Unfair Dismissal: How Good Businesses Get It Very Wrong

Every unfair dismissal case I've ever seen had the same origin story.

Something goes wrong with an employee. It builds for a while. The manager gets increasingly frustrated. And then one day, usually on a Friday afternoon when everyone's had enough, someone gets called into the office and told not to come back.

The manager feels great about it for about 48 hours. Then the letter from the Fair Work Commission arrives.

What unfair dismissal actually is

Under the Fair Work Act, a dismissal is unfair if it's harsh, unjust, or unreasonable. The Commission considers things like:

• Whether there was a valid reason for the dismissal
• Whether the employee was told the reason and given a chance to respond
• If the dismissal was for poor performance, whether the employee had been warned before
• Whether a support person was offered

Notice that "I was sick of them" is not on that list. Nor is "everyone knows they weren't performing." Nor is "we had a meeting and I told them the situation wasn't working."

The Commission looks at process. Always process.

The most common mistakes

Dismissing without warning. An employee can't improve if they don't know there's a problem. If you've never formally documented concerns or had a genuine conversation about performance, you don't have grounds to dismiss for that performance. You might feel like it's obvious. It isn't, legally.

The Friday afternoon special. Emotional decisions made at the end of a hard week, in the moment, without proper process. The employee is shocked. There's no documentation. Nobody offered them a support person. This is a gift-wrapped unfair dismissal claim.

Confusing "I don't want them here anymore" with "there's a valid reason." Valid reasons are specific, documented, and related to the employee's conduct or capacity. "The vibe is off" is not a valid reason. Neither is "we're restructuring" when the same role gets advertised two weeks later.

Getting the notice period wrong. After a dismissal, employers still need to pay out the correct notice based on length of service, plus any accrued leave. Getting this wrong doesn't just create a debt — it signals to the Commission that the whole process was sloppy.

Forgetting about small business rules. If you have fewer than 15 employees, the Small Business Fair Dismissal Code applies. It has specific steps you must follow. Skipping them is a fast track to an adverse outcome.

What good process actually looks like

You don't need an HR department to get this right. You need a bit of discipline.

For poor performance, the process is roughly: raise the concern clearly and specifically, give the employee a genuine opportunity to improve, document what was discussed and agreed, follow up, and only consider dismissal if things don't improve after a reasonable period. A formal written warning along the way is important. None of this needs to be adversarial — in fact it works better when it isn't.

For serious misconduct (theft, fraud, assault, serious safety breaches), you can dismiss without notice, but you still need to investigate first. Talk to the employee. Let them respond. Document everything. Don't assume guilt before you've heard their side.

For any dismissal, have a written record of the meeting, confirm the termination in writing, pay out everything they're owed on their last day or shortly after, and offer a support person in the meeting.

The 21-day clock

Once an employee is dismissed, they have 21 calendar days to lodge an unfair dismissal application. That's not a lot of time. It means that even if you think the dismissal was fine, you should be keeping your documentation ready.

If a claim is lodged, the Commission will first try conciliation — essentially a mediated negotiation. Many cases settle there, which means paying compensation to avoid a formal hearing. Compensation can be up to 26 weeks' pay. Legal costs are on top of that.

A well-run dismissal process doesn't just protect you from claims. It often means the employee moves on without feeling like they were ambushed, which reduces the likelihood they'll lodge in the first place.

The part that actually saves you

Here's the honest truth: most unfair dismissal claims aren't filed by employees who wanted to go to war with their employer. They're filed by people who felt blindsided, disrespected, or like they were never given a fair chance.

Good process is really just good management. Clear expectations. Honest conversations. Documentation that shows you tried. An exit that was handled with some dignity.

That's not a legal strategy. That's just how you treat people.

Get it right, and the legal protection is a bonus.

---

This is general information only, not legal advice. If you're managing a performance issue or heading toward a difficult dismissal, get in touch with The People Part before you have that Friday afternoon meeting.