Employment Law for Employers: 10 Mistakes That Cost Brisbane Businesses

Key Takeaways

• Sham contracting penalties under the Fair Work Act 2009 ss 357–359 are up to $93,900 per contravention for individuals and $469,500 for companies (2024–25 penalty units), plus back-payment of all employment entitlements.
• From 1 January 2025, intentional underpayment of employee entitlements is a criminal offence under s327A of the Fair Work Act, carrying up to 10 years imprisonment for individuals.
• General protections (adverse action) claims under s 340–342 carry a reverse onus of proof, have no high income threshold and no minimum employment period, so an employee can bring a claim from day one.
• WHS officers (directors and senior managers) face personal due diligence obligations under s 27 of the Work Health and Safety Act 2011 (Qld), with Category 1 offences carrying up to $3 million for a body corporate and $600,000 and/or 5 years imprisonment for an officer.
• The cost of getting pre-termination legal advice is $1,000–$3,000. The cost of getting a termination wrong: unfair dismissal compensation (up to ~$87,500), adverse action compensation (uncapped), legal costs ($20,000–$100,000+).

1. 1.Misclassifying Employees as Contractors
2. 2.Getting Unfair Dismissal Wrong
3. 3.No Written Employment Contracts
4. 4.Ignoring Modern Award Obligations
5. 5.Poor Workplace Investigations
6. 6.Unenforceable Restraint of Trade Clauses
7. 7.Not Protecting Confidential Information
8. 8.Failing to Manage WHS Obligations
9. 9.Getting Redundancy Wrong
10. 10.Not Seeking Legal Advice Before Termination
11. 11.Frequently Asked Questions

Employment law is one of the most heavily regulated areas of Australian law, and it is an area where mistakes are disproportionately expensive. A single misclassified contractor, a botched termination or an overlooked modern award obligation can cost tens of thousands of dollars in back-payments, penalties and legal fees, plus months of management distraction. From 1 January 2025, intentional underpayment is now a criminal offence carrying up to 10 years imprisonment.

These are the 10 mistakes we see most often from Brisbane employers, and how to avoid them.

1. Misclassifying Employees as Contractors

Sham contracting is prohibited under the Fair Work Act 2009 (Cth) ss 357–359. The law was fundamentally changed by the High Court in 2022 in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 398 ALR 404 and ZG Operations Australia Pty Ltd v Jamsek (2022) 398 ALR 603. The High Court held that the terms of the written contract are the primary consideration. The old "multifactorial" test looking at how the relationship operates in practice is now secondary.

What this means: if your contract says "independent contractor" but the substantive terms give you control over how, when and where the work is done, it is an employment relationship regardless of the label.

The penalties are significant. Individuals face up to $93,900 per contravention and companies up to $469,500 (2024–25 penalty units), plus back-payment of all employment entitlements: superannuation, annual leave, personal leave, long service leave, notice and redundancy pay.

The practical test: does the worker work under your control? Do they use your tools? Are they integrated into your business? Do they bear their own financial risk? Can they delegate the work to someone else?

2. Getting Unfair Dismissal Wrong

Unfair dismissal is governed by the Fair Work Act 2009 (Cth) ss 383–394.

The key thresholds are:

• The minimum employment period is 6 months (small business with fewer than 15 employees) or 12 months (large business) before unfair dismissal rights accrue
• Employees earning above the high income threshold of $175,000 per annum (2024–25) who are not covered by a modern award or enterprise agreement cannot bring an unfair dismissal claim
• There is a strict 21-day deadline for employees to lodge a claim with the Fair Work Commission, and late applications are rarely accepted

For employers with fewer than 15 employees at the time of dismissal, following the Small Business Fair Dismissal Code is a complete defence. The Code requires a valid reason, a warning (unless there has been serious misconduct) and an opportunity to respond.

Compensation is capped at the lesser of 26 weeks' pay or half the high income threshold, currently approximately $87,500. Median unfair dismissal compensation awarded in 2023–24 was approximately $7,797 (Fair Work Commission data). The median is modest, but the legal costs and management time are the real expense.

The common errors are giving no written warnings, allowing no genuine opportunity to respond before termination, not following the Small Business Fair Dismissal Code and dismissing during a period of workers' compensation.

3. No Written Employment Contracts

The National Employment Standards (NES) and the applicable modern award still apply regardless of whether you have a written contract. But without a written contract you have no protection for:

• Confidential information and trade secrets
• Intellectual property assignment (the default position is the employee owns IP they create)
• Restraint of trade / non-compete / non-solicitation
• Notice periods beyond the statutory minimum (1–5 weeks under the NES depending on service)
• Probation provisions
• Specific duties and KPIs

A good employment contract costs $500–$1,500. Not having one can cost you your key clients and proprietary information when someone leaves. If you are hiring for the first time, our new business checklist covers the first-employer mistakes to avoid from day one.

4. Ignoring Modern Award Obligations

Annualised salary arrangements must be reconciled at least annually under the Fair Work Act. If the annualised salary does not cover all award entitlements (including overtime, penalties and loadings), you must pay the difference.

Wage theft is now criminalised. From 1 January 2025, intentional underpayment of employee entitlements is a criminal offence under s327A of the Fair Work Act, carrying up to 10 years imprisonment for individuals. This was introduced by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024.

This is not hypothetical. Woolworths has disclosed underpayments exceeding $300 million. Commonwealth Bank, Bunnings, Super Retail Group and dozens of other major employers have reported similar issues. If it can happen to companies with dedicated payroll teams, it can happen to any business.

The practical steps are to conduct an annual payroll audit, use the Fair Work award finder tool and document your annualised salary reconciliation.

5. Poor Workplace Investigations

Procedural fairness is essential. The employee must be:

• Told the allegations specifically
• Given access to relevant material
• Given a genuine opportunity to respond
• The decision-maker must be impartial

An external investigator is worth engaging for serious allegations such as sexual harassment, fraud or bullying, where the respondent is a senior manager or where there is a risk of bias.

The documentation should include an investigation plan, witness statements, a findings report and an outcome letter. Failure to investigate properly before terminating can turn a valid dismissal into an unfair one. The Fair Work Commission will scrutinise your process as much as the substantive reason for dismissal.

6. Unenforceable Restraint of Trade Clauses

A restraint of trade clause is void as against public policy unless the employer can prove it is reasonable in the interests of the parties and the public. It must be reasonable in scope (what activities are restrained), geography (the area) and duration (how long).

Cascading or waterfall clauses are the standard drafting technique. They list multiple options (e.g. 24 months, 18 months, 12 months, 6 months; Australia, Queensland, Brisbane, 10km radius) and the court reads down to the most restrictive version that is reasonable.

The court will not rewrite an unreasonable restraint; it will strike it out entirely unless cascading provisions give it something to read down to. Just Group Ltd v Peck [2016] VSCA 334 remains influential on the approach to reasonableness of post-employment restraints.

Get this wrong and your former employee walks out with your clients and you have no enforceable restraint to stop them.

7. Not Protecting Confidential Information

Three layers of protection exist:

1. the equitable obligation of confidence (common law)
2. contractual obligations set out in the employment contract
3. statutory protections (for example, trade secrets and copyright)

The common law provides some protection even without a contract, but it is much harder to enforce. You need to show the information had the necessary quality of confidence, it was imparted in circumstances importing an obligation of confidence and there was unauthorised use.

With a well-drafted confidentiality clause in the employment contract, you define exactly what is confidential, the obligations during and after employment and the remedies for breach.

When an employee leaves and takes client lists, pricing information or trade secrets, you need to act fast. An urgent injunction may be required.

8. Failing to Manage WHS Obligations

Under the Work Health and Safety Act 2011 (Qld), officers (directors and senior managers) have personal due diligence obligations under s 27.

A Category 1 offence (reckless conduct exposing a person to risk of death or serious injury) carries a maximum penalty of $3 million for a body corporate, or $600,000 and/or 5 years imprisonment for an officer.

Psychosocial hazards are the new frontier. From 1 April 2023, the Work Health and Safety (Psychosocial Risks) Amendment Regulation 2022 (Qld) requires PCBUs to manage psychosocial risks such as bullying, harassment, workload and poor organisational change management. This is being actively enforced by the regulator.

9. Getting Redundancy Wrong

Genuine redundancy under Fair Work Act 2009 s 389 requires that:

1. the employer no longer requires the job to be performed by anyone because of operational changes, and
2. the employer has complied with the consultation obligations in the applicable award or agreement

If the redundancy is not genuine (e.g. you hire a replacement, you do not consult, you do not consider redeployment), the employee can bring an unfair dismissal claim.

You must also consider redeployment, meaning whether there are any other positions available in your enterprise (or an associated entity) that would be suitable and reasonable.

The redundancy pay scale runs from 4 weeks (1–2 years service) up to 16 weeks (9–10 years) under the NES. Employers with fewer than 15 employees are exempt and are not required to pay redundancy pay.

A common trap is making the role "redundant" while actually just wanting to replace the person. This is not redundancy, and the court will see through it.

10. Not Seeking Legal Advice Before Termination

Adverse action claims under the Fair Work Act s 340–342 carry a reverse onus of proof (s 361). The employer must prove the termination was not for a prohibited reason, such as the employee exercising a workplace right, taking sick leave or making a complaint. This is one of the most dangerous provisions in the Act.

General protections claims have no high income threshold and no minimum employment period. An employee can bring a claim from day one, regardless of salary.

The cost of getting a termination wrong:

• unfair dismissal compensation of up to approximately $87,500
• uncapped adverse action compensation
• legal costs of $20,000–$100,000+
• management distraction and reputational damage

The cost of getting advice before terminating is $1,000–$3,000. It is the cheapest insurance you will ever buy.

Frequently Asked Questions

Do I need an employment lawyer or can my commercial lawyer handle this?

Many commercial lawyers handle employment matters. However, employment law is highly regulated and technical. For complex matters (unfair dismissal defence, enterprise bargaining, WHS prosecution), use a lawyer with specific employment experience.

What's the biggest employment law risk for small businesses?

Sham contracting and unfair dismissal. Small businesses often use contractors without understanding the legal test, and often terminate employees without following the Small Business Fair Dismissal Code. Both are expensive mistakes.

Is it true that wage theft is now a criminal offence?

Yes. From 1 January 2025, intentional underpayment of employee entitlements is a criminal offence under the Fair Work Act s327A. The maximum penalty is 10 years imprisonment for an individual, and significant financial penalties apply to corporations.

Can I include a non-compete clause in all my employment contracts?

You can include one, but enforceability depends on reasonableness. Blanket non-competes applied to every employee are unlikely to be enforceable. Tailor each restraint to the employee's role, seniority and access to confidential information. Use cascading clauses to give the court room to read down.

What should I do if an employee makes a workers' compensation claim?

Do not treat them adversely. Terminating an employee because of a workers' compensation claim is prohibited adverse action. Continue managing the employment relationship normally, comply with your obligations to WorkCover Queensland and seek legal advice before making any decisions about the employee's role.

Need employment law advice for your business? Speak with Astris Law on (07) 3519 5616. We advise Brisbane employers on compliance, contracts, terminations and disputes. For ongoing GC support to avoid these mistakes before they happen, consider an outsourced general counsel arrangement. See our employment law services.

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