Most unfair dismissal payouts in Australia are small. The Fair Work Commission says the median compensation is between 5 and 7 weeks' pay, and less than 0.4% of applicants receive the maximum. The most the Commission can order is half a year's pay or $95,050, whichever is lower, for 2026-27.
Many claims never reach a decision. They settle at conciliation, where the payout is whatever both sides agree to.
What counts as being unfairly sacked?
A dismissal is unfair when it is harsh, unjust or unreasonable, when it was not a genuine redundancy, or when a small business employer didn't follow the Small Business Fair Dismissal Code. The Commission looks at whether there was a valid reason, whether you were told the reason and given a chance to respond and, for underperformance, whether you were warned first.
Resigning because your employer left you no real choice can also count, as our guide to constructive dismissal explains. Our redundancy pay guide covers what makes a redundancy genuine.
Who can make an unfair dismissal claim?
You must have worked for the employer for at least 6 months, or 12 months if it has fewer than 15 employees, and be covered by the national workplace relations system. You must also be covered by an award or enterprise agreement, or earn less than the high income threshold, which is $190,100 for dismissals on or after 1 July 2026. Commissions, bonuses and compulsory super don't count towards earnings for the threshold.
The deadline is 21 days from when the dismissal takes effect. The application fee for 2026-27 is $92.70, and you can ask for it to be waived if you are in serious financial hardship.
How much compensation can the Fair Work Commission order?
The cap is the lower of
- half your annual wage, which is what you would normally have received in the six months before the dismissal
- $95,050 for 2026-27, a figure that changes on 1 July each year.
Compensation only covers lost income. The Commission can't order compensation for pain and suffering, shock, distress, hurt or humiliation.
Reinstatement is the primary remedy, so the Commission first decides whether you should get your job back. It says it rarely orders that, for reasons such as the business having closed or the working relationship having broken down.
How is an unfair dismissal payout worked out?
The Commission starts with how long it thinks you would have kept working there, looking at your length of service, your work history and any performance or behaviour issues. That gives the pay you would likely have earned.
It then generally subtracts what you have earned since the dismissal. Workers' compensation payments are deducted. Income support payments are not. The amount can also be reduced for misconduct, and for contingencies such as sickness, unemployment or starting a job with a higher salary.
You are expected to make reasonable efforts to find a new job, and making no effort can lead to a deduction.
What does an unfair dismissal payout look like in dollars?
Say you earned $78,000 a year, which is $1,500 a week. Half your annual wage is $39,000, which is below $95,050, so $39,000 is the most the Commission could order.
A payout at the median of 5 to 7 weeks' pay would be $7,500 to $10,500. If you start a new job soon after the dismissal, your new earnings generally come off what the Commission would otherwise award.
The $95,050 limit only applies to people earning more than $190,100 who are protected because an award or enterprise agreement covers them.
What happens at conciliation?
Conciliation is the first step after you apply. It is voluntary and confidential, usually takes place 2 to 5 weeks after the application and runs for about 90 minutes online. The conciliator doesn't decide who is right.
The Commission says the two sides reach agreement in about 75% of cases. A settlement can include money, entitlements the employer owes you, a statement of service, the employer letting you resign, your job back, an apology, and agreements to keep the details confidential and not to criticise or take other action against each other.
If you didn't have a lawyer or paid agent at the conciliation, you usually get a cooling-off period of 3 business days to opt out of the agreement.
What happens if your case goes to a hearing?
The Commission publishes its hearing results each year.
| Hearing outcome, 2024-25 | Cases |
|---|---|
| Dismissal was fair, application dismissed | 89 |
| Granted, money ordered | 134 |
| Granted, reinstatement | 4 |
| Granted, reinstatement and lost pay | 5 |
| Granted, no remedy | 7 |
| Granted, remedy still to be decided | 19 |
| Granted, parties settled on remedy | 5 |
| Total | 263 |
Money is the usual remedy when an application is granted. Reinstatement was ordered in 9 of the 263 cases.
Is an unfair dismissal payout taxed?
The ATO lists compensation for loss of job or wrongful dismissal among the payments that can make up an employment termination payment. These are taxed under their own rules, usually at a lower rate if you receive the payment within 12 months of the job ending, up to a cap. Ask how a settlement payment will be taxed before you sign.
What should you do if you think you were unfairly sacked?
Move quickly. The 21 days run from when the dismissal takes effect, which may be your last day at work or your last day of paid leave. The Commission's website has an eligibility checker and links to free legal advice for eligible people. Keep your termination letter, pay slips and any emails about the reason you were given.
This is general information, not legal or financial advice.
Sources
- Fair Work Commission, Compensation for unfair dismissal (median 5 to 7 weeks' pay, less than 0.4% receive the cap, $95,050 for 2026-27, reasons not to reinstate, last updated 1 July 2026)
- Fair Work Commission, The formula to calculate compensation (remuneration, deductions, contingencies, misconduct, efforts to reduce loss, the six-month limb of the cap)
- Fair Work Commission, Reinstatement after unfair dismissal
- Fair Work Commission, Outcomes or remedies at an unfair dismissal hearing (the 2024-25 hearing outcomes table)
- Fair Work Commission, What is conciliation? and Options at conciliation for unfair dismissal (timing, 90 minutes, about 75% settle, settlement terms, cooling-off period)
- Fair Work Commission, What is unfair dismissal?
- Fair Work Commission, Unfair dismissal, can you apply? (minimum employment period, 21 days, when a dismissal takes effect)
- Fair Work Commission, High income threshold ($190,100, what counts as earnings)
- Fair Work Commission, Fees and costs ($92.70 for 2026-27, fee waiver)
- Fair Work Ombudsman, Unfair dismissal (what the Commission considers, eligibility, small business, free legal advice)
- Australian Taxation Office, Employment termination payments for employees (last updated 5 June 2026)
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