Quick Summary
Quick Summary
- Respond to the FWC within 7-14 days with written documentation
- Gather all evidence: termination letter, performance records, meeting notes, payroll documentation
- Address the 3 legal tests: valid reason, fair procedure, proportionate penalty
- Preserve all documents — never delete emails or files after a claim is lodged
- Seek legal advice — the cost of a lawyer is far less than losing a claim
An employee has just contacted you. They’ve lodged an unfair dismissal claim with the Fair Work Commission (FWC). Your heart sinks. What happens next? What are you legally required to do? How do you respond without making things worse?
If you’ve terminated an employee’s contract, the risk of an unfair dismissal claim is real. In 2024–2025, the FWC received thousands of unfair dismissal applications. Many employers don’t know what to do when the claim lands, which often costs them.
This guide walks you through the employer’s obligations, the FWC process, how to respond strategically, and the protections available to you if the dismissal was fair and well-documented.
What Is an Unfair Dismissal Claim?
An unfair dismissal claim is an application made by an employee to the Fair Work Commission claiming that their employer terminated their employment without a valid reason or without following fair procedures.
- Minimum employment period: 6 months for businesses with 15+ employees; 12 months for small businesses (under 15 employees).
- The termination must have been a “dismissal” — meaning the employer ended the employment relationship, not the employee.
- The application must be made within 21 days of the dismissal date.
When You Receive the Claim — What Actually Happens
When an employee applies to the FWC, the Commission sends a copy of the application to you.
- The employee’s details and employment history
- Their claim (what they say went wrong)
- The remedy they’re seeking (reinstatement, compensation, or a combination)
- Supporting documents or statements
Your Obligations When Responding to a Claim
1. Respond On Time
This is not optional.
2. Provide Documentary Evidence
- Written termination letter (stating the reason for dismissal and date of effect)
- All performance management records (warnings, feedback, training records)
- Email correspondence with the employee (especially about performance or conduct issues)
- Meeting notes or records of conversations about the dismissal
- Workplace policies that were allegedly breached
- Witness statements from managers or colleagues present at key events
- Payroll records (to confirm final payment and any entitlements owed)
- Any approval documents if the dismissal required higher-level authorisation
3. Address the Legal Tests
- Was there a valid reason for the dismissal? (e.g., serious misconduct, poor performance, redundancy)
- Were fair procedures followed? (e.g., was the employee given a chance to respond to allegations?)
- Was the penalty (termination) proportionate to the offence?
4. Do Not Communicate Further With the Employee
5. Do Not Destroy Evidence
The FWC Process Timeline
Once you respond, the process typically follows this timeline:
- Days 1–7: Employee applies; FWC notifies you
- Days 8–14: You respond; FWC reviews both submissions
- Weeks 2–4: Pre-hearing conference (often conducted by phone). The FWC tries to narrow the issues and encourage settlement
- Weeks 4–8: If no settlement, a hearing is scheduled (usually 30–60 days later)
- Hearing: Both sides present evidence and arguments (usually 1–3 days)
- Post-hearing: The FWC delivers a written decision (typically within 4–8 weeks)
This entire process can take 3–6 months. Budget for legal costs and internal management time.
📅 Critical Deadline: 7-14 Days to Respond
When the FWC notifies you of a claim, you have a tight deadline to submit a written response. Missing this deadline is extremely damaging to your defence. Immediately consult with a lawyer and begin gathering documentation.
Key Takeaways
Key Takeaways for Employers
- ✓The 21-day deadline for employees to apply is strict; check eligibility first (6-month or 12-month threshold)
- ✓Your response deadline is typically 7-14 days; missing it is almost always fatal to your defence
- ✓Documentation is everything — if you don’t have written evidence, you’re at serious risk
- ✓Fair procedure matters as much as reason — the FWC assesses both
- ✓Settlement before a hearing can save legal costs and time; don’t agree without legal advice
- ✓Prevention is cheaper than litigation — document issues, warn employees, keep records
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What Evidence Will Help You Win?
If the dismissal was fair and well-managed, your documentary evidence will prove it:
- Written performance reviews showing concerns before dismissal
- Training records showing the employer invested in improvement
- A clear, detailed termination letter explaining the reason and giving the employee a chance to respond
- Meeting notes documenting the employee’s responses to allegations
- Proof that the employee was treated consistently with other employees in similar situations
What You Should Not Do
The following actions can significantly weaken your position in an unfair dismissal claim:
- Don’t try to contact the employee directly to sort it out
- Don’t alter, delete, or lose any documents or emails
- Don’t tell other employees that a claim has been made (it’s confidential)
- Don’t terminate other employees in retaliation for the claim
- Don’t agree to anything without legal advice
- Don’t assume the FWC will see it your way if you had a good reason — procedure matters as much as reason
Possible Outcomes
If the FWC finds the dismissal was unfair:
- Reinstatement (the employee returns to their job, often with back pay)
- Compensation (typically ranging from $500 to $20,000+ depending on circumstances, loss of income, and distress)
- A combination of both
How to Protect Yourself Going Forward
The best defence is prevention. Before you dismiss anyone:
- Document performance or conduct issues in writing from the first conversation
- Give the employee a clear opportunity to respond and improve
- If dismissing, provide a detailed, factual written termination letter
- Keep copies of all communications
- Ensure fair procedures have been followed — even if the reason for dismissal is valid, unfair procedure can still result in a finding of unfair dismissal
- Consider seeking legal advice before terminating anyone, especially if the termination might be contested
Should You Settle?
Many unfair dismissal claims settle before a hearing. This often makes financial and reputational sense.
Fair Procedure Is Just as Important as Reason
The moment an unfair dismissal claim lands, move quickly and carefully. Respond on time. Gather all documentation. Preserve everything. Don’t communicate with the employee. Seek legal advice. The strength of your case often comes down to how well you documented the dismissal process, not just whether you had a good reason.
Fair procedure is just as important as having a valid reason. The FWC cares about both.
Frequently Asked Questions
If you fail to respond by the FWC deadline (typically 7-14 days), the Commission may proceed with the hearing without your input. This is extremely damaging — the FWC may draw adverse inferences, meaning it assumes your silence indicates you have no valid defence. You lose the opportunity to present your side, and the outcome is likely to be decided against you. Even if the dismissal was fair, failing to respond can result in a finding of unfairness and significant compensation. Always prioritise responding on time.
While you can represent yourself, unfair dismissal claims are complex and the stakes are high. A lawyer specialising in employment law can help you assess your position, gather evidence, draft a strong response, and potentially negotiate settlement. The cost of a lawyer is usually far less than the cost of losing a claim or paying unnecessary compensation. For employers in small businesses, legal costs may be recoverable if you win. Fair Work Centre members have access to expert advice — call 1300 161 828.
Costs fall into two categories: (1) Legal fees — typically $3,000-$10,000+ depending on complexity and whether the case goes to hearing; (2) Compensation if you lose — ranging from $500 for minor unfairness to $20,000+ if the employee has lost significant earnings or suffered distress. Some settlements exceed $30,000. The actual cost depends on the employee’s length of service, age, salary, and severity of unfairness. Prevention — good documentation and fair procedures — is much cheaper.
No — unfair dismissal claims are filed after employment has ended. However, if the FWC orders reinstatement as a remedy, the employee may be required to return to work during the claim process. Some settlements include paid leave periods where the employee receives pay but doesn’t work during the dispute. Whether an employee can work elsewhere during a pending claim is separate — most can, unless there’s a restrictive covenant in their employment contract.
An employee must have been employed for at least 6 months (for businesses with 15+ employees) or 12 months (for small businesses under 15 employees) to claim unfair dismissal. If the employee hasn’t met this minimum threshold, the FWC will dismiss the application without a hearing — no matter how unfairly they were treated. This is a key defence to check immediately when you receive a claim. If the employee doesn’t meet eligibility criteria, you can have the application dismissed quickly.
Yes — settlement is common and often advisable. A settlement agreement typically involves the employer paying the employee a lump sum in exchange for withdrawing the unfair dismissal claim. Settlements usually include a confidentiality clause, preventing the employee from discussing the claim publicly. The amount varies based on the strength of each side’s case, the employee’s potential losses, and negotiations. Settlements often cost less than a full hearing and legal fees, especially if your documentation is weak. Always seek legal advice before settling.
Unfair dismissal claims focus on whether the dismissal was harsh, unjust, or unreasonable — focusing on fair procedure and proportionate reasons. General protections claims allege the employer dismissed the employee for an unlawful reason (e.g., parental leave, raising safety issues, or exercising workplace rights). General protections don’t require a minimum employment period — they can be filed immediately. Penalties for breaching general protections are typically higher than for unfair dismissal. Both claims can be filed within 21 days of dismissal.
Valid reasons for dismissal include: serious misconduct (theft, violence, breach of trust), persistent poor performance despite warnings, genuine redundancy, and breach of critical workplace requirements. The FWC will assess whether the reason is genuine and substantial — not just an excuse. To prove validity, you must provide evidence: for performance, show warnings and opportunity to improve; for misconduct, show investigation and the employee’s response. Vague reasons like ‘not a good fit’ or ‘personality clash’ are not valid. When in doubt, seek legal advice.
The strongest defence includes: (1) a written termination letter clearly stating the reason; (2) performance reviews and warnings if performance-based; (3) investigation records and the employee’s response if misconduct-based; (4) meeting notes documenting the discussion; (5) payroll records showing final payment and entitlements; (6) training records showing investment in the employee; (7) evidence that other employees were treated consistently; (8) workplace policies allegedly breached. The more documentary evidence you have, the stronger your position. Weak documentation — vague letters, no warnings, no notes — makes you vulnerable.
The entire process usually takes 3-6 months from lodgement to decision, though some cases stretch longer if appeals are involved. Timeline: notification and response (1-2 weeks), pre-hearing conference (2-4 weeks), hearing scheduled (4-8 weeks after), hearing itself (usually 1-3 days), and decision (4-8 weeks after hearing). If you settle early, the process is much faster — many settle within 4-6 weeks. During this time, budget for legal costs, management time, and the stress of uncertainty. Early settlement can significantly reduce total duration and cost.
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