What unfair dismissal actually means in practice
Unfair dismissal law focuses on process, not intent.
Under Australian employment law, Fair Work considers whether:
- there was a valid reason related to conduct or capacity
- the employee was notified of that reason
- the employee had an opportunity to respond
- the decision was reasonable in the circumstances
Even where performance or conduct is genuinely poor, a dismissal can still be unfair if the steps leading to it do not hold together logically.
This is why many employers are surprised by claims.
They know why they terminated, but they underestimate how closely how is examined.
Why unfair dismissal risk increases as businesses grow
Growth increases complexity before it increases structure.
At under 100 employees:
- founders are no longer involved in every people decision
- managers are leading for the first time
- similar issues are handled differently across teams
- documentation is inconsistent or informal
What once relied on shared understanding now relies on memory and interpretation.
Unfair dismissal claims thrive in this gap.
The misconception that causes the most damage
Many employers believe that having a “good reason” is enough.
In practice, Fair Work looks at:
- whether expectations were ever made clear
- whether the employee knew there was a problem
- whether the response was proportionate
- whether the decision appears rushed or reactive
A strong reason combined with weak process is still vulnerable.
This is why saying “any reasonable person would agree” rarely helps.
What Fair Work tends to look at first
Fair Work does not start by judging character or intent.
It starts by assessing sequence and fairness.
Common early questions include:
- When was the issue first raised?
- What feedback was given, and when?
- Was the employee surprised by the termination?
- Were similar situations handled differently?
If those answers are unclear or inconsistent, risk escalates quickly.
This is also where poorly timed documentation causes problems.
What businesses usually get wrong
Most unfair dismissal claims are created by delay, not action.
Common patterns include:
- avoiding early performance conversations
- tolerating issues for months
- giving vague or mixed feedback
- then terminating suddenly when frustration peaks
From the employer’s perspective, the decision feels overdue.
From the employee’s perspective, it feels abrupt and unfair.
That mismatch is where claims form.
How unfair dismissal differs from general protections claims
Unfair dismissal and general protections are often confused, but they are not the same.
Unfair dismissal focuses on:
- fairness of process
- proportionality of outcome
- opportunity to respond
General protections focus on:
- the reason for the decision
- whether unlawful factors played a role
- timing in relation to complaints or leave
A termination can avoid unfair dismissal risk but still trigger general protections exposure if handled poorly.
This is why timing and wording matter just as much as process.
Small business rules (and where growing businesses trip up)
Businesses with fewer than 15 employees may rely on the Small Business Fair Dismissal Code if it is followed correctly.
Once a business grows beyond that threshold:
- the Code no longer applies
- expectations around process increase
- informal shortcuts become riskier
Many growing businesses continue operating as if they are still “small”, even when the legal framework has changed.
That assumption creates exposure.
The real cost of getting this wrong
Unfair dismissal claims rarely cost what businesses expect.
Beyond settlements or legal fees, the real costs include:
- leadership distraction
- time spent preparing responses
- emotional energy
- prolonged uncertainty
- pressure to resolve quickly
Even defensible claims can be expensive in focus and momentum.
This is why prevention matters more than “winning”.
What reduces unfair dismissal risk before termination
Risk is lowest when decisions are:
- made deliberately, not reactively
- supported by consistent documentation
- communicated calmly and clearly
- proportionate to the issue
You do not need corporate systems.
You do need coherence.
Most unfair dismissal risk can be reduced before termination is even on the table.
Where HR support adds the most value
For growing businesses, HR support is most effective when it:
- pressure-tests the proposed reason
- sense-checks timing and sequence
- identifies process gaps early
- helps managers communicate consistently
This avoids small missteps becoming formal claims.
FAQs
Before you terminate
Unfair dismissal risk is lowest when decisions are deliberate, documented and proportionate.
If you’re unsure whether your process would stand up to scrutiny, that uncertainty is usually the signal to pause and get advice before acting.
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