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Unfair Dismissal (NSW)

Unfair dismissal refers to a dismissal from employment that is harsh, unjust or unreasonable. If an employee wants to make an unfair dismissal claim in New South Wales, where the claim is made depends on whether the person is employed in the private or public sector. Employment in the private sector is governed by the federal Fair Work Act 2009, and so a claim must be made to the Fair Work Commission (FWC). Employment in the public sector is governed by the state Industrial Relations Act 1996, and so a claim must be made through the NSW Industrial Relations Commission (IRC).

Making and responding to a claim

An employee must make a claim to the FWC within 21 days of their dismissal, unless an extension is granted. The application must include:

  • contact details for the employee, any representative, and the employer;
  • employment details, including the dates the employee started work, was dismissed and finished work;
  • reasons given by the employer for dismissal;
  • reasons the employee believes dismissal was unfair.

When an employee lodges an unfair dismissal claim with the FWC, the commission will send a copy of the application to the employer and seek a response. The employer must respond to the commission and the employee within 7 days. The response must include:

  • the dates the employee started work, was dismissed and finished work;
  • reasons for the dismissal;
  • a response to the employee’s reasons they think the dismissal was unfair;
  • any jurisdictional objections (why the dismissed employee does not fall within the FWC’s jurisdiction).

Parties can then opt for conciliation, a voluntary process which aims to resolve an unfair dismissal claim informally, in private, and confidentially, using an FWC conciliator. If a settlement is not reached, the matter will go to a conference or formal hearing where a decision will be made by an FWC member.


Conciliation settlements are flexible and are reached via negotiation between the parties. An unfair dismissal  settlement may include:

  • reinstatement;
  • continuity (as if the dismissal did not happen);
  • payment or wages, entitlements or compensation;
  • a statement of service;
  • an apology;
  • a non-disparagement agreement (where the parties agree not to criticise each other).

If an unfair dismissal claim is dealt with by way of conference or hearing, the only possible remedies are reinstatement or compensation for lost wages (up to 26 weeks’ pay).

In considering an unfair dismissal claim, under the Fair Work Act, the FWC must take into account factors such as:

  • whether there was a valid reason for dismissal related to the employee’s capacity or conduct;
  • whether the employee was notified of the reason;
  • whether the employee was given an opportunity to respond to the reason;
  • whether any warning was given about any unsatisfactory performance if the dismissal was for that reason;
  • whether the employee was unreasonably denied a support person present in any dismissal discussions;
  • the degree to which the size of the employer’s business would be likely to affect dismissal procedures;
  • the degree to which human resources staff or expertise would have affected dismissal procedures.

Reinstatement must be considered before an order for compensation is made. Reinstatement might not be an option in circumstances where, for example, the relationship between the employer and employee cannot be repaired, or the employer would dismiss the employee again.

In deciding compensation for an unfair dismissal, the FWC must consider factors such as the effect of the order on the viability of the employer’s business, and any income earned by the employee between the dismissal and the order for compensation. The amount of compensation can be reduced on account of any misconduct by the employee. Compensation cannot be paid for shock, distress, humiliation or other hurt caused by the dismissal.

NSW Industrial Relations Commission

The IRC can generally deal only with applications from dismissed employees from the state public sector or local government. An employee must file an application with the IRC within 21 days of their dismissal. The IRC will serve a copy of the application on the employer, who is required to respond to the IRC and the employee within 10 days.

Conciliation follows, with an aim to resolve the matter via a negotiated settlement. If a settlement is not reached, the matter then goes to a hearing.

In considering the matter, under the Industrial Relations Act, the IRC must take into account the same factors as the FWC does. If the commission finds the employee was unfairly dismissed, it can order that:

  • the employee be reinstated to their former position;
  • re-employ the employee in another position the commission considers suitable;
  • the employer provide back pay and entitlements owing from the time of dismissal, where there is reinstatement or redeployment;
  • if both reinstatement and re-employment are impracticable, the employee be paid compensation of up to 6 months of wages.

The IRC has discretion to order costs in some circumstances, such as when it deems an application to be frivolous or vexatious, or when a party unreasonably fails to agree to a settlement of a claim.

For advice or representation in any legal matter, please contact Armstrong Legal.

Sally Crosswell

This article was written by Sally Crosswell

Sally Crosswell has a Bachelor of Laws (Hons), a Bachelor of Communication and a Master of International and Community Development. She also completed a Graduate Diploma of Legal Practice at the College of Law. A former journalist, Sally has a keen interest in human rights law.

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