Unfair Dismissal vs General Protections: What Employers Get Wrong (and Why It Matters)

Bianca Mazzarella

Principal LawyerAitken PartnersView Profile

Termination decisions can expose employers to different and unequal legal risks. Understanding which framework applies, and why, is critical before taking action.

Employers often treat termination risk as a single issue. It isn’t. In Australia, two very different legal regimes sit side by side: Unfair Dismissal and General Protections (also known as adverse action) claims. Getting these mixed up, or assuming one is a fallback for the other is where costly mistakes are made.

The Core Difference: Fairness vs Reason

• Unfair Dismissal is about whether the dismissal was harsh, unjust or unreasonable in the circumstances and whether procedural fairness was afforded to the employee; and
• General Protections focus on why a dismissal occurred - specifically, whether it was because the employee exercised (or proposed to exercise) a workplace right, or because of a protected attribute such as age, sex, family responsibilities, temporary illness, marital status, or political opinion.

The general protections provisions of the Fair Work Act 2009 (Cth) are designed to help prevent employers from taking adverse action for unlawful reasons, including discrimination, but not every employer gets this right.

Unfair Dismissal: A Procedural and Substantive Test

An unfair dismissal claim considers 2 limbs:

1. Was the dismissal harsh, unjust or unreasonable? And
2. Was procedural fairness afforded to the employee

The Fair Work Commission will look at factors which include whether:

• There was a valid reason (e.g. performance, conduct, genuine redundancy);
• The employee was warned that the conduct could lead to termination (unless serious misconduct involved);
• The employee was given an opportunity to improve i.e via a performance improvement program (if appropriate in the circumstances);
• The employees tenure and mitigating factors (i.e was it harsh and unjust to terminate in the circumstances);

• There was a breach of contract or employment policies;
• An impartial investigation took place (if appropriate);
• The employer considered the employee’s response and mitigating factors before deciding to terminate;

• The employee had an opportunity to respond to the proposed termination;

This is a balancing exercise, noting that some of the above steps may not be required where serious misconduct is involved (i.e theft).

Key limitations which may assist employers:

• High income threshold unless an Award applies
• Minimum employment period
• Exemptions for small business operators

General Protections: The Reverse Onus Trap

General protections claims are fundamentally different and carry significantly greater legal risk for employers. They arise where an employee alleges adverse action (including dismissal) because of a prohibited reason, such as:

• Exercising a workplace right (e.g. complaining about pay, requesting leave)
• Taking sick leave
• Making a complaint or inquiry
• Discrimination (e.g. age, sex, disability)
• Temporary absence due to illness or injury

For these claims, the burden of proof is reversed and the employer must prove that a prohibited reason was not on the decision maker’s mind at the time of termination. This can become difficult if there is a recent link between the termination and a prohibited reason – for example a recent complaint about pay or taking of sick leave.

Eligibility: a common (and costly) misconception

• Employers often assume: “They earn too much to bring a claim.”
• That income assumption only applies to unfair dismissal, which is subject to the high‑income threshold (currently $183,100).
• General protections claims are not subject to any income threshold, leaving employers exposed even where senior or highly paid employees are dismissed.

Remedies: Why General Protections Claims Hurt More

Unfair Dismissal remedies are relatively contained:

• Reinstatement
• Compensation (capped at 26 weeks’ pay)

General Protections claims are not capped in the same way and can include:

• Economic loss
• Non-economic loss (e.g. general damages payments for pain and suffering)
• Civil penalties

While unfair dismissal claims are concerned with fairness, general protections claims allege that an employee was subjected to adverse action because they exercised their workplace rights and/or had a protected attribute under the Fair Work Act 2009 (Cth). Due to this, general protections claims are more likely to escalate into court litigation.

Although both claims generally operate in a “bear your own costs” jurisdiction, the involvement of courts in general protections matters often results in higher costs, longer delays, and materially increased risk for employers.

Three key mistakes employers make that can lead to a general protections claim:

1. Poor documentation: No clear record of the real reason (along with warnings, performance management and timelines) leading up to a dismissal.
2. Timing issues: Termination shortly after a complaint or leave
3. Inconsistent messaging: Different reasons given for termination internally vs externally

How to Protect Your Business

• Clearly identify and document the reason for dismissal at the time;
• Ensure that reason is lawful and evidence-based;
• Maintain consistency across communications;
• Be cautious where an employee has recently exercised a workplace right or has a protected attribute; and
• Train decision-makers on how their evidence will be tested.

We understand how challenging this process is for employers. If you have a staff member who is simply not performing or living up to the standards you expect in your workplace, it’s natural to want them gone.

But taking action in a way that follows the proper steps and can be viewed by others as a fair process is vital, even when it feels unfair for you to keep putting up with the situation.

We are here to help you, and if you have any queries about how to effect a lawful termination process please contact Bianca Mazzarella, Principal Lawyer at Aitken Partners for a confidential discussion: (bmazzarella@aitken.com.au) +61 3 8600 6093.

FAQ

What separates an unfair dismissal claim from a general protections claim?

An unfair dismissal claim tests whether you dismissed an employee in a harsh, unjust, or unreasonable way, and whether you gave the employee a fair process. A general protections claim tests why you dismissed the employee. If the real reason ties to a workplace right or a protected attribute such as age, sex, or a temporary illness, you face a general protections claim instead of an unfair dismissal claim.

Who carries the burden of proof in a general protections claim?

You do. Once your employee raises a general protections claim, you must prove the dismissal did not involve a prohibited reason, such as a recent pay complaint or a period of sick leave. Unfair dismissal claims work the opposite way. Your employee carries the burden there.

Does the high income threshold protect you from a general protections claim?

No. The high income threshold, currently $183,100, applies only to unfair dismissal claims. General protections claims carry no income limit, so you stay exposed even after dismissing a senior or highly paid employee.

What remedies apply to unfair dismissal compared to general protections?

Unfair dismissal remedies stay limited to reinstatement or compensation capped at 26 weeks pay. General protections claims carry no cap and cover economic loss, non-economic loss such as damages for pain and suffering, and civil penalties.

What mistakes push a dismissal toward a general protections claim?

Three patterns put you at risk. Weak documentation of the real reason for dismissal. Termination that follows closely after a complaint or a period of leave. Different reasons given internally versus externally. Fix these three before you sign off on a termination.