Why the System Feels One-Sided: A Practical Guide for Employers Facing a Staff Dispute

Crownmark Lawyers | Commercial and Employment Disputes

A hire that started well does not always end well. Sometimes a valued employee leaves on bad terms, challenges the way they were let go, or disputes something in their agreement after the fact. For many business owners, this is the moment they discover what the workplace dispute system actually feels like from the employer's side of the table. It can be a surprise. The system is accessible and inexpensive for the employee to use, and demanding and exposed for the business that has to respond to it.

The common perception that the rules are weighted in favour of employees is not baseless, but it is not the full picture either. The accurate position is this. The Fair Work system is built to be easy for employees to enter, and it places the burden of justifying a decision on the employer. Employers are not left without protection, but the protections that exist are technical, have to be put in place in advance, and have to be actively asserted when a claim arrives. That gap, between the protection the law assumes you have organised and the protection most businesses actually have in place, is where disputes are won and lost.

A system designed to be easy to enter

An employee who believes they have been treated unfairly can bring a claim quickly and cheaply. An unfair dismissal or general protections application carries a filing fee of less than $100, and a claim must be lodged within 21 days of the dismissal taking effect, so these matters move fast. The Fair Work Commission is also, by default, a no costs jurisdiction. Under section 611 of the Fair Work Act, each side ordinarily bears its own legal costs regardless of who wins, and the Commission will only order one party to pay the other's costs in limited circumstances, such as where a claim was made vexatiously or had no reasonable prospect of success. In practice this means even a weak claim is cheap for an employee to run, while the employer wears the cost of defending it either way.

The sharper edge for employers is the general protections regime, which deals with so-called adverse action. If an employee alleges that the business took action against them, such as dismissing them, for a prohibited reason, for example because they exercised a workplace right or made a complaint about their employment, the law presumes that the action was taken for that reason unless the employer proves otherwise. This reverse onus, set out in section 361 of the Act, is the single clearest illustration of the imbalance. The employer has to prove a negative, and unlike unfair dismissal, compensation in these matters is not capped.

What actually protects an employer

It is wrong, though, to say that nothing protects the business. Several things do, and the reason a solicitor matters is precisely that these protections only work if they are set up correctly and raised at the right time.

The minimum employment period is the first. An employee cannot bring an unfair dismissal claim until they have completed six months of service, or twelve months if the business is a small business employer. The high income threshold is the second. From 1 July 2026 it is $190,100, and an employee who earns above it and is not covered by a modern award or enterprise agreement cannot bring an unfair dismissal claim at all, which allows the employer to raise a jurisdictional objection. The Small Business Fair Dismissal Code is the third. A business with fewer than 15 employees that follows the Code, and keeps the completed checklist, will generally have the dismissal treated as fair. That protection is real but not automatic, because the employer still has to show it complied and that its belief was held on reasonable grounds.

Beyond these, a genuine redundancy is excluded from unfair dismissal if it is handled properly, and the remedies themselves are contained. Compensation for unfair dismissal is capped at the lower of 26 weeks' pay or half the high income threshold, which is $95,050 for dismissals on or after 1 July 2026, and it does not include any component for hurt or distress. The most important protection of all, however, is the least automatic. A well drafted contract and a defensible process win these cases. A dismissal that is justified on the merits can still be found unfair if the process was poor, for instance where the employee was given no valid reason or no genuine chance to respond. None of this is handed to an employer by the system. It has to be built in advance.

Restraints are changing, so protect the business the right way

Many employers rely on a non-compete clause to stop a departing employee taking clients, staff, or confidential knowledge to a competitor. Two cautions apply, one current and one coming.

Even now, non-compete clauses are difficult to enforce. A court will read a restraint down, or refuse to enforce it, if it goes further than is reasonably necessary to protect a legitimate business interest, and a generic clause copied into every contract often fails that test. The coming change is more significant. In the 2025-26 Federal Budget the Government announced a ban on non-compete clauses for workers earning below the high income threshold, intended to take effect from 2027. The legislation has not yet passed and consultation on the detail has taken place, but employers should plan on the basis that, once it commences, non-competes will be unenforceable for most of their workforce.

The sensible response is to rely on what survives. Carefully drafted confidentiality obligations, client and staff non-solicitation clauses, and clear assignment of intellectual property are not the target of the reform and remain enforceable when they are reasonable and properly drafted. Restraints connected to the sale of a business are also treated differently. Now is the time to have these reviewed, rather than discovering a weakness in the middle of a dispute.

The common flashpoints

Most employer disputes fall into a handful of categories. Unfair dismissal claims, where the question is whether the dismissal was harsh, unjust, or unreasonable, and whether the process was fair. General protections claims, with the reverse onus described above. Restraint and confidentiality disputes, which tend to erupt when a senior employee leaves for a competitor. And underpayment or award classification claims, which carry particular weight now that intentional underpayment of wages has been a criminal offence since 1 January 2025, meaning that even a payroll practice the business thought was settled can carry real exposure. Each of these can escalate quickly, and each is far easier to manage with the groundwork already in place.

The lesson for employers

The system is not rigged against employers, but it does assume they will come prepared and defend their decisions actively, and it offers no free pass for getting the contract or the process wrong. The work that wins these matters is done long before a dispute begins: sound employment contracts, clear and lawful policies, documented performance management, and a fair process every time. Once a claim lands, the 21 day clock is short and early advice tends to be decisive.

Every matter turns on its own facts, and this article is general information rather than legal advice. The consistent theme, though, is that sound advice early is far less costly than unwinding a dismissal, or a poorly drafted restraint, after the dispute has already begun.

 Harjit Mahindroo

 Managing Partner

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