Losing your job is stressful, and it is not always clear whether a dismissal was lawful. An employee who believes they were sacked unfairly may be able to apply to the Fair Work Commission (the Commission) for a remedy. This guide explains what unfair dismissal means, who can apply, the strict 21-day deadline, and the fee and dollar limits for 2026-27. It is general information, not legal advice.
Key takeaways
- A dismissal is unfair if it was harsh, unjust or unreasonable and not a genuine redundancy.
- You must apply to the Fair Work Commission within 21 days.
- Minimum service is 6 months, or 12 months for small business employers.
- Remedies are reinstatement or capped compensation ($95,050 for 2026-27).
What unfair dismissal means
Unfair dismissal is when an employee is dismissed in a way that is harsh, unjust or unreasonable, that is not a case of genuine redundancy, and, if the employer is a small business, that is not consistent with the Small Business Fair Dismissal Code. A 'dismissal' usually means the employer telling you that you no longer have a job. It can also include constructive dismissal, where an employer's conduct forces you to resign.
Not every dismissal is unfair. When deciding whether one was harsh, unjust or unreasonable, the Commission weighs factors including:
- whether there was a valid reason related to conduct or capacity
- whether the employee was told the reason and given a chance to respond
- if the dismissal was for underperformance, whether the employee had been warned first
- anything else the Commission considers relevant, such as the size of the business
Who can apply
Unfair dismissal is a protection under the Fair Work Act 2009. You need to be covered by the national workplace relations system, which covers most Australian employees, and to meet three tests: a minimum employment period, an income or coverage test, and the 21-day deadline covered below. You must:
- have completed the minimum employment period with that employer
- be covered by the national workplace relations system
- be covered by a modern award or enterprise agreement, or earn less than the high income threshold
| Employer size | Minimum time worked before you can claim |
|---|---|
| Small business (fewer than 15 employees) | 12 months |
| Larger business (15 or more employees) | 6 months |
The income test means a well-paid worker can still be protected if an award or agreement covers their role; only those above the high income threshold and not covered by an award or agreement are shut out on income grounds. Regular and systematic casuals with a reasonable expectation of ongoing work can qualify; if unsure, read casual versus permanent. Genuine independent contractors generally cannot claim; see contractor versus employee.
The strict 21-day deadline and the fee
The deadline is critical: you must lodge your application with the Commission within 21 days of your dismissal taking effect. The Fair Work Ombudsman does not investigate unfair dismissal complaints, so lodging with the Commission is what starts the process. The 21 days can only be extended in exceptional circumstances, so lodge early. A fee applies, and a waiver is available if paying it would cause serious hardship.
The Small Business Fair Dismissal Code
A small business is any business with fewer than 15 employees, counted when the employee is told their job is ending or given notice. The headcount includes the employee being dismissed, any others dismissed at the same time, regular and systematic casuals, and employees of associated entities.
Small businesses follow a simpler process set out in the Code, and showing it was followed is a strong defence. In broad terms, an instant dismissal can be fair where the employer reasonably believes the conduct is serious enough (such as theft, fraud or violence), while other dismissals should follow a fair process: a valid reason, a warning that the job is at risk, and a genuine chance to respond. Owners planning a role change should also read small business redundancy.
The genuine redundancy defence
A dismissal is not unfair if it is a case of genuine redundancy: the employer no longer needs the job done by anyone because of operational change, met any consultation obligations in the award or agreement, and could not reasonably redeploy the employee elsewhere. If any element is missing, the redundancy may not be genuine and the dismissal can be challenged.
Redundancy pay is separate from any unfair dismissal remedy; for how it is worked out and taxed, see severance pay and redundancy tax. What lands in a final pay packet is covered in final pay.
What the Commission can order
The primary remedy is reinstatement, giving the employee their job back, sometimes with an order to restore lost pay. The Commission must consider it first and only turns to compensation if reinstatement is not appropriate, for example because the business has closed, the employee cannot work due to illness, or the relationship has broken down too badly to return.
Compensation is limited to lost income. The Commission cannotaward anything for pain and suffering, shock, distress, hurt or humiliation. The most it can order is the lower of half the employee's annual wage (roughly six months of their own pay) or the compensation cap of $95,050 for 2026-27. Most awards are modest: the median is between 5 and 7 weeks' pay, and fewer than 0.4% of applicants receive the cap.
How the process works
The process resolves most matters quickly, without a court:
- Lodge: the employee files within 21 days and pays the fee (or asks for a waiver).
- Response: the Commission notifies the employer, who can respond and may object, for example that the employee is not eligible.
- Conciliation: an independent conciliator holds a private, confidential phone discussion to help the parties reach their own agreement. Most claims settle here, often through an agreed payment or reference.
- Conference or hearing: if conciliation fails, a Commission member decides the matter and can make binding orders.
Unfair dismissal versus general protections
Unfair dismissal is not the only claim, and picking the right one matters. A general protectionsclaim argues the employer took 'adverse action' (such as dismissing you) because of a protected reason, for example exercising a workplace right, making a complaint, union membership, or a discriminatory attribute. These claims involving dismissal must also be lodged within 21 days, but unlike unfair dismissal they are not subject to the same compensation cap and can attract penalties against the employer.
Unlawful termination is a related stream for employees not covered by the general protections rules, covering dismissals for reasons such as race, sex, age, disability or pregnancy. You generally choose one pathway, so get advice before lodging. The Fair Work Act underpins these protections, and our glossary explains the key terms.
A worked example
Frequently asked questions
How long do I have to lodge a claim?
You have 21 days from the day your dismissal takes effect, extended only in exceptional circumstances.
How much does it cost to apply?
The application fee is $92.70 for 2026-27, indexed on 1 July. A waiver is available if paying would cause serious financial hardship.
Can I get my job back?
Reinstatement is the primary remedy and is considered first. Many people do not want to return, so the Commission orders compensation instead where reinstatement is not appropriate.
What is the most compensation I can receive?
The most is the lower of half your annual wage or the cap of $95,050 for 2026-27. Nothing is paid for hurt, distress or humiliation, and the median award is 5 to 7 weeks' pay.
Was my dismissal a redundancy or unfair?
If your role was genuinely no longer needed, consultation was met, and redeployment was not reasonable, it is likely a genuine redundancy, not unfair. Otherwise you may still claim. More questions are answered in our FAQ.
- Act within 21 days. The deadline to apply to the Fair Work Commission runs from when the dismissal takes effect and is rarely extended.
- Check eligibility. You generally need 6 months of service (12 months for a small business with fewer than 15 employees) and to be under the high income threshold or covered by an award or agreement.
- Know the 2026-27 figures. The fee is $92.70, the high income threshold is $190,100, and the compensation cap is $95,050, each indexed on 1 July.
- Reinstatement comes first, compensation is capped. Any payment covers lost income only, up to the lower of half your annual wage or $95,050, with nothing for hurt or humiliation.
Author & reviewer
Sarah has spent over a decade advising Australian SMBs on Fair Work, NES compliance, and payroll. Based in Sydney, she has worked across hospitality, retail and professional services.