In considering whether a termination was harsh, unjust or unreasonable, the following must be considered (s.387 FW Act):

as well as other relevant matters.

Case study

In Woodman v Hoyts Corporation (2001) 107 IR 172, a full bench of the AIRC reinstated a casual cinema worker who was accused of allowing another off-duty employee to take a company product from the Candy Bar without paying and later lying about the incident. The full bench found that the employee's conduct amounted to a valid reason for termination but that termination in all the circumstances of the case was disproportionate. The employee had not himself participated in the theft and the lie was not premeditated or intended to benefit the employee himself. The AIRC was satisfied "in all the circumstances" that reinstatement was appropriate.

For the purpose of section 385 of the FW Act, the person has been dismissed if they were terminated at the initiative of the employer or they were forced to resign because of the conduct or course of conduct of the employer, (s.386).

A person will not be dismissed, for the purpose of the unfair dismissal provisions, if:

If the person has not been dismissed they would not be able to make out the necessary elements of section 385 of the FW Act for the termination to be an unfair dismissal.

The Minister for Workplace Relations may declare a Small Business Fair Dismissal Code. A person's dismissal will be consistent with the Code if the employer was a small business employer at the time of the dismissal and the employer has complied with the provisions of the Code in relation to the dismissal (s.388 FW Act).

For the period from 1 July 2009 to 31 December 2010 the definition of "small business employer", will be a business with less than 15 full-time equivalent employees. At the time of writing (July 2009) the Bill to implement this provision has not yet passed the Senate. It is expected that the method of calculating the number of full-time equivalent employees will be the average weekly total number of hours worked in the business in the four weeks before the termination divided by 38.

For the period after 1 January 2010, the definition of "small business employer" will be a business with less than 15 employees by head count.

A code has not yet been declared by the Minister, however a draft code has been released. Part of the draft code states that a dismissal will be fair where an employer dismisses an employee where the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. If the draft Code becomes the declared Code, an employer does not need to prove the misconduct actually occurred.

If the employer is a "small business employer" and the employer complied with the provision of the code, the termination will be deemed to be fair and the elements of an unfair dismissal required for section 385 will not be made out.

If the employer is not a small business employer or a small business employer has not complied with the code in terminating the employee, then the dismissal will not be consistent with the Small Business Fair Dismissal Code and the necessary element of section 385 will be made out.

A person's dismissal will be a genuine redundancy if both of the following requirements are met (s.389 FW Act):

Under section 389(2) of the FW Act it would not be a genuine redundancy if it was reasonable to redeploy the person within the employer's enterprise or an associated entity.

If a person's dismissal was found to be due to a genuine redundancy, the person would not be able to make out the required element of section 385 of the FW Act for the dismissal to be an unfair dismissal.

To make an application for unfair dismissal the person making the application must be protected from unfair dismissal. Under sections 382 to 384 of the FW Act, a person is protected from unfair dismissal if the following applies to them:

The primary remedy for a dismissal found to be harsh, unjust or unreasonable is to reinstate the employee to the same position or to a comparable position as they held prior to the termination. FWA has the power in certain circumstances to reinstate a worker to an equivalent position with an associated entity of the employer. A reinstated worker can seek an amount representing their lost wages between the date of termination and the reinstatement, and to have all employment benefits continue to accrue without loss of continuity.

Where reinstatement is inappropriate (for example, where the position has been filled by another worker or where tensions in a small workplace would be insurmountable if the dismissed employee returned to work), compensation may be ordered instead of reinstatement. The maximum compensation payable to employees covered by an award is six months wages; and for non-award employees is half the amount of the high income threshold (discussed above in "Persons protected from unfair dismissal") or six months wages, whichever is less.

Applications for a remedy for unfair dismissal must be made within 14 days after the day on which the termination took effect, or such period as FWA allows (see: s.394 FW Act). The matters to be taken into account for an extension of time to lodge an application have been codified in section 394(3) of the FW Act.

A number of matters must be decided by FWA before the merits of an unfair dismissal are considered. These matters are:

The first step for a worker who applies for a remedy for unfair dismissal is usually a conciliation conference with the employer at the AIRC. If the matter is not resolved at that stage, it then usually proceeds by way of arbitration. The FW Act gives FWA considerable discretion in relation to the method of finalising the claim.

Appeals to a Full Bench of FWA can be made on a question of law or a significant question of fact.

Costs against a party in an unfair dismissal can only be awarded against an Applicant if an application was made vexatiously or without reasonable cause, or if it should have been apparent to the Applicant that the application had no reasonable prospect of success. Costs will only be awarded against a Respondent if the response to an application was made vexatiously or without reasonable cause, or if it should have been apparent to the Respondent that the response had no reasonable prospect of success (s.611 FW Act)

Costs can be awarded against a lawyer or paid agent where they caused the other party to incur costs by some unreasonable act or omission or because they encouraged a person to start or continue a matter when it should have been apparent to them that the person had no reasonable prospects of success (s.401).

Workers who are not entitled to bring proceedings for unfair dismissal may still be entitled to bring proceedings elsewhere for the wrongful termination of their contract of employment.

If the contract is for a fixed period, it terminates when that period expires; no special notice is required. If the contract is for a fixed period and the contract is terminated by the employer before the end of the fixed period, the employee maybe able to sue for damages relating to the remainder of the fixed period.

If the contract is not for a fixed period, and the employee is dismissed, or if the employee is dismissed prior to the end of the contract, then there may be an action for wrongful dismissal. In the absence of misconduct or any other circumstances justifying immediate dismissal, the employee is entitled to be given notice in accordance with the written contract of employment (if any), or if there is no express term for the period of notice the employee would be entitled to rely upon an implied term of reasonable notice. The question of what is reasonable will depend on the circumstances (including position, seniority, salary, length of service and age).

An employee who can show that the dismissal was wrongful has a claim for damages. The amount of damages may relate to the wages that could have been earned during the "reasonable" period of notice, taking into account whether the employee has subsequently found work.

Unless specifically authorised by an award or employment agreement, an employer has no general right to suspend employees without pay, but an employee who is not ready, willing and able to work in accordance with the obligations under the contract of employment may not be entitled to be paid.

At common law, an employer does not have the right to stand down employees without pay when they cannot be usefully employed. Unless there is some provision in the contract of employment or award to the contrary, an employer who cannot usefully employ their employees has the alternative of either paying them wages during the period or dismissing them. In dismissing an employee in these circumstances, the employer should take careful note of the unfair dismissal provisions (see: "Unfair dismissals", above).

Some awards permit deductions of pay where employees cannot be usefully employed for reasons such as a strike, a breakdown of machines or a stoppage of work for which the employer cannot reasonably be held responsible.