Why Unfair Dismissal Claims are Skyrocketing

March 24, 2026

Written by Natasha Hawker
Founder and Managing Director

Natasha is a leading HR expert, entrepreneur, author and sought-after media commentator for outlets such as Sunrise (Channel 7), ABC Radio and The Australian Financial Review. Natasha co-founded Employee Matters in 2011 to help Australian businesses achieve success through their people.

In the current Australian economic climate, business as usual feels like a distant memory. As the cost of doing business climbs and the Reserve Bank continues to adjust interest rates, including the most recent increase, many employers are finding themselves backed into a corner.

The unfortunate result? A significant rise in employee redundancies. However, there is a secondary trend emerging that every business owner needs to be aware of: a massive surge in Fair Work Commission (FWC) claims.

The 40% Surge and the FWC Bottleneck

One of our Employee Experts recently represented a client at an FWC Unfair Dismissal conciliation and uncovered some startling insights. The Commission is currently reporting a 40% increase in Unfair Dismissal claims.

This influx has created a major administrative bottleneck. If you find yourself facing a claim today, don’t expect a quick resolution. Submissions are taking longer to review and the delay for matters being scheduled for a hearing has stretched to roughly four months.

The FWC is currently reviewing its processes to manage this volume, but for now employers must brace for a long, drawn out and stressful period if a claim is lodged against them.

Redundancy is Not a Shield

There is a common misconception that a redundancy protects an employer from an Unfair Dismissal claim. This is false. An employee can lodge a claim for a redundancy just as easily as they can for a standard termination.

To defend such a claim, the employer must prove the redundancy was “genuine.” This means:

The person’s job no longer needed to be performed by anyone because of changes in the operational requirements of the enterprise.
The employer complied with any obligation in a Modern Award or Enterprise Agreement to consult about the redundancy.
It was not reasonable in all the circumstances to redeploy the person within the employer’s enterprise or an associated entity.

The Low Bar and the High Cost

The reality for employers is that the barrier to entry for a disgruntled employee is incredibly low. It costs an employee just $89.70 to file an Unfair Dismissal application with Fair Work Australia.

For that small fee, an employee can initiate a process that costs the employer thousands of dollars in legal fees, dozens of hours in lost productivity and a significant amount of emotional stress. Even if the employer has done everything right, they still have to show up and defend the process.

The AI Factor: A New Complication

Adding fuel to the fire is the rise of Artificial Intelligence. Recent reports from HR Daily and SmartCompany highlight a new trend: employees using AI to generate their Fair Work claims.

While the FWC has issued warnings against relying solely on AI noting that these claims can often be filled with “hallucinations” or irrelevant legal jargon, the ease of clicking “generate” means the Commission is being swamped with more paperwork than ever. This AI-driven claim farming is a major contributor to the current four-month backlog.

“Relying on documents without understanding what they say or mean is fraught with risk,”

Commissioner Sarah McKinnon

How to Protect Your Business

With the economy hurting and interest rates rising, redundancies may be unavoidable. However, they must be handled with surgical precision.

Follow the Process to the Letter: Do not cut corners on consultation periods or notification requirements.
Document Everything: Keep exhaustive records of why the redundancy is necessary and the steps you took to consider redeployment.
Get Expert Advice: The low bar for filing means you cannot afford a low bar for your HR processes. One procedural slip up can turn a genuine redundancy into a very expensive Unfair Dismissal win for your exited employee.

The current climate is tough and the Fair Work Commission is feeling the strain. By ensuring your redundancies are genuine and your termination processes are watertight, you can protect your business from becoming another statistic in the 40% surge.

If you are considering restructuring or need representation in a Fair Work matter, contact our team today to ensure your business is protected.