or injury, dismissal can be lawful, but only after you have considered the medical evidence and any reasonable adjustments, and you are not dismissing them for a temporary absence.

The trap is dressing up one reason as another. Calling a performance problem a redundancy does not make it one, and the Fair Work Commission will look behind the label. If the real reason for the decision is a prohibited one, no amount of lawful framing will save it.

Duty three: run a fair process

Even with a lawful reason, a dismissal can still be found harsh, unjust or unreasonable if the process was unfair. When deciding an unfair dismissal claim, the Commission must consider the factors in s 387 of the Act:

whether there was a valid reason 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 employee was unreasonably refused a support person
whether the employee was warned about unsatisfactory performance before dismissal
the size of the business and whether it has dedicated HR expertise
any other matter the Commission considers relevant.

In practice this means: investigate allegations before acting, put your concerns to the employee in a meeting, allow a support person if requested, give them time to respond, and weigh their response before deciding. For performance issues, give clear warnings and a reasonable chance to improve before terminating. Document every step, because the file you keep is the evidence you will rely on if a claim is made.

The Small Business Fair Dismissal Code

If you employ fewer than 15 people, the Small Business Fair Dismissal Code (s 388 of the Act) is your shield against unfair dismissal. A dismissal consistent with the Code is not an unfair dismissal. The Code requires you to give the employee the reason, give them a chance to respond, and for performance issues, give a warning and a chance to improve first. Serious misconduct can justify immediate dismissal. Following the Code's checklist and keeping records of it is the single most effective defence a small business has.

Duty four: give the right notice or pay in lieu

Unless the dismissal is for serious misconduct, s 117 of the Act requires written notice of the day of termination, and a minimum notice period based on continuous service:

1 year or less: 1 week
more than 1 to 3 years: 2 weeks
more than 3 to 5 years: 3 weeks
more than 5 years: 4 weeks.

An employee over 45 who has completed at least 2 years of service gets an extra week. A contract, award or enterprise agreement can require more, so check those before you finalise anything.

Instead of having the employee work out the notice, you can make a payment in lieu. It must be paid at the employee's full pay rate, which includes loadings, allowances, overtime and penalty rates, not just base pay. Notice does not apply to casuals, employees on fixed-term or seasonal arrangements, or employees dismissed for serious misconduct, but the reason must genuinely be serious misconduct for that exception to hold.

Duty five: pay final entitlements and redundancy pay

Final pay must include all wages and entitlements up to the termination date, plus any accrued but untaken annual leave, which s 90(2) of the Act requires you to pay out at the rate the employee would have received had they taken it. Long service leave, where it applies, may also be due.

If the dismissal is a redundancy and the employee has at least 12 months' service, redundancy pay under the National Employment Standards ranges from 4 weeks' pay for 1 to 2 years of service up to 16 weeks for 9 to 10 years. Small business employers are exempt from redundancy pay, as are casuals and employees dismissed for serious misconduct. Awards and agreements can set different amounts, so confirm what applies to your workforce.

The cost of getting it wrong

The consequences of an unlawful dismissal are significant. For a general protections breach, a court can impose penalties of up to $19,800 per breach for an individual and $99,000 per breach for a company, and those amounts increase regularly. The same court can order compensation for the employee's loss, which is not capped the way unfair dismissal compensation is, and reinstatement is available too.

For unfair dismissal, the Commission prefers reinstatement and can order compensation where that is not appropriate. Compensation is capped at the lesser of 26 weeks' pay and half the high income threshold, which is around $95,050 in the 2026-27 financial year (s 392 of the Act).

A dismissal for a protected attribute can also be pursued under state or federal anti-discrimination laws separately from the general protections, widening the exposure. Add the time spent defending a claim, and a single poorly handled termination can easily cost more than the employee's annual salary.

A compliance checklist

Before you dismiss anyone, work through this list:

Identify the genuine reason: write it down, then test it against the prohibited reasons in duty one.
Gather evidence: performance records, emails, witness statements, investigation notes.
Meet with the employee: explain the concerns, allow a support person, and give a genuine opportunity to respond.
Decide objectively: consider the response, and document why.
Confirm the notice period: check s 117 and the contract, award and agreement.
Calculate final pay: include the annual leave payout, and pay on time.
Keep the file: the termination letter, calculations, and all notes, in case a claim is made.
If you are a small business: follow the Small Business Fair Dismissal Code and keep its checklist.

When you need a lawyer

The 21-day deadline for both unfair dismissal and general protections applications means disputes escalate fast, and most claims are resolved in conciliation before any hearing. A lawyer's value shows up at two points: before the termination, and in the first week after a claim lands.

Before you terminate, a lawyer can pressure-test the genuine reason, review the s 387 factors against your process, check notice and final pay calculations, and review the termination letter. After a claim, they can respond to the application within the deadline, negotiate a settlement at conciliation, and advise on whether a payment in lieu of notice or a deed of release is appropriate. Given the reverse onus in general protections claims, having a lawyer review the decision while the reasons are still fresh is far cheaper than defending the claim later.

Where dismissals actually go wrong: the real reason

The duty employers most often miss is the first one, because it is the hardest to see from the inside. Process failures get fixed with checklists and templates, but a general protections claim does not turn on your paperwork. It turns on the reason, and s 361 means the employee's allegation is presumed true unless you can prove otherwise. The manager who dismisses the employee who keeps complaining about pay, or the one who comes back from parental leave to find their role gone, rarely writes the real reason in the file, but the pattern is exactly what a court will examine.

The practical fix is to build a habit. Before every termination meeting, write down the genuine reason in one sentence, and ask whether that reason would survive scrutiny if the employee alleged it was retaliation, discrimination or a response to a complaint. If you cannot answer that confidently, pause and take advice before the meeting, not after the claim arrives in the mail. That one discipline, applied to every dismissal, protects you better than any template.

If you are facing a dismissal decision and want the reason and process checked before you act, an employment lawyer can review the situation quickly and tell you where the risk sits.