If you've recently dismissed an employee, it's important to understand the legal options they may consider. Depending on their circumstances, a dismissed employee may pursue one of four main avenues:

  • Unfair dismissal (subject to specific eligibility criteria) under the Fair Work Act

  • General protections under the Fair Work Act

  • Discrimination under federal, state, or territory equal opportunity laws

  • Common law claims for breach of contract.

The two areas most frequently accessed by employees are claims for unfair dismissal and applications for adverse action under the general protections provisions of the Fair Work Act.

 

Can employees pursue multiple actions?

No. Employees must choose a single legal pathway for the same conduct. This prevents “double-dipping” across jurisdictions, including anti-discrimination tribunals.

However, if an initial application is withdrawn or dismissed due to jurisdictional error, the employee may lodge a new application, provided it is submitted within 21 days of the dismissal taking effect.

When deciding which avenue to pursue, employees will consider the potential remedies available if successful.

 

Unfair dismissal claim

Although unfair dismissal is the most frequent claim lodged with the Fair Work Commission (FWC), access is limited to specific employees. Employees who cannot claim unfair dismissal include:

  • an employee who has served less than the relevant minimum period of employment (six months, or 12 months where the employer employs fewer than 15 employees)

  • is award or agreement-free and has an annual earning rate that exceeds the high-income threshold, which is currently $183,100 per year as of 1 July 2025. This amount is indexed each year.

  • where the reason for the dismissal was a case of genuine redundancy, or

  • an employee who is pursuing other termination of employment proceedings.


If an employee is eligible to claim unfair dismissal, several factors may be considered to determine the appropriate course of action. These may include:

  • the maximum amount of compensation that may be awarded in an unfair dismissal claim is based on the equivalent of six months’ ordinary earnings (up to a maximum of $91,550 in the 2025-26 year and indexed each year)

  • the FWC is not a court, consequently, legal costs may be less than for an adverse action claim.

The applicant bears the responsibility in an unfair dismissal case to demonstrate that the dismissal was harsh, unjust, or unreasonable, and that the reason for the dismissal was invalid. Most unfair dismissal applications heard by the Fair Work Commission are resolved through mediation and settlement before proceeding to arbitration.


Adverse action – general protection provisions

General protection applications relate to adverse action taken by a person against another person, in relation to the workplace. The general protections provisions of the Fair Work Act deal with:

  • the protection of workplace rights and the exercise of those rights

  • the protection of freedom of association and involvement in lawful industrial activities

  • protecting from discrimination (which overlaps with discrimination laws), and

  • sham arrangements.


The most common ‘adverse action’ by an employer is dismissal, although adverse action can also include:

  • injuring an employee in his or her employment or altering the position of the employee in a way that prejudices them

  • discriminating between the employee and another employee

  • refusing to employ a prospective employee, or

  • discriminating against a prospective employee in the terms or conditions which the prospective employer offers to employ them.


Examples include demotion or being overlooked for a promotion due to the employee’s legitimate activities at work.

The most common allegations regarding adverse action are that the dismissal was based on discriminatory grounds, or that the dismissal was due to an employee’s temporary absence due to illness or injury, or that the employee was dismissed or victimised for exercising a workplace right.

For example, the Fair Work Ombudsman has successfully prosecuted employers in relation to discrimination against employees returning from parental leave, resulting in significant fines, employers paying compensation and employers having ‘enforceable undertakings’ imposed on them.

 

Why employers should be concerned about adverse action claims

There are several reasons why adverse action claims may pose a greater challenge for employers than unfair dismissal claims. The main reasons why a dismissed employee may pursue an adverse action claim rather than an unfair dismissal claim include:

  • a wider jurisdiction – adverse action applications are open to prospective and current employees as well as contractors and other workers

  • there is no minimum period of employment that must be served to access this jurisdiction

  • general protections provide broader remedies including injunctions

  • while time limits for lodging claims are the same as for unfair dismissal (i.e. 21 days), damages are uncapped for general protections, and

  • there is a reverse onus of proof under general protection applications which means the employer is effectively guilty until proven otherwise.


As adverse action applications are eventually heard before a court, legal costs for proceedings may be a consideration for an applicant. However, there have been instances of self-representation before the Federal Circuit Court.

However, from the employer’s perspective, the cost and difficulty of defending general protection claims are primarily caused by the reverse onus provision.

 

What does this mean for your business?

Employers must be diligent in following their HR policies. The goal is to prevent adverse actions or unfair dismissal claims. Be aware that courts and tribunals use the balance of probabilities as the standard of proof in dismissal cases.

The more serious the allegations, the higher your certainty must be that the conduct took place. This is especially true for claimed adverse action cases, where the reverse onus of proof applies.