An unlawful termination occurs if an employee is dismissed: for a prohibited reason; without the appropriate period of notice or payment in lieu of notice; or in circumstances where an employer is required to notify Centrelink of proposed terminations.

A claim of ‘unlawful termination’ may be made to Fair Work Australia by an employee, or prospective employee, who is not employed by a national system employer. The unlawful dismissal provisions under the Fair Work Act were inserted under the external affairs powers of the Australian Constitution (not the corporations power) and consequently have universal effect in Australia.

The unlawful dismissal law is seldom accessed by employees, in comparison to unfair dismissal applications, as it usually involves application to the Federal Court or a court of 'competent jurisdiction', with the associated legal costs acting as a deterrent to most employees.

There are exceptions where it is not unlawful to discriminate against a person. Under s772(2) of the Fair Work Act, the main exceptions include:

To have unlawful discrimination explained and find out what employers should do to prevent a finding of unlawful discrimination refer to Overview in this section.