How employers can reduce unfair dismissal risk with sound HR support

An unfair dismissal is a legal claim an employee can bring against an employer over a dismissal that is harsh, unjust, or unreasonable.

In Australia, most employees can apply for unfair dismissal with the Fair Work Commission (FWC) and have 21 days from the day after the dismissal to do so. Employers have 7 days to respond. The maximum compensation cap for unfair dismissal is $95,050 (as of 1 July 2026), and even if the claim is settled at conciliation, it can cost an employer thousands of dollars.

The best way to reduce the risk of unfair claims is to build strong, fair employment relationships: clear processes, good documentation, and getting expert HR advice early when a problem comes up, rather than after it has escalated or the relationship has broken down.

MyHR supports over thousands of Australasian businesses and thousands more individual employment relationships. In the past year, we've overseen more than 1,000 disciplinary and termination procedures and dozens of unfair dismissal claims, and we've never had a successful case brought against an employment process we recommended to a client. Here's what employers need to know about unfair dismissals.

What is an unfair dismissal claim?

Unfair dismissal is a legal mechanism for an employee or ex-employee to challenge a dismissal by their employer.

The unfair dismissal process in Australia

Most employees have 21 days from the day after a dismissal occurs to apply for an unfair dismissal (or general protections) claim with the Fair Work Commission.
Before they are eligible to apply, employees must complete the minimum employment period of at least 6 months, or at least 12 months if they work for a small business (less than 15 employees).
Employees who earn more than the high-income threshold (currently $190,100) cannot apply for unfair dismissal, unless an award or agreement covers their employment.
Casual employees cannot apply unless they have a regular and systematic pattern of work with a reasonable expectation of continued employment.
Employers have 7 days to respond to an unfair dismissal application.
The claim can be settled at any time, by mutual agreement. The first step is a conciliation meeting arranged by the FWC (in most cases, this happens within 5-6 weeks). If the claim cannot be settled at conciliation, the FWC holds a formal hearing or conference and decides an outcome (typically months after the application is received).

Find out more about the unfair dismissal process at the FWC website.

How businesses expose themselves to unfair dismissal risk

The grounds for unfair dismissals centre around contentious or poorly-handled terminations, redundancies, or resignations. We regularly see unfair dismissal claims that arise from 3 key areas:

Dismissing someone without a valid reason, e.g. a personality clash, temporary illness. For a reason for termination to be valid, the employee must be unable to perform the inherent requirements of the role, be a genuine case of serious misconduct, or a genuine redundancy.
Not following fair process, e.g. not properly investigating an issue, failing to properly inform the employee of the allegations (and evidence), not giving an employee an opportunity to respond, or not taking their response into account.
The employee quitting but claiming the employer’s actions left them with no other option (also called forced resignation or constructive dismissal).

Employers also need to be very mindful that while a dismissal might not be unfair, most employees can also apply for a general protections claim if they believe the termination was for a prohibited reason, e.g. their age, race, sex, gender identity, disability, because they were off work for a long period due to illness or injury, or because they exercised a workplace right.

There are no minimum employment period requirements or high income threshold for general protections applications, and there is no compensation cap.

Find out more about general protections and how they differ from unfair dismissals.

What can employers do to reduce their risk of an unfair dismissal claim?

Many unfair dismissal claims result from employers rushing through termination procedures or not giving the employee a fair chance to put forward their side of the story. The employment relationship is often strained or has broken down entirely.

Start the employment relationship off right

We see many employers face unfair dismissal claims in the first 12-24 months of employment.

Attracting, screening, and hiring the right people, and providing a clear, structured onboarding experience will all help reduce the chance of your employee not meeting expectations. If both you and your employees know what is required, communication is open and regular, and there are transparent processes for handling issues, there is a much better chance the employment relationship will be healthy and productive.

While there is some protection from unfair dismissal during the minimum employment period (or if the employee is on a valid probation period), employers still need to meet all other conditions of employment, e.g. providing minimum entitlements.

MyHR provides all the tools you need for effective recruitment campaigns that attract the best talent. Once you’ve found the right person, we can help kick-start the employment relationship with precise, legally-robust documentation, the perfect onboarding plan, and intuitive, self-service software that makes it easy to track and review employee performance from the outset.

What should an employer do if an employee raises an unfair dismissal?

If an employee raises an unfair dismissal claim, we recommend consulting HR or employment experts. Even if the claim appears unfounded or invalid, you need to respond properly.

1. Consider your options

You have 7 days to respond to the employee’s claim, so take time to get to the bottom of the issue.

Weigh up the claim from a business perspective. It may be better to settle it with a payment so you don’t waste unnecessary time, money, and energy on it. But you may decide to object to an application or contest the employee’s version of events, especially if you strongly believe you are right and want to stand up for your principles and values.

MyHR’s advisory team can provide expert guidance and planning advice. You need to respond to an unfair dismissal application - if you don’t, the FWC may make a decision against you without your input.

2. Respond to the claim

Once you are ready to respond, write back to the FWC accepting or contesting the claim. You will be asked:

Whether you object to the applications on legal grounds (e.g. the application wasn’t lodged within the statutory timeframe, the dismissal was a case of genuine redundancy).
Your reasons for the dismissal.
Your response to the employee’s allegations.

The application will also give a date and time for a conciliation meeting, where you and the employee can discuss the issues with the help of a FWC specialist.

3. Explore conciliation

Conciliation is voluntary and you can choose not to attend, however, not attending will not close the case. Instead, it will move to a formal hearing (you may also lose the chance for conciliation at a later stage).

Conciliation gives both parties an opportunity to present and discuss their side of the story and to get help resolving issues from an independent professional. You don't need to prepare evidence or submissions.

The outcomes of a conciliation can be more flexible than a formal hearing, and binding recommendations can only be made if both parties agree.

It’s generally acknowledged that 75% of unfair dismissal applications get sorted out through conciliation or a confidential settlement before they need resolution at a hearing.

4. If you end up at the FWC

If you don’t reach a settlement, the case will proceed to a hearing or conference in front of a FWC member. This is where things get expensive and time-consuming, and you will probably need legal representation - it’s like going to court!

Unlike conciliation, the FWC can impose binding outcomes but either party can challenge the decision. From there, the case will go to the Appeals Bench.

If a case does end up at the FWC, you should think about whether time or money (or your principles) are more important, as it may be best to reach a settlement with the complainant.

If you want to defend an unfair dismissal, we strongly recommend you get professional advice before going to an FWC hearing.

Get the right help with MyHR

Dealing with employment disputes and unfair dismissal applications can soak up a lot of time and resources. From investigating and responding to claims, to conciliation or legal proceedings, you need the right sort of guidance.

With over 2,000 employees on our books, MyHR supports a lot of employment relationships. Our powerful software and expert HR advice create a wraparound platform for employers, ensuring your people-management processes are clear and compliant and you have the backing of on-call HR professionals.

Things don’t always go as planned, however, and there are times when you need to end a worker’s employment. This is when detailed knowledge of the legal landscape and adhering to fair process is crucial. Mistakes can be extremely costly.

In the past year, we’ve overseen more than 1,000 disciplinary procedures and dozens of unfair dismissal applications. We've never had a successful unfair dismissal or general protections case brought against an employment process we recommended to a client.

Even if you’ve already had an unfair dismissal claim raised against you, we can advise the best path forward as well as providing ongoing HR advice to build strong employment relationships and minimise your legal risks.

And with MyHR, you pay a fraction of the cost you would if you had to turn to employment lawyers or HR consultants for help.