Why Unfair Dismissal Claims Have Increased 70% Over the Last 3 years
A business owner dismisses an employee after months of frustration. There have been missed deadlines, difficult conversations and ongoing reliability concerns, so by the time the decision is made, the reasons feel obvious.
3 weeks later, an unfair dismissal application arrives. It's polished, legally framed and refers to procedural fairness, inconsistent treatment and inadequate warnings, even though the employee never used that language while employed.
This is becoming increasingly common because online information and generative artificial intelligence (AI) can now turn a short account of a dismissal into a formal-looking claim within minutes. That doesn't necessarily make the claim accurate or likely to succeed, but it makes it much easier to lodge.
Why the 70% Increase in Unfair Dismissal Claims?
The widely reported 70% increase doesn't relate only to unfair dismissal claims. The Fair Work Commission have reported its total workload to have increased by more than 70% over the 3 years to the end of the 2025 - 2026 financial year.
Unfair dismissal applications are rising sharply. In the first half of 2025 - 26, the Commission received 9,725 unfair dismissal applications, which was 41% higher than the average for the same period across the previous 3 financial years. General protections applications involving dismissal were 62% above their 3 year average.
Our take: the direction matters more than the exact percentage. Employees are increasingly willing and able to challenge the way their employment ended, which means both the reason for dismissal and the process followed are more likely to be examined closely later on.
AI Has Changed Access
The rise in claims doesn't necessarily mean employers are dismissing more people unfairly. One of the most significant changes is that employees can now identify possible claims and prepare applications with very little cost, time or legal knowledge.
The President of the Fair Work Commission, has identified the growing use of AI tools by potential applicants as a key reason for the Commission’s workload increase.
An employee no longer needs to understand the legal terminology, spend time on the Fair Work Website, or think through know how to structure an application. An AI tool can explain the deadline, suggest possible arguments and prepare a polished account.
This may assist someone with a legitimate concern, but it can also exaggerate the strength of a case, introduce inaccurate details or make an ordinary workplace disagreement appear legally significant.
For employers, the length and confidence of an application shouldn't be mistaken for legal merit. At the same time, it should not simply be dismissed as “just AI”. Every claim still needs to be assessed against the facts, the available records and the process the business actually followed.
Why Weak Claims Still Matter
We talk to many business owners who initially focus on the possible compensation amount. In practice, the immediate cost is often the time required to reconstruct events, locate records, prepare a response, attend conciliation and obtain advice while continuing to run the business.
Most unfair dismissal claims don't result in a large compensation order, and many are resolved during conciliation. Even so, a defensible matter can consume significant management time, create legal or HR costs and extend a dispute the owner believed had ended.
There may also be an internal impact. Other employees will notice whether workplace decisions appear fair, consistent and properly considered, in turn impacting productivity, side conversations, and ultimately workplace culture.
The Mistakes We See from Businesses
The most common issue is not the absence of a genuine concern, but rather allowing that concern to build without addressing it clearly, and/or early enough.
Managers may have informal conversations, adjust rosters and re-do work, but never directly (and frankly) tell the employee that their performance is unacceptable or that their employment may be at risk. When the business eventually loses patience, the dismissal feels justified to the owner but somehow sudden to the employee.
Probation periods can also create false confidence.
Once an employee has completed the qualifying period, they may be eligible to bring an unfair dismissal claim even if the contract refers to a longer probation period. The minimum period is generally 6 months, or 12 months for a small business with fewer than 15 employees.
To read more about the difference between probation periods and qualifying periods, we cover it in this article.
Redundancies also create risk when the commercial reason is valid but the process is incomplete. The role must genuinely no longer be required, consultation obligations under an applicable Award or enterprise agreement must be followed, and reasonable redeployment options must be considered.
Businesses can also get into difficulty when new allegations are added at the end of the process, the termination reason is broader than the concerns raised with the employee, or the outcome has effectively been decided before the employee is given an opportunity to respond.
These mistakes usually occur because the owner is trying to resolve an operational problem quickly. However, a rushed process can make a legitimate decision much harder to defend.
A Better Approach
The increase in claims doesn't mean employers should avoid managing performance or dismissing an employee where there is a sound reason. It means the process should be intentional.
Performance concerns should be addressed early, while they are still manageable. The employee should understand what is falling short, what needs to improve and what may happen if sufficient improvement does not occur. Important conversations should also be confirmed through contemporaneous (written as soon as possible after the facts) file note.
Before disciplinary action is finalised, the employee should be told the specific concern and given a genuine opportunity to respond. That response should be considered before the decision is made.
For redundancies, employers should check the applicable modern Award or enterprise agreement before announcing the outcome. Consultation, redeployment, notice and final pay obligations should be addressed, and the commercial rationale should be documented.
To read more about the redundancy process, we posted this article which explains what you need to know.
It is also far more useful to obtain advice before the termination meeting than after an application arrives. A short review may identify a missing warning, an inconsistent reason or a procedural step that can still be corrected.
Final Thoughts
The increase in unfair dismissal claims is not simply a sign that employees are becoming more litigious or that employers are doing more things wrong. It simply reflects a change in access. Information is easier to find, applications are easier to prepare, and AI can give almost any workplace grievance the appearance of a developed legal claim.
That makes sounds HR support more important than ever.
Business owners still need to make difficult employment decisions, and they should be able to do so. The strongest protection is to address concerns early, explain expectations clearly, follow a fair process and ensure the final decision is supported by the evidence.
When a dismissal, redundancy or serious performance matter is approaching, early HR advice can help identify gaps before they become part of a Fair Work claim.
Book a free discovery call today, and let’s take the HR off your plate so you can focus on growing your business.
Need help? Contact us today - sandra@hrconsultingtas.com.au or 0408 408 225
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The content provided on this website serves as a general information resource on the subjects discussed, and should not be considered tailored to specific individual circumstances or a replacement for legal counsel. While we exert significant effort to ensure the accuracy of our information, HR Consulting TAS cannot ensure that all content on this website is consistently accurate, exhaustive, or current. Recommendations by HR Consulting TAS and any information acquired from this website should not be regarded as legal advice.
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