Unfair Dismissal: Rules, Time Limits & Thresholds
An unfair dismissal claim must be lodged with the Fair Work Commission within 21 days of the dismissal taking effect. Whether it succeeds depends on how long the person worked there, how big the employer is, how much they earn and whether the dismissal was harsh, unjust or unreasonable. This guide sets out both the employer's obligations and the worker's rights, and it sits alongside our redundancy calculator guide.
- An unfair dismissal application must reach the Fair Work Commission within 21 days of the dismissal taking effect, and late claims are accepted only in limited cases.
- The minimum employment period is 6 months, or 12 months if the employer is a small business with fewer than 15 employees.
- For dismissals on or after 1 July 2026, the high income threshold is $190,100, and the compensation cap is $95,050 for claims lodged on or after that date.
- Employers need a valid reason, a fair process and a chance for the worker to respond, and workers can bring a support person to meetings.
What is unfair dismissal?
Unfair dismissal is a dismissal that the Fair Work Commission finds was harsh, unjust or unreasonable, and that was not a genuine redundancy or a fair dismissal by a small business.
| Term | Meaning | Why it matters |
|---|---|---|
| Dismissal | The employer ends the employment, or the worker resigns because they were forced to. | A claim needs a dismissal first, so a voluntary resignation is usually outside the scheme. |
| Harsh, unjust or unreasonable | The test the Commission applies to the reason, the process and the outcome. | A valid reason can still be unfair if the process was poor. |
| Procedural fairness | Telling the worker the concern, letting them respond and considering their reply. | It is one of the main points the Commission looks at. |
| Genuine redundancy | The job is no longer needed and consultation duties were met. | A genuine redundancy is not an unfair dismissal. |
| Serious misconduct | Conduct serious enough to justify immediate dismissal, with no notice period. | It still requires evidence and a fair process. See workplace misconduct. |
Who can make an unfair dismissal claim
Most private-sector employees are in the national system, while NSW state public sector employees and some local government employees use the NSW state system.
| Situation | Can the worker apply? |
|---|---|
| Employee of a larger employer (15 or more employees) | Yes, after at least 6 months of employment, if they are covered by an award or agreement, or earn under the high income threshold. |
| Employee of a small business (fewer than 15 employees) | Yes, after at least 12 months of employment, and the Small Business Fair Dismissal Code applies. |
| Casual employee | Yes, if employed on a regular and systematic basis with a reasonable expectation of continuing work, and the service period is met. |
| Labour hire worker | The claim is against the labour hire provider, because it is the employer, not the host. |
| Genuine contractor | No. An ABN does not decide the question, so check the real relationship with the Fair Work Ombudsman or ATO tools. |
| NSW state public sector employee | Covered by the NSW state system, so check with the relevant state body. |
Unfair dismissal time limits and thresholds
These figures apply from the dates shown, and they change each 1 July.
| Item | Figure | Applies from |
|---|---|---|
| Time limit to apply | 21 days from the dismissal taking effect | Current |
| Minimum employment period | 6 months; 12 months for a small business employer | Current |
| High income threshold | $190,100 | Dismissals on or after 1 July 2026 |
| Compensation cap | $95,050 | Claims lodged on or after 1 July 2026 |
| Small business size | Fewer than 15 employees | Current |
What makes a dismissal unfair
The Commission looks at the whole story, not only the reason given on the day.
- Check there was a valid reason related to the worker's capacity or conduct, with evidence that can be explained clearly.
- Tell the worker about the concern before any decision, and give them a fair chance to respond.
- Allow a support person at discussions about dismissal, and do not unreasonably refuse one.
- Warn about unsatisfactory performance and give a real chance to improve before dismissing for it.
- Consider the worker's length of service, personal circumstances and the size of the employer when judging whether the outcome is proportionate.
Unfair dismissal for small business employers
A small business with fewer than 15 employees can use the Small Business Fair Dismissal Code, which sets out what a fair dismissal looks like for them.
- Employees must have worked for 12 months before they can make a claim, not 6 months.
- Summary dismissal is possible for serious misconduct if the employer holds a reasonable belief and acts on it fairly.
- For poor performance, give a warning and a chance to improve before ending the job.
- Use the code's checklist and keep written records of every conversation, since they help both sides if the matter is later reviewed.
Unfair dismissal vs redundancy and misconduct
The label you use matters less than whether the facts support it.
| Type of ending | What the employer must show | What the worker is owed |
|---|---|---|
| Performance dismissal | Warnings, support and a fair chance to improve. | Notice or pay in lieu, and final entitlements. |
| Serious misconduct | Evidence and a fair process before a summary dismissal. | Final entitlements, but no notice. See insubordination. |
| Genuine redundancy | The job is no longer needed and consultation duties were met. | Notice and NES redundancy pay for employers with 15 or more employees. See retrenchment. |
| Resignation | Nothing, unless the worker was forced out. | Final pay. See resignation letter. |
Notice and payments are covered in our guides to notice period and severance pay.
What employers should do before dismissing
- Write down the reason and the evidence, and check it against the award or contract.
- Meet the worker, explain the concern and let them respond, with a support person if they wish.
- Consider the response honestly before deciding, and do not backdate anything or pressure the worker.
- Give the correct notice or pay in lieu, and pay all final entitlements, including unused annual leave.
- Keep records of every step for 7 years, in case the Commission asks for them.
What workers should do after a dismissal
- Write down what was said and when, and keep emails, messages and payslips.
- Ask for the reason in writing, and check your final pay against your award.
- Count 21 days from the day the dismissal took effect, and lodge with the Fair Work Commission within that time.
- Call the Fair Work Infoline on 13 13 94 for free information, or speak to a community legal centre or employment lawyer.
- Take the settlement process seriously, and get advice before signing any agreement.
Common unfair dismissal mistakes to avoid
- Dismissing on the spot without hearing the worker's side, even where the concern seems obvious.
- Relying on a verbal warning that nobody wrote down.
- Calling a dismissal a redundancy when the role is simply being refilled.
- Waiting more than 21 days to lodge, because the deadline is strict.
- Skipping notice or final pay, which creates a separate underpayment problem.
Unfair dismissal FAQ
How long do you have to make an unfair dismissal claim?
You have 21 days from the day the dismissal takes effect to lodge with the Fair Work Commission. The Commission can accept a late application only in limited circumstances, so act quickly and get advice if you are close to the deadline.
How long must you work before you can claim unfair dismissal?
The minimum employment period is 6 months, or 12 months if the employer is a small business with fewer than 15 employees. Casual employees can qualify if they were employed regularly and systematically with a reasonable expectation of continuing work.
What is the unfair dismissal compensation cap?
The compensation cap is $95,050 for claims lodged on or after 1 July 2026. The high income threshold is $190,100 for dismissals on or after the same date. Reinstatement is also possible, and the Commission decides what remedy fits the case.
Can you be dismissed without notice?
Notice is not required for serious misconduct, and an employer may pay in lieu of notice in other cases. Otherwise NES minimum notice applies, from 1 week for up to 1 year of service to 4 weeks for more than 5 years, plus 1 extra week for some workers over 45.
Next step: handle unfair dismissal fairly
Check the facts, give the person a chance to respond and keep clear records. At TQN Personnel, we place and pay labour hire workers across Sydney and can help you find workers for your site. This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman, the ATO or an employment lawyer for your situation.