Wrongful dismissal: sacked without the notice you were owed
Wrongful dismissal is a dismissal in breach of the contract — most often without the notice the contract requires, or part-way through a fixed term the employer had no right to cut short. It does not matter whether the dismissal was fair. What matters is whether the employer had the contractual power to do it the way it did.
Read moreShow less
How much notice were you owed?
| Where the notice comes from | What it means |
|---|---|
| Your contract states a period | That period, and it cannot be less than the statutory minimum |
| The National Employment Standards (s 117) | A floor, not a ceiling: 1 week (up to 1 year's service), 2 weeks (1–3 years), 3 weeks (3–5 years), 4 weeks (over 5 years), plus 1 week if you are over 45 with at least 2 years' service |
| Your contract says nothing | The law usually implies reasonable notice — assessed on your seniority, salary, length of service, age, qualifications and how long it is likely to take you to find comparable work |
| A fixed-term contract with no early-termination right | Pay and benefits to the end of the term |
Reasonable notice can be far longer than the statutory minimum. Courts have found around six months for senior, highly paid roles, and as little as two months for a truck driver. It is judged on the circumstances when notice was, or should have been, given. Where an award or the National Employment Standards already fix the notice, courts have held there may be no room to imply a longer period — so this matters most for award-free employees.
Your employer can pay you in lieu of notice only if the contract gives it that power. Without one, an immediate dismissal is a breach sounding in damages. The Fair Work Act separately requires the minimum notice to be given or paid out, except for serious misconduct.
A hotel noise complaint, a 'sham' hearing and $1.44 million
Read the full storyShow less
Adam Elisha had worked for Vision Australia since 2006 as an adaptive technology consultant, setting up technology for people with vision impairment. In March 2015, staying at a country hotel for work, he rang reception at around 12.30am to complain about noise outside his room. The hotel's proprietor later alleged he had been aggressive and intimidating.
Vision Australia stood him down and gave him a letter setting out the hotel allegations, which he denied at a disciplinary meeting. But the managers deciding his fate had also been told by his own manager, with whom his relationship was strained, that he had a history of aggression. That was never put to him. He was dismissed for serious misconduct, without notice pay, and was later diagnosed with a major depressive disorder. He settled an unfair dismissal claim for $27,248.68, the most the law allowed.
He then sued for breach of contract. The trial judge found he had not been aggressive at the hotel, that the claimed history of aggression 'lacked any proper foundation', and that the process was 'nothing short of a sham and a disgrace'. He awarded $1,442,404.50. The Victorian Court of Appeal set that aside, holding that damages for psychiatric injury were not available and were too remote.
The High Court restored the award, six judges to one. His contract said his conditions would be in accordance with Vision Australia's policies and procedures, so the disciplinary policy, which promised a written outline of the allegations before any meeting, bound the employer. The old English case of Addis v Gramophone Co Ltd did not bar damages for psychiatric injury, and a serious psychiatric injury from a breach like this was a serious possibility the parties should have contemplated.
If your contract says you must follow your employer's policies, its disciplinary policy may bind your employer too. A dismissal that ignores the promised process can be a breach of contract, not only an unfair dismissal.
Decided six to one, with Steward J dissenting. This is now the leading case: damages for psychiatric injury caused by a breach of an employment contract in the course of a dismissal can be recovered, subject to the usual rules on remoteness.
Summary dismissal and serious misconduct
An employer can dismiss without notice only for conduct serious enough to go to the root of the contract — a repudiation, or a fundamental breach. Dishonesty usually qualifies. Poor performance rarely does. Fear that you might misbehave in future is never enough; the conduct must already have happened.
Read moreShow less
- The employer carries the burden. In a wrongful dismissal claim, it must prove the misconduct justified summary dismissal. It is an objective question, decided on the facts as the court finds them.
- Later-discovered misconduct can still count. An employer can justify a summary dismissal with serious misconduct it only found out about afterwards. But once it has validly dismissed you on notice or paid you out, it cannot later recast that as a summary dismissal.
- Knowing and ignoring misconduct can waive it. An employer that keeps you on, with full knowledge, may lose the right to dismiss for that conduct.
- "In the employer's opinion" clauses are read carefully. Usually the employer need only have genuinely formed the opinion. But where the rest of the contract points the other way, courts have required the misconduct to be proved, treating the opinion as going only to how serious it was.
Demotion, pay cuts and changing the job
Your employer cannot change the terms of your contract on its own. A variation needs your agreement and something given in return, though keeping your job can itself count. Without an express power in the contract, award or agreement, an employer generally cannot:
Read moreShow less
- demote you, or take away a promotion already given
- cut your pay
- significantly change your agreed responsibilities or hours
Not every change is a variation. An employer can direct you to do the job differently, adopt new systems, or make changes within the scope of what you were employed to do. A significant loss of status or responsibility can be a breach even without any change in title or pay; ordinary give-and-take is not.
Repudiation, and your choice
A serious unauthorised change — a demotion, a real pay cut, a different job — can be a repudiation: conduct showing the employer no longer intends to be bound by the contract. It does not end the contract by itself. You choose:
| What happens | |
|---|---|
| Accept the repudiation | Treat the contract as ended, by words or clear conduct, and claim damages. This is the common law's constructive dismissal. It can also free you from post-employment restraints — see restraints and confidentiality |
| Affirm the contract | Keep it on foot and hold the employer to it. Carrying on as though nothing happened can be treated as affirming the contract, and an employer will argue it shows you agreed to the change |
| Work under protest | Continuing to work while clearly objecting and considering your position is not, on its own, affirmation. Put the objection in writing |
After 30 years at Telstra, sent home over a hearing test
Read the full storyShow less
Valerie Martin joined Telstra in 1989 and from around 2000 answered Triple Zero calls. Since 2012 Telstra had known she had mild to moderate high-frequency hearing loss, and she worked with a headset covering both ears. From late 2017 Telstra considered her performance unsatisfactory. It put her on four performance plans and gave her two written warnings over slow answering and mishandled calls, including an ambulance call connected to the wrong suburb. The court also found she had altered the time on a call ticket.
In November 2019 an audiologist reported good speech discrimination, but Telstra's occupational doctor then reported that she was unsuitable for Triple Zero work. On 7 November 2019 her manager told her not to come back until she was medically cleared. Telstra paid her discretionary leave for a time, then nothing from 14 February 2020, the day she started her case. It later back-paid her base salary for those months, without admission. In May 2020 an ear specialist found her fit to return, but she did not go back. Her doctor certified her unfit for work, and she resigned in May 2021.
Her claims under the enterprise agreement, the Fair Work Act's pay rules and disability discrimination law all failed. But the court held that at common law an employer has no right to suspend an employee without pay. Doing so repudiated her contract, so whether the direction was reasonable did not matter. The court accepted that it materially contributed to a persistent depressive disorder.
Given her performance history, the court put the chance she would have stayed until her planned retirement at only 15%. That left $11,994.41 in lost wages after what Telstra had already paid. It awarded $30,000 for the psychiatric injury, and with interest the final judgment, in February 2025, was $45,933.92.
Being told to stay home while your employer checks your fitness is not the same as being lawfully stood down. Unless your contract or an agreement allows it, an employer that keeps you away from work and stops paying you may be breaching your contract.
Decided a month before the High Court's decision in Elisha v Vision Australia Limited [2024] HCA 50, which confirmed that damages for psychiatric injury can be recovered for breach of an employment contract. Final orders were made in Martin v Telstra Corporation Ltd (No 3) [2025] FedCFamC2G 274.
Unpaid bonuses and commission
Whether you can sue for a bonus depends on what the contract says about it.
Read moreShow less
| Type | Can you claim it? |
|---|---|
| Commission or bonus calculated by formula | Yes. It is a contractual entitlement like salary. Failing to follow a direction does not forfeit it unless the contract links the two |
| Bonus assessed against set objectives, with a discretion | Often. A bargained-for discretion must be exercised honestly and not capriciously or arbitrarily. If the objectives were met, the employer has to have said clearly that it could still refuse |
| Genuinely discretionary or ex gratia bonus | Rarely. The employer can attach almost any condition, provided it does not act in bad faith |
| Share plans, options and "bad leaver" rules | Depends on the plan rules. A "bad leaver" clause usually turns on whether the conduct actually happened, not on what the employer believed |
On a wrongful dismissal, you can also recover bonuses and benefits you would have received during the notice period. A purely discretionary benefit is much harder to recover than one the contract required.
What you can get
Contract damages aim to put you where you would have been if the contract had been performed. For a wrongful dismissal that usually means the pay and benefits for the notice period you should have been given, or for the rest of a fixed term.
Read moreShow less
| How it works | |
|---|---|
| Lost pay and benefits | Salary, superannuation and other contractual benefits over the notice period or unexpired term, assessed on gross pay |
| Looking for work | You are expected to mitigate by seeking comparable work, and earnings in the period come off. The employer has to prove you failed to mitigate |
| Hurt, distress and the manner of dismissal | Not recoverable, on the orthodox Australian position. The High Court's 2014 decision in Barker also rejected any implied term of mutual trust and confidence |
| Punishing the employer | Not available. There are no exemplary damages for breach of contract |
| Reinstatement | Courts will not order an ordinary employment contract to be performed. The remedy is money |
Some statutory claims fill the gaps contract leaves. Distress can be compensated in a general protections or discrimination claim, and unfair dismissal can look at fairness where contract law will not. See general protections and discrimination.
Where to bring it, and what it can cost
A contract claim goes to the ordinary civil courts. That brings the ordinary costs rule: the losing party is usually ordered to pay a large part of the winner's legal costs. That risk is one of the biggest differences from the Fair Work system, where each side generally bears its own costs.
Read moreShow less
- Fair Work Act claims are largely costs-protected. In the Commission (s 611) and in court (s 570), each party bears its own costs unless a narrow exception applies — for example, a claim brought vexatiously or without reasonable cause.
- A contract claim joined with a genuine Fair Work Act claim. Where they are run in the one federal proceeding, the courts have held that the s 570 costs rule cannot be split between the causes of action.
- The costs of running an unfair dismissal claim are not recoverable as damages in a contract claim.
