19th May, 2025
Wrongful termination is a serious issue in any workplace. In New South Wales (NSW), legal protections exist to ensure that employees are not unfairly dismissed. While dismissal may sometimes be necessary, it must be done in a lawful and reasonable way. Both employees and employers benefit from understanding their rights and obligations.
What Constitutes Wrongful or Unfair Dismissal?
Under the Fair Work Act 2009, a dismissal is considered unfair if it is harsh, unjust, or unreasonable. For example, termination may be unfair if an employee is:
- Dismissed due to temporary illness or injury,
- Let go without a valid reason or fair process,
- Dismissed because of discriminatory reasons, such as age, gender or disability.
If the employee works in the private sector, their unfair dismissal claim is handled by the Fair Work Commission (FWC). For public sector or local government employees in NSW, claims go to the NSW Industrial Relations Commission (IRC) under the Industrial Relations Act 1996 (NSW).
Timeframes for Lodging a Claim
A key detail often overlooked is the time limit. Employees must submit an unfair dismissal application within 21 days of the dismissal taking effect. Late applications are generally not accepted unless there are exceptional circumstances.
Who Can Make a Claim?
Not every termination qualifies for an unfair dismissal claim. To be eligible, an employee must:
- Be covered by the Fair Work Act or NSW Industrial Relations Act,
- Have completed the minimum employment period which is 6 months (or 12 months for small businesses),
- Not be a casual employee (unless employed on a regular and systematic basis with a reasonable expectation of ongoing work).
Additionally, the termination must not be due to a genuine redundancy, which is excluded from unfair dismissal protections.
How the Process Works
When an employee believes their dismissal was unfair, they can file a claim with the FWC or IRC. The employer is notified and given a chance to respond. Most matters proceed to conciliation, a voluntary and confidential process to try and resolve the issue. If conciliation fails, the matter may go to a hearing or conference.
The decision-maker considers several factors, such as:
- Whether there was a valid reason related to performance or conduct,
- Whether the employee was given an opportunity to respond,
- Whether proper procedures were followed.
Possible Outcomes
Outcomes from unfair dismissal claims can include:
- Reinstatement to the employee’s former role,
- Compensation, generally capped at 26 weeks’ pay under the Fair Work system,
- Other negotiated outcomes, such as a statement of service or a settlement agreement.
It’s worth noting that compensation is not awarded for emotional distress, humiliation, or reputational harm.
Why Employment Agreements Still Matter
While unfair dismissal laws provide a safety net, many workplace disputes can be avoided with clear, well-drafted employment agreements. These agreements outline roles, responsibilities, termination clauses, and rights—helping both employers and employees avoid misunderstandings.
Wrongful termination claims can be complex. Employers should take care when managing dismissals, and employees should understand their rights.
Need help with employee agreements or corporate law matters? Our team at Castrikum Adams Legal is here to assist.
The Unfair Dismissals Benchbook on the Fair Work Commission website can be a helpful resource for those wanting to learn more on this topic.
To read more on this topic, click here. However, if you found this blog on wrongful termination helpful, we invite you to check out our other blog posts.