06/11/2015Employee Issues, Performance Management

The Challenges, Solutions and Prevention of Unfair Dismissal Claims


Our Insight Report on unfair dismissals unearths the reasons behind the reasons that employers settle unfair dismissal claims and the implications for their businesses. Over 2500 senior HR professionals were surveyed, and the response was extensive. The Report explores the challenges, solutions and prevention of claims. The report is available free for immediate download for those interested in seeking a solution to this growing problem.

“As it is a concerning issue for all employers, we wanted to conduct our own research to learn more and give back to businesses,” said Steve Champion, ERS Managing Director. “By speaking directly with those at the coalface, we uncovered their most pressing issues regarding settling of claims as well as the solutions to address them.”

The Fair Work Commission states that 80% of claims are being settled at conciliation, with the majority involving a pay-out. The survey showed that 53% of respondents think that companies settled early to reduce further costs and 33% to mitigate long-term damage such as to workplace culture.

“The cost (management time, lost productivity, legal fees etc) in preparing for an arbitration hearing - at which even if you ‘win’ you can’t recoup the costs - most often far outweighs the cost of settling.” NSW engineering Group Manager

Respondents’ views on the solution were not uniform. There was a clear debate between implementing a short-term solution versus tackling the issue from the root cause, which was adhering to business processes and procedures.

A Security HR Manager from NSW explains the preference for short-term solutions -

“To avoid further legal costs at a full hearing, or worse, proceeding to the Federal Circuit court, the companies are advised by their legal teams to pay a token ‘go away’ amount to settle the claim. In most of the cases, it does not equate to admission of a wrongdoing or procedural unfairness.”

However, paradoxically, the main learning from the report is that whilst on the one hand companies settle claims because of concerns about the cost of defending them or the reputational damage, the fact they settle them rather than stick to following the correct process, leads to more claims and hence more costs and presumably more reputational damage than they would otherwise have. So it is an entirely circular argument.

The contrary was best summarised by an HR director from NSW -

“Alternatives for settling that have been effective: companies being proactive instead of reactive, i.e. implementing performance management policies & frameworks.”

The Unfair Dismissal Insight Report provides quotes from the respondents supporting their opinions. The report is easy to read and informative for both employees and employers and the wide variety of responses makes it more relatable to any business.

“Nice work, I enjoyed reading the report, interesting and insightful. Often knowing you're not alone in your opinions and recognition of similar issues and resolutions is all the encouragement one needs [to continue down the path], thanks for sending it through.” National Solutions & Training Manager 

You can view and download the Insight report here. Feel free to leave us any feedback in the discussions below.

About ER Strategies

ERS steers employers through the minefield of workplace conflict. We provide tailored services in all areas related to Employee Relations and also act as the external ER Department for many business. Our efforts are focused on fixing the immediate problem, then minimising future ones.

Services include: representing employers in unfair dismissals & disputes, enterprise bargaining, employee contracts, policies and procedures, WHS risk management programs, mediations and workplace investigations.

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