How Unfair Dismissal Compensation Is Calculated

Under the Fair Work Act 2009 (Cth), the primary remedy for unfair dismissal is reinstatement, meaning the employee is returned to their previous role or a similar position in terms of pay, hours, and responsibilities. If reinstatement isn’t practical, the Fair Work Commission (FWC) may order compensation as an alternative.

Compensation Calculation

Compensation for unfair dismissal is capped at 26 weeks' wages or half of the high-income threshold (whichever is less). As of the latest update, the high-income threshold is $175,000, making the maximum compensation $87,500.

Factors Considered in Compensation

The FWC considers various factors when determining the compensation amount, including:

1. Viability of the Employer's Business: How the compensation might affect the employer’s operations; 
2. Employee’s Length of Service: The duration of employment before the dismissal.
3. Potential Lost Wages: The income the employee would have earned if not dismissed.
4. Efforts to Mitigate Loss: Whether the employee sought alternative employment after dismissal.
5. Post-Dismissal Earnings: Any wages the employee earned between their dismissal and the compensation order.

Limitations on Compensation

It’s important to note that the FWC does not award compensation for shock, distress, or humiliation caused by the dismissal. Additionally, if the employee’s misconduct contributed to their dismissal, the compensation may be reduced accordingly.

Reinstatement and Back Pay

In cases where reinstatement is ordered, the employee is also entitled to back pay from the date of dismissal to the reinstatement order. However, this back pay is capped at the equivalent of 26 weeks’ wages.

Seek Expert Advice

Understanding how compensation for unfair dismissal is calculated can be complex. If you believe you have been unfairly dismissed, Bentham Sydney Employment Lawyers can provide expert legal advice and help you navigate the process. Contact us today for a confidential consultation.

This article provides general information. For specific advice, please contact Bentham Sydney Employment Lawyers.

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Got Questions?

Unfair dismissal occurs when an employee is terminated from their job in a manner that is harsh, unjust, or unreasonable. This may involve a lack of a valid reason for dismissal, failure to follow proper procedural requirements, or dismissal in retaliation for exercising workplace rights. To determine if a dismissal is unfair, various factors are considered, including the reason for the dismissal and whether proper processes were followed. For personalised advice on whether a dismissal may be considered unfair, contact Bentham Sydney Employment Lawyers for expert assistance.

If an employer receives an unfair dismissal claim, they should promptly review the details of the claim and gather all relevant documentation related to the termination. It is essential to assess whether proper procedures were followed and if the dismissal was for a valid reason. Employers should also prepare to engage in conciliation or hearings with the Fair Work Commission if required. For guidance on how to handle an unfair dismissal claim and to ensure compliance with the Fair Work Act, contact Bentham Sydney Employment Lawyers for expert advice.

Yes, employees on probationary periods can still claim unfair dismissal. However, there are specific considerations for probationary employees, such as whether the dismissal was based on a valid reason and if proper procedural fairness was observed. Probationary employees must demonstrate that their dismissal was not justified or that it breached the terms of their employment. For advice on unfair dismissal claims during probationary periods, contact Bentham Sydney Employment Lawyers to explore your options.

To support an unfair dismissal claim, an employee typically needs to provide evidence such as their employment contract, records of performance reviews, communications related to the dismissal, and any evidence of procedural breaches. Additionally, demonstrating that the dismissal was not for a valid reason or that proper processes were not followed is crucial. For assistance in gathering and presenting the necessary evidence for your claim, contact Bentham Sydney Employment Lawyers for expert support.

Employers can minimise the risk of unfair dismissal claims by ensuring they follow proper procedures, including providing clear reasons for termination, adhering to company policies and employment contracts, and offering opportunities for the employee to respond to concerns. Conducting thorough performance reviews and ensuring compliance with relevant laws and regulations are also key. For tailored advice on preventing unfair dismissal claims and implementing best practices, contact Bentham Sydney Employment Lawyers for expert guidance.

If an unfair dismissal claim is successful, remedies may include reinstatement to the former position or compensation for lost wages and other entitlements. The Fair Work Commission will consider factors such as the impact of reinstatement on workplace dynamics and the financial losses suffered by the employee. Compensation calculations involve assessing lost remuneration, deducting any earnings since termination, and applying statutory caps. For detailed advice on the remedies available and how to pursue them, contact Bentham Sydney Employment Lawyers for expert legal assistance.