In Brief 

The odds are stacked against employers in Australia when it comes to employee motivated disputes and litigation. Recent data from the Fair Work Commission shows the total number of employee claims against employers increased by 27% in the 2024 reporting year, the highest number of claims since 2010.

Employees are more aware of their industrial rights than ever before and our federal workplace relations system provides a smorgasbord of workplace rights for them to choose from both during and after employment. Any action to mitigate litigation can be a significant corporate cost-saving initiative. Ultimately, there is no way to eliminate the risk of lawsuits from employees, but here are 5 proactive steps HR can take to minimise legal risk in 2025.

1. Document due process 

Numerous decisions over the years have provided guidance around how employers can successfully reverse the onus of proof in general protections claims (i.e. show they acted for lawful reasons when making decisions affecting employees). It is important to remember that if an employee happens to be a union member or was invoking workplace rights at the same time as alleged misconduct, the employee is not immune from disciplinary action. In two important cases, The Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 and CFMEU v BHP Coal [2014] HCA 41, the High Court established the notion that it is the subjective evidence of the decision maker as to their reasons for taking action against an employee (if accepted by a Court as true) that will win an adverse action case for an employer.

HR Tip: It is critical that HR ensures decision makers in dismissal scenarios can demonstrate through contemporaneous documentary evidence (such as emails, diary entries or written correspondence) that the basis for making adverse decisions affecting employees are grounded in objective, lawful reasons only.

2. Compliant employment contracts and policies

Case law shows that employers frequently neglect the importance of written contracts of employment. While enterprise agreements, modern awards and the National Employment Standards contained in the Fair Work Act 2009 (Cth) cover off on many statutory terms of employment, it is important to remember that these statutory benefits are usually orientated in favour of employees. The written employment contract can be used to "fill the gaps" in areas where employers require protection, and which are not dealt with by statutory instruments, for example, matters relating to discipline and dismissal, intellectual property, confidentiality and post-employment obligations.

Multiple infamous employment law decisions over the years have held that where a contract imposes obligations on employees to comply with policies and procedures, those policies and procedures may be incorporated into the contract, unless the employer's reciprocal obligation to comply is expressly excluded. The most recent case of this kind was handed down in 2024, which resulted in an employee being awarded AU$4.4 million for psychiatric injury flowing from breach of a disciplinary procedure incorporated into the employment contract.

HR Tip: To avoid policies being incorporated into the contract as enforceable terms that can result in litigation, HR teams should have employment contracts and terms relating to workplace policies professionally drafted by lawyers to make clear that policies do not form part of the contract.

3. ‘Tick and flick’ workplace training is a risk

The Fair Work Commission has criticised employers who commonly rely upon online, self-taught “tick and flick” training which lacks the educational outcomes of face-to-face training. In Ramlan Abdul Samad v Phosphate Resources Ltd [2024] FWC 2868, the Fair Work Commission observed that an employer does not need to have a policy for everything and there are some behaviours that are so extreme that they do not need to be codified because any reasonable person would know not to engage in them. But, for other unwanted behaviours such as bullying and sexual harassment, detailed interactive training which is culturally and linguistically appropriate, and deals with not just the “what” but also the “why” is critical. Online tick and flick modules will not cut it.

HR Tip: Workplace policies relating to professional standards and behaviours in the workplace should not be introduced without providing interactive education and training to employees on the effect and impact of the policies and procedures. HR teams should ensure regular face to face training on topics such as bullying, health and safety, discrimination and sexual harassment covering not just “what” is unlawful, but “why”.

4. Hire competent independent workplace investigators

There can be serious consequences for employers if an investigation into workplace conduct is flawed.  Over the last 12 months there have been numerous decisions in which judges and Commission members have been scathing in their assessment of poorly conducted workplace investigations. These decisions revealed unjustified delays and investigative errors such as findings based on uncorroborated witness evidence, reliance on hearsay, applying the wrong standard of proof, investigator bias, failure to interview key witnesses, and failure to explore or consider counter allegations.

Bungling an investigation can mean payment of compensation to former employees or reinstatement, as well as significant reputational damage to the organisation and to representatives of the organisation who have conducted the investigation, particularly if the investigation report is disclosed as part of legal proceedings.

HR Tip: HR teams should seek professional advice about who should conduct an independent investigation and whether legal privilege should apply, to protect the integrity of reports produced, and to ensure the investigation process adopted is consistent with the contemporary standards and expectations that are being applied by Courts and Tribunals.

5. Monitor the legal landscape and emerging risks

Your HR team must stay on top of ever-changing federal and state legislation and emerging case law. This can be done by staying abreast of developments on podcasts like the Dentons IR Insights podcast and ensuring professional advice is obtained for high risk dismissals, multiple redundancies and decisions that might impact on workplace rights of individuals in the workplace. 

HR Tip: HR teams must continually review and update internal policies to meet developing workplace compliance and seek external professional advice for serious or high risk employee relations matters.