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Top 3 Mistakes Businesses Get Sued By Their Employees For

Being an employer in modern times is not easy. There are many things to consider such as insurances, business licences and registrations, hiring and retention of employees and maintaining a healthy cash flow and revenue just to name a few. Unfortunately, many businesses do not have the time nor resource to consider such issues and leave themselves at risk to litigation when unforeseeable issues arise.

Too often we see well intended small businesses trying to do the right thing, however due to the evolving landscape of employment law, many employers find themselves breaching the Fair Work Act and relevant laws industrial and OHS laws. Ranging from discrimination to unfair dismissal and adverse action claims, there are recurring breaches that we see small businesses making that could be avoided if proper risk management strategies were implemented. We explore the top 3 reasons below:

...due to the evolving landscape of employment law, many employers find themselves breaching the Fair Work Act...

  1. Not having Company Documents - In recent cases that we have dealt with, some employers had engaged employees without issuing a contract of employment. When a dispute arose, it was discovered that there were no explicit terms to deal with the dispute. This causes ambiguity in the employment relationship and the employer incurred costs that were avoidable had a proper employment contracted existed. In other instances, the employer was unable to discipline an employee who had clearly done something wrong because they did not have a suite of Policies and Procedures that reflected their company values and the standard of behaviour and performance expected from their employees. The above disputes would have easily been avoided had the proper documents been in place and issued to the employee at the commencement of their employment.

  2. Not implementing Policy & Procedures - Another issue we find ourselves dealing with often are cases where Policy & Procedures may be present, however, they were never distributed to or acknowledged by the employees. Recent case law demonstrates that having an employee merely cite or acknowledge the existence of a policy is not sufficient, and that an employer ought to discharge their obligations properly by delivering (at least) training annually so that they are aware of the expectation of how to behave and act at the workplace. Whilst there are a wide range of Policies & Procedures that are available, at the very least, every business notwithstanding its size, revenue or number of employees, should have the following policies (including but not limited to): OHS, social media, leave, disciplinary action, alcohol and drug policy, reimbursement and allowances, etc. Depending on your industry and area of work, you may also require a business-specific Policy & Procedure to be developed.

  3. Not conducting Proper Investigations - There may be times when allegations are made by one employee against another, or if a workplace incident has occurred (e.g. damage to company equipment, etc). At this point, many employers make the crucial mistake of finding guilt or attributing blame without following due process and affording procedural fairness to the employee. Notwithstanding that a valid reason for disciplining and/or dismissing the employee may be present, there are numerous cases where employees were still paid compensation or reinstated just because the employer did not follow the principles of natural justice. In these circumstances, many of these situations may have been avoided if the employer had conducted proper investigations into the allegations or the alleged misconduct. Better yet, workplace investigations are best often performed by an independent and objective person (externally, e.g., investigative firms, lawyers, etc) who can impartially gather the evidence and present it to the final decision maker within the employer’s company. The huge benefit in following this procedure is that it minimises the risk of litigation, and should litigation ensue, the report may be covered by professional and legal privilege.

In short, when running a business where you hire employees, be sure to not only have company documents that are relevant to your business, make sure that you have implemented the documents and have delivered the requisite training to ensure that your employees know what their employer expects of them.

This is not legal advice and is the information is only general in nature. Please seek legal assistance from a lawyer to choose what is right for your personal circumstance. Should you have any queries, please contact us at

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