How to navigate adverse action risks, ensure genuine redundancy, and manage underperformance with confidence and compliance

Managing termination in Australia is one of the highest-risk areas for employers. Between unfair dismissal, general protections (adverse action) claims, and increased scrutiny from the Fair Work Commission, even well-intentioned decisions can unravel quickly if the process isn’t sound.

The key is not just why you terminate, but how you get there.

Understanding the adverse action risk

Adverse action claims arise when an employee alleges they were treated unfavourably because of a protected attribute or because they exercised a workplace right. This could include taking sick leave, raising a complaint, requesting flexible work, or even making an inquiry about their pay.

The challenge for employers is that the burden of proof effectively shifts onto the employer. Once a claim is made, you must demonstrate that the reason for termination was lawful and unrelated to any protected reason. This is where poor documentation and inconsistent processes create real exposure.

A common pitfall is timing. If an employee raises a complaint and is then dismissed shortly after for “performance issues” that were never previously addressed, the optics are problematic-and often legally risky.

Redundancy: getting it right

Redundancy is often seen as a safer pathway, but it comes with its own traps. A redundancy must be genuine under the Fair Work Act. That means:

• The role is no longer required to be performed by anyone
• You’ve consulted with the employee in line with any applicable award or agreement
• You’ve considered reasonable redeployment options within the business (or associated entities)

Where employers fall down is using redundancy as a substitute for performance management or interpersonal conflict. If the role still exists in a slightly altered form, or if someone else is hired into a similar position soon after, the redundancy may not hold up under scrutiny.

Another key risk is failing to properly consult. Consultation is not a tick-box exercise – it requires giving the employee a real opportunity to respond and considering their input before a final decision is made.

Managing underperformance with clarity

Performance-based terminations are among the most defensible-if handled correctly. The issue is that many employers either move too quickly or avoid the process altogether until frustration builds.

A sound performance management process should include:

• Clearly defined expectations and position requirements
• Specific examples of performance gaps
• A structured improvement plan with measurable outcomes
• Reasonable timeframes to improve
• Regular check-ins and documented feedback
• A clear warning that employment may be at risk if improvement isn’t achieved

What matters most is consistency and fairness. If expectations are vague or applied unevenly across the team, the process becomes difficult to defend.

Childcare example: performance vs adverse action risk

A long day care centre has an educator who has recently raised concerns about staff-to-child ratios and safety practices during busy periods. Around the same time, the Centre Director also has concerns about the educator’s documentation  – learning observations are often late and lack detail.

Frustration builds, and within a few weeks, the Director decides to terminate the educator’s employment, citing “ongoing performance issues.”

The educator then lodges a general protections (adverse action) claim, arguing they were dismissed because they raised safety concerns, a clear workplace right.

In this situation, the employer is exposed. While there may have been legitimate performance concerns, there was:

• No documented history of performance discussions
• No formal warning or opportunity to improve
• No separation between the safety complaint and the termination decision
• Close timing between the complaint and dismissal

All of this creates a strong inference that the dismissal may have been linked to the complaint.

Final thoughts

Termination decisions should never be reactive. Whether it’s redundancy, misconduct, or performance, the safest path is one grounded in process, evidence, and fairness.

Employers who take the time to distinguish between the reason for termination and the process they follow are far better positioned to avoid costly claims. In today’s environment, intent alone isn’t enough-your documentation and actions need to support it.

Nick Hedges is the founder of Resolve HR, a Sydney-based HR consultancy specialising in providing workplace advice to managers and business owners. He recently published his first book, “Is Your Team Failing Or Kicking Goals – Take Control of Your People & Their Performance”. It is a practical response to the most pressing HR challenges, which can be found at https://resolvehr.com.au/.

Disclaimer: The contents written do not constitute legal advice and do not cater for individual circumstances.   The information contained herein is not intended to be a substitute for legal advice and should not be relied upon as such.