Who Can Bring a Claim for Unfair Dismissal and How is Compensation Calculated?

The law relating to unfair dismissal claims is contained in the Fair Work Act 2009. Unfair dismissal claims are commenced by filing an Unfair Dismissal Application with the Fair Work Commission. However, an Application can only be made within 21 calendar days of the date the dismissal takes effect.

Who Can Bring a Claim for Unfair Dismissal?

To be eligible to file a claim for unfair dismissal, you must:

  1. be an employee who has been dismissed from their employment;
  2. be covered by either an Award or Enterprise Bargaining Agreement, or have earnings less than $167,500.00 (current High Income Threshold); and
  3. have served the minimum employment period with the employer. This is a 6 month period of service for employers with 15 or more employees or 12 months of service with employers with under 15 employees.

Generally, a person is considered dismissed where:

  • the person’s employment has been terminated at the employer’s initiative, or
  • the person was forced to resign because of the conduct or course of conduct engaged in by the employer.

When is a Dismissal Unfair?

A dismissal will be considered unfair if the Fair Work Commission is satisfied that the dismissal was harsh, unjust or unreasonable and was not a case of a genuine redundancy.

There are 2 key elements for assessing whether a dismissal was “harsh, unjust or unreasonable”. These are:

  1. was there a valid reason for the dismissal relating to the person’s capacity or conduct (including considerations for workplace health and safety)?; and
  2. was a proper procedure followed in relation to the dismissal (also known as procedural fairness).

The second procedural element has many factors to consider including, but not limited to:

  • was the employee notified of the reason for their dismissal?
  • were the allegations of any misconduct put to the employee ahead of any investigatory/disciplinary meetings?
  • did the person have ample opportunity to respond during any investigatory/disciplinary meetings and did they have a support person?
  • was the decision by the employer to dismiss the employee made before any investigations and meetings could be performed/finalised?
  • if the dismissal was for underperformance, whether the person was warned about the underperformance prior to dismissal and if they had a reasonable opportunity to improve their performance.

Special rules also apply to small businesses (less than 15 employees). These are set out in the Small Business Fair Dismissal Code.

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What is the Fair Work Commission process upon filing an Unfair Dismissal Application?

Once an Unfair Dismissal Application is filed with the Fair Work Commission, they will serve the Application upon the employer who is usually given 7 calendar days to respond.

The Commission will then organise a Conciliation Conference (a telephone/video conducted mediation) for the parties to provide them an opportunity to negotiate a settlement without the matter proceeding to a formal hearing. The Conciliation Conference with normally be held 30 days of the Application being filed.

Most cases settle at or shortly after the Conciliation Conference.

If no settlement is reached at the Conciliation Conference stage, unless the Application is withdrawn, the Application will usually proceed to be heard by a Fair Work Commission Member by way of a formal hearing. This will involve the preparation of witness statements and submissions, and is a more adversarial process. Following a hearing, the Fair Work Commission will publish a Judgment on their website.

How is Compensation for Unfair Dismissal calculated?

Compensation for unfair dismissal always depends on the facts and varies from case to case.

Whilst compensation can only be considered if the Commission is satisfied that reinstatement is inappropriate, in most cases reinstatement is simply not appropriate.

Compensation cannot be awarded for shock, distress or humiliation and is capped at the amount equal to the lesser of 26 weeks remuneration and half the High Income Threshold.

When assessing the amount of compensation the Commission applies the formal set out in the case of Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, namely:

  1. Calculate the estimated remuneration the employee would have received if they had not been dismissed by reference to the estimated period the employee would have remained in the relevant employment but for the termination (‘the anticipated period of employment’).
  2. Deduct any remuneration earned by the employee since their dismissal, or which the employee could have earned if they have failed to mitigate the loss, by reference to the anticipated period of employment.
  3. Deduct an amount for contingencies to account for situations that may have arisen during the anticipated period of employment and which might have brought about some change in the earning capacity or earnings of the employee.
  4. Consider the impact of taxation and adjust the figure accordingly by deducting the tax the employee would have paid if they had received the amount as wages, then increasing that amount by the amount of tax liability to the employee on the compensation as ordered, for example, if the amount is to be taxed as an employment termination payment.
  5. Assess the figure against the compensation cap.

If you have any questions or would like us to bring a claim for unfair dismissal against your former employer on your behalf, please contact us as soon as possible to speak to a Specialist Employment Lawyer.

Remember, a limitation period of 21 days applies from the date the dismissal takes effect.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.