An unfair dismissal occurs when the employment of an employee is terminated without a valid reason and in circumstances in which it is harsh, unjust or unreasonable. This is the test which applies to the employment of most Australian employees, whose employers are covered by the national fair work system, administered by the Fair Work Commission. The employment of some Australian workers is covered by State laws and State tribunals, several of which have their own employment tribunals in some form or another.
Having said that many Australian employees are not protected from being unfairly dismissed, for example because they have not been employed for a minimum qualifying period or their earnings exceed what is called the “high income threshold” or the “prescribed amount”*.
They may have to settle for an unlawful dismissal claim if they qualify to do so.
There are very tight time limits to pursue an unfair dismissal case whatever the system and it is very difficult, some would say almost impossible, to obtain an extension of time to make a claim.
All jurisdictions use a system called “conciliation and arbitration” to determine unfair dismissal cases in independent specialist tribunals. “Conciliation” is a particular form of dispute settlement process, similar to but not exactly the same as “mediation”, each of which seeks a resolution by agreement and consequently by the parties making concessions.
If the dispute cannot resolved by agreement, it can be referred to “arbitration” which is a more formalized form of dispute resolution by an experienced adjudicator called a Deputy President or Commissioner who will ordinarily be a former industrial law practitioner, senior trade union official or employer organization officer, and sometimes former public servants with experience in the field.
Remedies for unfair dismissal include reinstatement of employment (very, very rarely ordered), and/or financial compensation technically capped at 26 weeks’ pay.
Some observations about the process
From the perspective of the employee;
the remedies for a successful unfair dismissal case in an industrial tribunal such as the Fair Work Commission are limited to
(a) reinstatement of employment, which is almost never ordered; and
(b) compensation for lost earnings which is capped at a maximum of 6 months pay with the maximum vary rarely awarded.
From the perspective of the employer;
although it is theoretically unnecessary for an employer to be legally represented in an unfair dismissal case, most employers other than very small employers do appoint and have legal representation. It is apparent to me, because I have often been told so, that the reasoning of many employers to arrange legal representation for this is that
a) they are often insured for the costs of defending an unfair dismissal claim as part of their business indemnity insurance;
b) they are too busy to undertake the often painstaking and tedious paperwork required to defend a claim;
c) it is demoralizing and administratively inefficient for staff to prepare for and defend a claim against a colleague; and
d) legal costs are tax deductible to a business (but not to an employee).
Of course there are many other reasons why employees who are dismissed take proceedings for unfair dismissal aside from seeking financial compensation. Those motives include anger and frustration, a motive to reverse an injustice, humiliation, and a desire to embarrass the decison makers. Significantly, one of the agreed settlement terms is more often than you would think a retrospective revocation of the dismissal facilitated in a deed of settlement and a statement of service which can go a long way to effectively removing the stigma of dismissal.