The Risk
Termination felt justified,
process untested
The Trigger
Unfair dismissal
claim lodged
The Cost
From $1,500
To $6,300
The decision to proceed internally
A medium-sized employer with approximately 25 employees had become frustrated with the performance and conduct of a long-standing employee. There had been concerns for some time. Management believed the employment relationship had run its course and decided it was time to bring it to an end.
The business considered obtaining advice and support before proceeding. The upfront investment was $1,500.
Instead, the termination was handled internally. Management wanted to move quickly and avoid spending money on advice. They assumed the issues were obvious, the decision was justified and the process would be straightforward. The employee was dismissed in a meeting with little preparation, limited documentation and no properly managed process leading up to the decision.
When the issue escalated
Shortly afterwards, the employee lodged an unfair dismissal claim.
The business then had to respond to the application, prepare documents, explain the reasons for dismissal, account for the process followed and defend decisions that had not been properly documented at the time.
Managers who expected a simple internal process found themselves dealing with external representation,
deadlines, stress and the significant distraction of formal proceedings. Even where concerns about the employee had existed, the absence of a sound process made the matter more difficult and more expensive to defend.
Estimated impact
$6,300 in legal, HR and settlement-related costs
Significant management time spent preparing for and responding to the claim
Stress and disruption for leaders involved in the decision
Risk of reinstatement, settlement or an adverse outcome
Reputational and cultural fallout from a poorly handled termination process
What was intended to be a quick internal decision became a formal dispute requiring the business to defend a process that had not been properly prepared or documented.
The takeaway
Terminating employment without advice and support rarely saves money. Where process, documentation and risk are not considered upfront, the cost of defending the decision can quickly exceed the cost of getting it right in the first place.
“By the time an employer is ready to terminate, they are usually focused on the behaviour, the frustration and the need to move on. But if the matter is challenged, the focus shifts very quickly to process. What was documented? What warnings were given? Was the employee given a fair opportunity to respond? Getting advice early does not make termination harder. It helps make sure the decision is made properly, and that the business is not left defending a process that was rushed or incomplete.”
Greg Arnold
Founder / Principal Consultant, EWS