Unfair Dismissal Australia: Time Limits, Eligibility & How to Claim
Complete guide to unfair dismissal claims in Australia. Covers eligibility requirements, the strict 21-day time limit, the Fair Work Commission process, remedies including reinstatement and compensation, and the small business fair dismissal code.
What qualifies as unfair dismissal?
Under section 385 of the Fair Work Act 2009, a dismissal is unfair if it was harsh, unjust, or unreasonable, it was not a case of genuine redundancy, and it did not comply with the Small Business Fair Dismissal Code (for employers with fewer than 15 employees). A dismissal can be 'harsh' even if there was a valid reason — for example, if the punishment was disproportionate to the misconduct, or the employee had long service and an unblemished record. 'Unjust' generally means the employee did not actually do what they were accused of, or the reason for dismissal was not substantiated. 'Unreasonable' often relates to procedural failures — the employee was not given a chance to respond, was not warned about performance issues, or the investigation was inadequate. The Fair Work Commission considers factors including the reason for dismissal, whether the employee was notified of that reason, whether they had an opportunity to respond with a support person present, any prior warnings, the size of the employer's business, and whether the employer had dedicated HR resources. Constructive dismissal — where an employer's conduct forces you to resign — can also be challenged as unfair dismissal in some circumstances.
Eligibility: minimum employment period and earnings threshold
Not all employees can bring an unfair dismissal claim. You must meet several eligibility criteria. First, you must have completed the minimum employment period: 12 months for employees of small businesses (fewer than 15 employees) or 6 months for employees of larger businesses. This period runs from your first day of employment. Second, you must either be covered by a modern award or enterprise agreement, or earn below the high-income threshold. For 2025-26, the high-income threshold is $175,000 per year (indexed annually). If you earn above this amount and are not covered by an award or agreement, you cannot bring an unfair dismissal claim — though you may still have other legal options such as a general protections claim, which has no income cap. Third, you must be an employee, not a genuine independent contractor. Casual employees can claim unfair dismissal if they were employed on a regular and systematic basis and had a reasonable expectation of ongoing employment. Use our Unfair Dismissal Checker to quickly assess whether you meet the eligibility requirements.
The strict 21-day time limit
This is the most critical rule in unfair dismissal law: you must lodge your application with the Fair Work Commission within 21 calendar days of the dismissal taking effect. Not 21 business days — 21 calendar days, including weekends and public holidays. The clock starts on the day after your termination, which is usually the last day of your notice period (or the day you were told if no notice was given). Missing this deadline is extremely difficult to overcome. The FWC can grant an extension in 'exceptional circumstances' but the bar is very high. Factors the Commission considers include the reason for the delay, whether the applicant was aware of the time limit, any action taken to dispute the dismissal within the 21 days, prejudice to the employer, and the merits of the underlying application. In practice, extensions are rarely granted for delays of more than a few days, and almost never for delays of more than a few weeks. If you have been dismissed and think it might be unfair, lodge your application as soon as possible — you can always withdraw it later, but you cannot lodge late without exceptional circumstances. The application fee is currently $83.30 (indexed annually) and can be waived in cases of serious financial hardship.
The Fair Work Commission process
Once you lodge an unfair dismissal application, the FWC process typically follows several stages. First, the employer is notified of the claim and given 7 days to respond. The matter is then listed for conciliation — a confidential, phone-based conference with an FWC conciliator who tries to help the parties reach a settlement. About 75% of unfair dismissal claims are resolved at conciliation, most commonly through a negotiated financial settlement. If conciliation fails, the matter proceeds to a formal hearing or conference before an FWC Member. At the hearing, both parties present evidence and submissions. The applicant bears the initial burden of showing they were dismissed, and the employer must then show the dismissal was not harsh, unjust, or unreasonable. Hearings are less formal than court proceedings but are still adversarial — witnesses can be called and cross-examined. You can represent yourself, be represented by a lawyer, or have an agent (such as a union representative) appear on your behalf. Permission from the Commission is required for lawyer representation at hearings, and is generally granted only in complex cases. The entire process from lodgement to decision typically takes 2-4 months, though complex matters can take longer.
Remedies: reinstatement and compensation
If the Fair Work Commission finds your dismissal was unfair, two remedies are available. The primary remedy under the Act is reinstatement — being returned to your former position (or a comparable one) as if the dismissal had not occurred, including back-pay for the period of absence. However, reinstatement is ordered in only a small percentage of cases, typically where the employment relationship has not irretrievably broken down and the workplace is large enough to accommodate a return. The more common remedy is compensation — a financial payment from the employer. Compensation is capped at 26 weeks' pay or half the high-income threshold (currently $87,500), whichever is lower. The Commission calculates compensation by considering the income you would have earned but for the dismissal, minus any income earned since dismissal (mitigation), minus any amount for contingencies (the chance you would have been dismissed lawfully anyway), and applying any necessary reduction for misconduct. The average unfair dismissal compensation payout in Australia is typically in the range of 4-12 weeks' pay, though outcomes vary widely. Use our Redundancy Pay Calculator and Notice Period Calculator to understand your full termination entitlements alongside any potential unfair dismissal claim.
Small Business Fair Dismissal Code
If your employer is a small business (fewer than 15 employees at the time of dismissal), a different set of rules applies. The Small Business Fair Dismissal Code provides a simplified framework that, if followed, makes the dismissal fair regardless of other circumstances. Under the Code, an employer can summarily dismiss an employee (without notice) if the employer reasonably believes the employee's conduct is sufficiently serious — including theft, fraud, violence, and serious breaches of safety procedures. A single warning is not required for summary dismissal of serious misconduct. For other dismissals, the Code requires the employer to have given the employee a valid reason related to their capacity or conduct, warned the employee (verbally or in writing) that their job is at risk, and given them an opportunity to respond. The warning does not need to be a formal written warning — a clear verbal warning documented in the employer's records is sufficient. If the FWC finds the employer followed the Code, the dismissal will not be found to be unfair. If the employer did not follow the Code, the standard unfair dismissal test applies. Small business employees also face a longer qualifying period of 12 months (compared to 6 months for larger employers) before they can bring an unfair dismissal claim.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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