Australian employees who have completed the minimum employment period (12 months for small businesses with fewer than 15 employees, 6 months for larger employers) can make an unfair dismissal claim if they believe their termination was harsh, unjust, or unreasonable.
Small businesses with fewer than 15 employees have a valuable protection: the Small Business Fair Dismissal Code. If you follow the Code when dismissing an employee, the dismissal is deemed fair and the employee cannot succeed in an unfair dismissal claim. The Code requires that you genuinely believe the employee's conduct was sufficiently serious to justify dismissal, and that you gave a warning first (unless the conduct was serious enough for summary dismissal, such as theft, fraud, or violence).
For performance-based dismissal, the Code requires: a clear warning to the employee that their performance is not meeting expectations, an opportunity to improve within a reasonable timeframe, and documentation of the warning and the subsequent failure to improve. Verbal warnings are technically sufficient, but written records are strongly recommended.
For summary dismissal (without notice), the employee must have committed serious misconduct — theft, fraud, assault, serious safety breaches, or being intoxicated at work. Even then, the employee should be given an opportunity to respond before the decision is finalised, unless doing so would be unreasonable in the circumstances.