Unfair dismissal under Part 3-2 of the Fair Work Act

What unfair dismissal means

Part 3-2 of the Fair Work Act 2009 provides a pathway for eligible employees to seek a remedy from the Fair Work Commission (FWC) if they believe they have been unfairly dismissed. This remedy is available when a dismissal is considered 'unfair'.

A dismissal is deemed 'unfair' when it is harsh, unjust or unreasonable. The FWC considers several factors when assessing this, including whether there was a valid reason for the dismissal, whether procedural fairness was observed, whether the employee was given an opportunity to respond to allegations, and the size of the employer’s enterprise. workplace investigation timer can be a useful tool in ensuring procedural fairness.

For small businesses, the Small Business Fair Dismissal Code outlines a procedural pathway. Following this code can assist in demonstrating that a dismissal was not unfair.

Eligibility

To be eligible for an unfair dismissal claim under Part 3-2 of the Fair Work Act, an employee must satisfy certain criteria. Primarily, a minimum employment period must have been completed. This period is six months for employees whose employer has fifteen or more employees, and twelve months for employees of small business employers (those with fewer than fifteen employees).

Another eligibility requirement relates to the employee’s earnings. An employee’s income must be below the high-income threshold, which is adjusted annually. However, this earnings limitation does not apply if the employee is covered by a modern award or enterprise agreement.

Finally, the dismissal must have occurred at the employer's initiative. This principle is subject to constructive dismissal considerations, where an employee resigns due to employer conduct that would be considered unreasonable.

The 21-day clock

An application for unfair dismissal must be made to the Fair Work Commission within 21 days of the dismissal taking effect. This timeframe is a critical procedural requirement.

The Fair Work Commission may, in limited situations, allow applications lodged after this 21-day period. Such extensions are granted only in exceptional circumstances and are a matter of discretion for the Commission.

Following the lodging of an application, the Fair Work Commission typically arranges a conciliation conference. If conciliation is unsuccessful in resolving the dispute, the matter may proceed to a formal hearing.

Remedies

The main remedy available to an employee who has been unfairly dismissed is reinstatement. This means the employee is returned to their former position, with their period of service recognised as continuous.

If reinstatement is not considered a suitable outcome, the Fair Work Commission can order compensation. This compensation is subject to a cap, calculated as the lower figure of either half the high-income threshold or 26 weeks of the employee’s ordinary weekly pay.

The amount of compensation awarded is adjusted to account for several factors. These include contingencies that may have prevented the employee from regaining employment, any earnings the employee has received since dismissal, and any instances of misconduct by the employee. Costs orders are not common, but may be made if one party has behaved unreasonably during proceedings.