What is the difference between unfair dismissal and wrongful termination?
Facing job loss can be a challenging experience, especially when you believe it happened unfairly or improperly. In Australia’s employment landscape, two common legal concepts often arise: unfair dismissal and wrongful termination. While these terms might seem interchangeable, they represent distinctly different legal pathways with separate remedies and processes. Stevens & Associates specialises in helping employees and employers understand these important distinctions.
Key Takeaways
- Unfair dismissal is a statutory claim under the Fair Work Act, while wrongful termination is a contract law claim
- Different time limits apply – unfair dismissal claims must be filed within 21 days, while contractual claims have longer limitation periods
- Remedies differ significantly – unfair dismissal may result in reinstatement or compensation capped at 26 weeks’ pay, while wrongful termination damages are based on contractual losses
- Both claims can sometimes be pursued simultaneously depending on circumstances
- Evidence collection and prompt action are critical regardless of which claim you pursue
Key Definitions
What is Unfair Dismissal?
Unfair dismissal is a statutory concept established under the Fair Work Act 2009. It occurs when an employee’s dismissal is considered harsh, unjust or unreasonable. Not everyone can make an unfair dismissal claim – eligibility requirements include completing a minimum employment period (12 months for small businesses, 6 months for larger employers), not being dismissed due to genuine redundancy, and being covered by a modern award or enterprise agreement.
The most distinctive feature of unfair dismissal claims is the strict 21-day time limit from the date of dismissal to lodge an application with the Fair Work Commission.
What is Wrongful Termination?
Wrongful termination (sometimes called wrongful dismissal) refers to a contract or common law claim where termination breaches the employment contract or contractual obligations. This typically includes scenarios such as dismissal without providing the required notice period, repudiation of the employment contract, or breach of express contractual terms regarding termination procedures.
The remedies for wrongful termination focus on contract law principles – primarily damages for breach of contract and payments required under the contract’s terms.
Legal Framework in Australia
Fair Work Act and Commission Jurisdiction
The Fair Work Commission (FWC) is the tribunal that handles unfair dismissal applications. The process typically begins with a conciliation session aimed at reaching an agreement between parties. If conciliation fails, the matter proceeds to a formal hearing where the Commission may order reinstatement or compensation up to 26 weeks’ pay.
Contract Law and Court Remedies
Wrongful termination claims proceed through different legal channels – typically state or federal courts depending on the claim amount and jurisdiction. These cases follow standard court procedures, which generally involve more formal processes and potentially longer timeframes than FWC matters.
The courts assess whether the employer breached the employment contract and determine appropriate damages based on contractual entitlements.
Interaction with Other Protections
Both unfair dismissal and wrongful termination can overlap with other workplace protections, including:
- General protections claims (adverse action)
- Discrimination laws
- Redundancy provisions
- Enterprise agreement or award protections
These interactions can create complex legal scenarios where multiple remedies might be available.
“Understanding the fundamental difference between unfair dismissal and wrongful termination is essential for both employees seeking justice and employers aiming to comply with their legal obligations. The right approach depends on the specific circumstances of each case.” – Stevens & Associates
Key Differences at a Glance
Legal Basis
The most fundamental difference lies in the legal foundation:
- Unfair dismissal: Statutory remedy under the Fair Work Act focusing on whether the dismissal was harsh, unjust or unreasonable
- Wrongful termination: Contract-based remedy focusing on whether contractual terms were breached
Available Remedies
The remedies available to successful claimants differ significantly:
- Unfair dismissal: Reinstatement to the previous position (primary remedy) and/or compensation capped at 26 weeks’ pay
- Wrongful termination: Damages calculated based on contractual losses, including unpaid notice periods and other contractual entitlements
Time Limits and Procedures
Procedural differences include:
- Unfair dismissal: 21-day application deadline; matters proceed through the Fair Work Commission with mandatory conciliation
- Wrongful termination: Limitation periods typically range from 6-12 years depending on jurisdiction; claims proceed through court processes
Common Scenarios and Examples
Examples of Unfair Dismissal
Typical unfair dismissal scenarios include:
- Termination without proper warnings for performance issues
- Dismissal without allowing the employee to respond to allegations
- Disproportionate response to minor misconduct
- Failure to follow proper disciplinary procedures
Examples of Wrongful Termination
Common wrongful termination scenarios include:
- Termination without providing the contractual notice period
- Failure to pay entitlements specified in the contract upon termination
- Breach of specific termination clauses in the employment contract
- Constructive dismissal where the employer forces resignation through contract breaches
Evidence Collection and Next Steps
Essential Documents
Regardless of which claim you pursue, collect:
- Employment contract and offer letter
- Termination letter or communication
- Payslips and employment records
- Relevant policies and procedures
- Performance reviews and warnings
- Communications regarding the dismissal
Immediate Response Actions
After a dismissal, take these steps:
- Note the exact date of dismissal (critical for time limits)
- Request a written reason for termination if not provided
- Preserve all work-related documents and communications
- Create a detailed timeline of events leading to dismissal
- Identify potential witnesses
- Seek prompt legal advice to determine the appropriate claim
Conclusion
Understanding whether your situation fits an unfair dismissal claim, wrongful termination claim, or potentially both is critical to protecting your workplace rights. The key differences lie in their legal basis, remedies, time limits, and procedures. By identifying the correct pathway early, you can maximise your chances of a favourable outcome.
If you’re facing dismissal issues or need to understand your options, seeking specialised legal advice is the most reliable approach. Stevens & Associates provides expert guidance on employment termination matters, helping both employees and employers navigate these complex legal areas with confidence.
