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Unfair dismissal

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A guide to understanding unfair dismissal under the NSW industrial relations system

State industrial relations laws cover most NSW unincorporated businesses (eg sole traders and partnerships) as well as some incorporated businesses operating in NSW (eg some charities and not-for-profit organisations). Incorporated businesses that employ young workers under 18 years of age also have to meet some requirements under NSW child employment laws.

Important note:  Under the Industrial Relations (Child Employment) Act 2006, a child under 18 years of age employed by a constitutional corporation may use the unfair dismissal provisions of the NSW industrial relations system.

Under the NSW Industrial Relations Act 1996 (the Act) an employee, who believes they have been unfairly dismissed or threatened with dismissal, can apply to the NSW Industrial Relations Commission (the Commission) for reinstatement and/or compensation.

When is a dismissal unfair?

A dismissal is unfair when it is 'harsh, unreasonable or unjust'. In dealing with a claim, the Commission may take into account if the employer:

• gave a reason for the dismissal
• allowed the employee to explain or justify why they should be reinstated or re-employed
• provided the employee with a warning of unsatisfactory performance.

The Commission may also take into account any other matters that it considers relevant.

Who is eligible to make an unfair dismissal application?

In general, the unfair dismissal provisions of the Act apply to:

• employees who are covered by a NSW award or enterprise agreement
• NSW public sector employees
• employees whose work is not covered by an award and who earn less than $106,400 per year (this amount is automatically indexed on 1 July each year). 

A casual employee in these categories is able to lodge a claim for unfair dismissal if the casual employee was employed for more than a short period. Defining a short period will depend on the circumstances of each case.

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Who is NOT eligible to make an unfair dismissal claim?

• employees covered by a federal award if they have a right to make a claim under federal law
• employees engaged under a fixed contract of less than six months
• employees engaged under contract for a specific task
• employees serving a pre-determined probation or qualifying period of three months or less (this period may be more than three months if it is reasonable in relation to the nature and circumstances of the employment)
• employees engaged on a casual basis for a short period.

Apprentices and trainees cannot make unfair dismissal applications under the Act, but other legislative remedies are available.

How can an employee make an application?

A dismissed employee, or an employee threatened with dismissal, can lodge an unfair dismissal application with the Commission at the Industrial Registry. There is a specific form which has to be completed. The staff of the Registry can assist with this.

A union can make an application on behalf of the employee or employees involved. 

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How quickly must the application be made?

An application must be made within 21 days of the dismissal. There is some scope for the Commission to accept applications beyond this period, if it considers there is sufficient reason to do so.

How is an employee's application dealt with?

After an application has been lodged, there will be a conciliation hearing. The employee and the employer will meet with a member of the Commission in an attempt to resolve the claim.

If conciliation is unsuccessful, the application will proceed to an arbitration hearing. This process is more formal. Both the employee and the employer are able to make submissions setting out their case to the Commission.

After hearing from both sides, the Commission will determine the claim either by dismissing it, or by making a legally enforceable order where it upholds the claim.

The employee and employer can be represented by an agent, an industrial organisation or a lawyer.

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What can the Commission do?

Where the Commission upholds a claim, it may order an employer to:

• reinstate the employee to their former position
• re-employ the employee in another position that the employer has available
• provide back pay and other entitlements owing from the time of the dismissal, where reinstatement or re-employment is ordered
• compensate the employee by ordering payment of an amount not exceeding the remuneration of the employee during the six months before the dismissal, where reinstatement or re-employment is considered impracticable
• not dismiss the employee, where dismissal has been threatened. 
  

Other information

1. The Commission also has powers under other sections of the Act to reinstate employees who are dismissed in the course of an industrial dispute or as a result of victimisation or a work injury in certain circumstances.
   
   
2. If an employee believes that the employer has not paid all remuneration owing to them (to a figure not exceeding $20,000), the employee may make a claim for non-payment of remuneration during an unfair dismissal hearing. Special conditions apply to such claims.  

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For further information:

• Office of Industrial Relations
  PH: 131 628 (local call charge in NSW)
  TTY: 1800 555 677
  
  
• your employer association or union
  
  
• Industrial Registry
  NSW Industrial Relations Commission
  50 Phillip Street, Sydney 2000
  Ph: (02) 9228 7766
  
  
• Young People at Work – information for young workers

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