Wrongful Dismissal vs Unfair Dismissal at Work

Wrongful dismissal

There are many laws and regulations when it comes to dismissals at work. We aim to clarify what the differences are between wrongful dismissal and unfair dismissal in the workplace.

Employees can fairly be dismissed from their place of work due to unsatisfactory performance, or genuine financial and operational reasons of the employer. However, there are unfortunately situations which can be classed as unfair or wrongful dismissal where the dismissed employee deserves compensation.

All employees have a contract of employment, even if it’s not a written one. That means that under the common law, an employee whose employment contract is terminated by their employer may bring an action for “wrongful dismissal”. However, because that involves going to Court, it is often not an economic action for a dismissed employee to take.

Many employees instead can bring an “unfair dismissal” application to the Fair Work Commission, which tends to be quicker and cheaper, and has a greater likelihood of an employee being reinstated (although this is still a rare outcome).

What constitutes wrongful dismissal?

It is a wrongful dismissal when the employer terminates an employee where it involves a breach of their employment contract. The remedy for such a breach is damages – there is almost never power to obtain reinstatement.

Because most employment contracts can be terminated by giving notice, damages might be payable equal to the period of that notice. Where a contract does not expressly provide for notice, a Court might order damages equal to what would be “reasonable notice” in the circumstances.

There is no length of service required for making a claim for wrongful dismissal.

What constitutes unfair dismissal?

The Fair Work Commission will not just look at whether your termination was consistent with your employment contract, but also whether it was fair. You may have been unfairly dismissed where there was no valid reason for your dismissal, or where the dismissal was harsh, unjust and/or unreasonable.

The dismissal has to be ‘at the initiative of the employer’, so you cannot being an application where you have resigned, unless you have been forced to do so by something your employer has done.

In some cases you can claim for unfair dismissal if you have been demoted unfairly.

When is it not an unfair dismissal?

  • When you don’t meet the eligibility criteria (explained below)
  • If the dismissal was a genuine redundancy

The dismissal from a small company was consistent with the Small Business Fair Dismissal Code

The Fair Work Commission will usually consider whether the employee was given notice of dismissal, any warning/s given prior to termination, given opportunities to respond, and whether there was a performance issue.

Who can apply for unfair dismissal?

Applications must be lodged within 21 days of the dismissal becoming effective. You also must meet the eligibility criteria, which includes:

  • Having completed the minimum period of employment, which is either 6 or 12 months, depending on the size of the business
  • Either a Modern Award or an enterprise agreement applying to the employment, or earning less than $145,400 per year (this is the high-income threshold which excludes you from applying for unfair dismissal, and also may include any extras which bump the salary up to over the threshold, including a guaranteed bonus or novated car lease)
  • Employees who were covered by the National Workplace Relations System (which is most employees in Australia)

Who can’t apply for unfair dismissal?

  • Employees who work outside the national system employers, who include:
    • State Government employers (NSW, QLD, WA, SA, TAS)
    • Local Government employers (NSW, QLD, SA)
  • Independent contractors
  • Casual workers, who don’t have regular hours without reasonable expectation of continuing employment, most likely will not be accepted

What can I claim for under an unfair dismissal application?

You may be able to apply for a reinstatement (and an order to restore lost pay), where you can return to your original place of work. This is rarely awarded, often because the relationship between the employee and employer may have broken down by this stage.

You could also be awarded monetary compensation, which is capped at 26 weeks pay, instead of reinstatement. Compensation can be awarded for loss of wages and entitlements, loss of opportunity for further employment, or other damages arising from the termination.

For expert advice on wrongful and unfair dismissals in Australia, contact Taylor & Scott and talk through your case with us. Taylor and Scott act for clients in a range of employment-related matters, including unfair dismissals. Our aim is to allow you to enforce your rights in a cost-effective way. Most matters settle on a confidential basis before they reach a hearing.

If you think you might have a claim, speak to our expert lawyers on 1800 600 664 or complete the Contact Form on this page, and we can help you get the compensation you deserve.

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