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When is an employer at risk of an unfair dismissal claim?

When an employment relationship ends in a difficult or cantankerous manner, there are often ramifications for both the employer and the employee.

Oftentimes, it is difficult to discern if the employee was fired for good cause, fired unfairly, or if the circumstances resulted in an employee feeling as if there was no alternative but to quit their job. The determination as to if the job loss was an actual firing versus a forced resignation is significant as it will impact whether the employee can make a successful unfair dismissal claim.

What counts as an unfair dismissal?

If an employee is terminated directly or constructively and claims that they were either let go for an unfair reason or were, essentially, forced to quit, then a claim for unfair dismissal can be raised by the employee.

First, let’s look at the difference between a direct unfair dismissal verses a constructive unfair dismissal.

Direct Unfair Dismissal: If an employee can prove that they were dismissed for an illegal reason, such as a disability, or discrimination, or a legitimate medical condition, then an unfair dismissal claim can be made.

Constructive Unfair Dismissal: This type of unfair dismissal can be more difficult to assess. In this instance, the employee may claim that they had no other option but to quit their job. An example of this might be if an employer tells an employee, “If you don’t quit, I will fire you.” In this situation, an employee may feel forced to resign so as not to have to admit to having been fired from their employment to the next employer.

Constructive Dismissal can also occur as a result of the following events/actions:

  • Changes in management or job requirements that the employee cannot possibly meet
  • Bullying by other employees
  • Harassment or abuse being allowed by the employer and being perpetrated by a supervisor/employees or customers
  • Unfair scheduling or an increase in working hours beyond the norm
  • A significant cut in wages
  • Refusal to allow sick/holiday time
  • Demotion

If an employee can show that their position and/or their place of employment so adversely affected their ability to do their job, they may have a case for unfair dismissal.

ALSO READ: 4 tips to re-energise your workforce as pandemic fatigue takes a toll

What doesn’t count as an unfair dismissal?

If an employee was actually fired for the following, it is not an unfair dismissal:

Capacity: The employee genuinely did not have the skills necessary to successfully perform the job requirements

Performance: The employee was not performing up to the standards necessary for the job to be competently completed. With performance it is important for the employer to have documented the employee’s lack of proper performance, ie. coming in late, incomplete assignments, missing deadlines

Misconduct in the Workplace: The employee has behaved or is causing behavior that is unprofessional and inappropriate in the workplace environment. Again, it is important to document the employee’s actions that rise to the level of misconduct

Redundancy: The employee’s job is no longer needed because the industry has changed or technological advances have eliminated the work

Voluntary Resignation: The employee gives notice and leaves their place of employment of their own free will

ALSO READ: Seven steps to attract and hire the best staff in 2021

What happens if an unfair dismissal claim is successful?

If an employee’s unfair dismissal claim is successful they can be reinstated in their former position or a similar one as well as receive back pay. When reinstatement isn’t practical – which is in most cases – compensation must be provided instead.

The compensation payable can be up to $71,000, so it’s important employers protect themselves from unfair dismissal claims from the outset to avoid potential financial fallout and legal difficulty down the track.


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