Last updated: March 2026
Dismissing an employee in Australia is not simply a business decision. It must comply with the Fair Work Act 2009 and follow proper procedural fairness. If not handled properly, you may face claims from employees, potentially involving unfair dismissal lawyers.
So what counts as a fair reason for dismissal in Australia?
This guide explains the legally accepted grounds for termination, what employers must do to remain compliant, and how employees can protect their rights.
Understanding Fair Dismissal Under the Fair Work Act
Under Australian law, a dismissal is considered fair if:
- There is a valid reason related to capacity, conduct, or operational requirements
- The employee is notified of the reason
- The employee is given an opportunity to respond
- A fair and reasonable process is followed
The Fair Work Commission assesses whether a dismissal was harsh, unjust, or unreasonable.
Let’s examine the most common fair reasons for dismissal in Australia.
1. Lack of Capacity or Inability to Perform the Role
An employer may lawfully dismiss an employee who cannot perform the inherent requirements of their job.
This may include:
- Ongoing failure to meet performance standards
- Inability to perform essential duties
- Long term illness affecting work capacity
- Inability to meet safety requirements
However, employers must first:
- Clearly outline job expectations
- Provide reasonable support or adjustments
- Allow the employee time to improve
If an employer dismisses someone without giving them a fair opportunity to address concerns, the termination may be considered unfair.
2. Persistent Poor Performance
Poor performance is a common reason for dismissal, but it must be carefully managed.
Examples include:
- Consistently missing targets
- Failure to follow lawful directions
- Ongoing productivity issues
- Repeated errors despite training
To dismiss fairly for poor performance, employers should:
- Set clear performance expectations
- Provide written warnings
- Offer training or a performance improvement plan
- Allow reasonable time for improvement
Immediate termination without warnings or documentation may lead to an unfair dismissal claim.
3. Serious Misconduct
Serious misconduct can justify summary dismissal, meaning termination without notice.
Examples of serious misconduct include:
- Theft or fraud
- Violence or threats
- Sexual harassment
- Serious breaches of workplace safety
- Dishonesty
Even in cases of serious misconduct, employers must conduct a proper investigation and allow the employee to respond to the allegations.
A reasonable belief based on evidence is required before proceeding with summary dismissal.
4. Genuine Redundancy
Redundancy occurs when a position is no longer required due to operational changes within the business.
Common situations include:
- Business restructuring
- Downsizing
- Technological changes
- Closure of a department
For redundancy to be genuine under Australian law:
- The role must no longer be required
- The employer must consult with the employee
- Redeployment options must be considered
If consultation does not occur or the role still exists in another form, the dismissal may not qualify as genuine redundancy.
Employees may also be entitled to redundancy pay depending on their length of service.
5. Breach of Employment Contract or Company Policy
An employee may be dismissed for breaching their employment contract or workplace policies.
Examples include:
- Violating confidentiality agreements
- Refusing lawful and reasonable instructions
- Conflicts of interest
- Repeated policy breaches
The seriousness of the breach determines whether warnings are required or whether dismissal is justified.
Minor breaches typically require corrective action before termination.
6. Probationary Period Termination
Employees on probation generally have limited protection against unfair dismissal claims.
However, minimum employment periods apply before an employee can lodge a claim:
- Six months for businesses with 15 or more employees
- Twelve months for small businesses
Even during probation, dismissal cannot be based on unlawful reasons such as discrimination or retaliation.
Employers should still document performance concerns and follow a fair process.
What Makes a Dismissal Unfair?
Even if a valid reason exists, a dismissal may still be considered unfair if:
- The employee was not informed of the reason
- The employee was not given an opportunity to respond
- No warnings were given for performance issues
- The decision was disproportionate to the conduct
The Fair Work Commission evaluates the overall fairness of the decision.
Procedural fairness is just as important as having a valid reason.
Unlawful Reasons for Dismissal
Certain reasons are always unlawful under Australian employment law.
An employer cannot dismiss an employee because of:
- Race, gender, age, disability, or religion
- Pregnancy or parental leave
- Temporary absence due to illness or injury
- Union membership
- Exercising workplace rights
Unlawful dismissal may lead to general protections claims or discrimination proceedings.
Best Practices to Avoid Unfair Dismissal Claims
Employers can reduce risk by:
- Keeping detailed documentation
- Applying workplace policies consistently
- Providing regular feedback
- Following the Small Business Fair Dismissal Code where applicable
- Seeking legal advice before terminating employment
Employees should:
- Review their employment contract
- Understand their workplace rights
- Seek advice promptly if concerned about termination
Clear communication and documented processes protect both parties.
Frequently Asked Questions
1. What is considered a valid reason for dismissal in Australia?
A valid reason relates to conduct, capacity, or operational requirements such as redundancy. The reason must be supported by evidence and fair procedure.
2. How long do employees have to file an unfair dismissal claim?
Employees must lodge an application with the Fair Work Commission within 21 days of the dismissal taking effect.
3. Can an employee claim unfair dismissal during probation?
Employees must complete the minimum employment period before lodging a claim. However, unlawful dismissal protections may still apply during probation.
4. What is the Small Business Fair Dismissal Code?
The Small Business Fair Dismissal Code allows small businesses with fewer than 15 employees to dismiss staff fairly if they follow specific guidelines, especially in cases of serious misconduct or poor performance.
5. What compensation can be awarded for unfair dismissal?
If a dismissal is found to be unfair, the Fair Work Commission may order reinstatement or financial compensation, which is capped under the Fair Work Act.
6. Can an employer dismiss an employee without warning?
An employer may dismiss without warning only in cases of serious misconduct. For poor performance or minor breaches, warnings and a fair process are usually required.
