An unfair dismissal is a dismissal which is deemed to be 'harsh, unjust or unreasonable'. Relevant factors in determining whether a dismissal is unfair are whether the reason for dismissal was valid, whether warnings were given and whether the employee was given an opportunity to put his or her side of the story.

The new laws, which are of particular benefit to small and medium sized businesses, make the following changes:

• employees cannot make a claim of unfair dismissal for the first 3 months of their employment. This period can be shortened or lengthened by written agreement;
• employees whose demotion has resulted in a 'significant' reduction in remuneration cannot make a claim of unfair dismissal unless they have actually been dismissed;
• the Industrial Relations Commission can dismiss claims of unfair dismissal after the initial conciliation process if they have 'no reasonable prospect of success';
• when assessing claims of unfair dismissal the Industrial Relations Commission must consider the differing capacity of businesses of different sizes to comply with the 'correct' dismissal procedures e.g. a small business is unlikely to have a dedicated human resources department.

A further Bill seeking to permanently exclude all new employees of businesses with fewer than 20 employees from making a claim of unfair dismissal has lapsed.

Employees, who are ineligible to file an unfair dismissal claim may still have a claim at common law.