For employers
An employee is threatening legal action: the first steps, and when to call a lawyer
An employee, or a former one, has said the words: they are going to Fair Work, they have spoken to a lawyer, they will sue. Sometimes it is a bluff. Sometimes a claim is already drafted. Either way the next few days matter, because the most expensive mistakes employers make happen in the heat of the threat, not in the claim itself. This page is about those days: what not to do, what to gather, how to work out what the threat is actually worth, and when to get advice.
Updated . General information, not legal advice.
Time limits that apply
| What | Limit | Source |
|---|---|---|
| The employee's window for a dismissal-related Commission claim | 21 days from the dismissal for unfair dismissal or general protections | Fair Work Act ss 394(2), 366 |
| Underpayment and non-dismissal general protections claims | Can be brought for up to 6 years | Fair Work Act ss 544, 370 |
| Your response once a Commission claim is lodged | Unfair dismissal: within 7 days of being told | Fair Work Commission, responding to an unfair dismissal claim |
Do you need a lawyer for this?
Advice usually pays for itself when
- The employee is still employed and you are considering any change to their role, hours or employment in response. That is adverse action territory and the reverse onus applies.
- The threat concerns discrimination, sexual harassment, a safety complaint or wage theft, where penalties and uncapped compensation are in play.
- The amounts are significant, the file is thin, or more than one employee is involved.
- A lawyer's letter has arrived with a deadline.
The free route is usually enough when
- A former employee with a modest unfair dismissal claim, a well-documented process on file, and a realistic settlement figure of a few weeks' pay.
- The threat is about final pay or entitlements you can simply check and, if owed, pay.
What should I not do?
Do not change anything about the employee's job, hours, pay or duties because of the threat. Making a complaint or threatening a claim is a workplace right, and any adverse action taken because of it is a general protections contravention where you have to prove the threat was not a reason. Do not delete, alter or create documents. Do not discuss the matter with other staff beyond those who need to know. Do not send an angry reply. Do not offer money on the spot without knowing what the claim is worth. And do not ignore it, because a threat that becomes a lodged claim comes with a seven-day response window and a conciliation date.
What should I gather?
The employee's contract, position description and pay records. Any warnings, performance reviews, meeting notes and the termination letter if there was one. Every email, message and note that touches on the events in dispute, in the order they happened. A short chronology written by the manager involved while it is fresh, marked as prepared for the purpose of obtaining legal advice. Details of any complaint the employee made and what was done about it. This file is what a lawyer will ask for first and what the Commission will read later. Building it now, before positions harden, is the single most valuable thing an employer can do in the first week.
Which claim is realistic, and what is it worth?
Threats are often vague. Work out which claim actually fits. A dismissed employee with six months' service can claim unfair dismissal within 21 days, capped at $95,050 for dismissals on or after 1 July 2026 and usually settling for far less. An employee dismissed or penalised after a complaint or leave can claim general protections, uncapped, with the reverse onus. Unpaid wages can be claimed for six years and the Ombudsman may investigate. Discrimination and harassment have their own forums. Each has a different exposure and a different likelihood of success on your file. Putting a realistic number and probability on the threat turns panic into a decision about whether to settle, defend or wait.
Should I respond, and how?
Usually yes, briefly and in writing, acknowledging the correspondence and saying the business is considering it and will respond by a date. If the employee has raised a specific entitlement, check it and pay what is owed without waiting; paying a correct entitlement is not an admission of anything else. If a lawyer's letter has arrived, its deadline is a negotiating position, not a court order, but ignoring it invites the claim. Where a settlement is sensible, an early offer through a short deed can end the matter for less than a conciliation months later. Where the file is strong, a calm response setting out the facts often ends the threat. Which of those applies is the question a lawyer answers in the first conversation.
When does a lawyer pay for itself?
Whenever the employee is still employed, because the risk is in what you do next. Whenever the threat involves discrimination, harassment, safety or wage theft. Whenever a lawyer is on the other side. And whenever the numbers, on a realistic reading, exceed what an early settlement would cost. Liquid Employment Lawyers is FairWork Mate's paid legal partner for employers facing threats and claims. It is an Australian employment law firm, not a free government service, and it explains scope and fees before any work. For a modest, well-documented dismissal dispute, the free tools and the Commission's own process are often enough.
What is the free route for employers?
The Fair Work Ombudsman on 13 13 94 explains entitlements and the claims process to employers at no cost. FairWork Mate's unfair dismissal payout estimator and underpayment exposure tool put a range on the money, the director liability risk score covers personal exposure, and the employer speaking notes tool prepares you for any conciliation. Free general information, not legal advice. FairWork Mate is not affiliated with the Fair Work Commission or the Ombudsman.
Free FairWork Mate tools for this
Talk to Liquid Employment Lawyers about this
Share a few details and their team will be in touch to talk it through. No obligation, and you decide whether to go further after that first conversation.
Liquid Employment Lawyers is an Australian employment law firm and FairWork Mate's paid referral partner, not free Fair Work advice. They discuss scope and any fees with you directly. FairWork Mate is not affiliated with the Fair Work Commission or the Fair Work Ombudsman. For free general guidance, use the tools above or call the Fair Work Ombudsman on 13 13 94.
Prefer to read about the partnership first? About Liquid Employment Lawyers
Common questions
The employee is still with us. Can we let them go to avoid the claim?
Dismissing someone because they threatened a claim is adverse action for exercising a workplace right, and you would have to prove the threat was not a reason. It converts a possible claim into a likely one with no cap. Do not.
Does business insurance cover this?
Some policies include employment practices liability cover for claims of this kind, often with a requirement to notify the insurer promptly. Check the policy and notify if it applies; late notification can void cover.
Should we offer a settlement straight away?
Sometimes an early, modest settlement through a short deed is the cheapest outcome. Offering before you know the claim's realistic value is how employers overpay. Put a number on it first, then decide.
Is Liquid Employment Lawyers free?
No. It is an Australian employment law firm and FairWork Mate's paid referral partner. Enquiring is free and there is no obligation. The Fair Work Ombudsman on 13 13 94 provides free information to employers.
Official sources
FairWork Mate AI
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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.
Related legal help
The Commission asks for your response within 7 days (Form F3). What to check first, what conciliation costs, the $95,050 cap, and when a lawyer pays for itself.
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