The problem with firing employees in Australia (and the UK’s surprising solution)

Given FWC’s “unsustainable” workload, Australian businesses may need a new way to communicate with employees when working relationships are no longer viable, writes Paul O’Halloran.

Research suggests many Australian employers are increasingly reluctant to address employee performance or conduct issues directly, due to concerns about legal repercussions and the risk of employee claims.

With more than 40,000 claims lodged with the Fair Work Commission (FWC) last year and the commission indicating that its workload is reaching “unsustainable” proportions, the concern is justified. This raises an important question: does Australia need a more structured, lower-risk way for employers to have frank conversations with employees when a working relationship is no longer viable?

While working from our Dentons Edinburgh office in November last year, I observed that the United Kingdom has addressed this issue through the concept of “protected conversations”, a statutory, without-prejudice “fireside chat” that allows employers and employees to discuss exit options openly, without the immediate risk of litigation.

What are ‘protected conversations’ in the UK, and why do they matter?

Protected conversations, permissible under section 111A of the UK’s Employment Rights Act 1996, allow employers and employees to have confidential, off-the-record discussions about ending employment by mutual agreement. The purpose is not to bypass fairness or due process, but to create space for honest, respectful conversations about future options without immediately triggering adversarial disputes or formal procedures.

How do protected conversations work in the UK?

Under UK law, certain conversations about a potential exit are generally inadmissible in ordinary unfair dismissal claims. Crucially, this protection applies even where no dispute has yet arisen. This gives employers greater confidence to raise sensitive issues earlier, including departure options, while allowing employees to engage in discussions without fear that exploratory conversations will later be used against them.

What problem is this approach trying to solve?

Many employment disputes escalate not because they are unavoidable, but because conversations happen too late, or not at all. The UK framework recognises that avoidance can increase risk and erode trust. Protected conversations are intended to normalise earlier dialogue in the employment relationship and reduce the need for grievances, drawn-out processes, or litigation.

How is this different from ‘without prejudice’ discussions?

Traditional “without prejudice” protections usually apply only once a dispute already exists. Protected conversations go further by allowing confidential discussions before claims and allegations are made. For HR professionals, this distinction is significant because it supports proactive people management rather than reactive damage control.

How are protected conversations approached in practice?

Employers typically invite the employee to a meeting, explain that the discussion is intended to be a protected conversation, and outline that the purpose is to explore whether a mutually agreed exit may be appropriate. The conversation should be respectful, non-threatening, and framed as an option rather than an ultimatum.

Employers will often keep brief internal notes confirming that the discussion took place under the protected conversations framework and that no improper behaviour occurred. If matters progress, the process is usually followed by a written settlement agreement, a reasonable period for consideration, and access to independent legal advice.

Are there safeguards for employees?

Yes. The protection is not unlimited. It does not apply to claims such as discrimination, whistleblowing, or other serious statutory breaches. It can also be lost entirely if there is improper behaviour, including intimidation, undue pressure, or discriminatory conduct. The framework is designed to encourage professionalism, not coercion.

How are protected conversations typically used?

They are commonly used to discuss settlement agreements or negotiated exits where the employment relationship is no longer working, but formal disciplinary action may be inappropriate or undesirable. When handled well, they can result in dignified exits, reduced stress, and outcomes that protect reputation on both sides.

What can Australian HR leaders learn from the UK approach?

Australia currently relies more heavily on post-dispute settlement discussions in Fair Work Commission conciliation conferences or general “without prejudice” principles. The UK experience demonstrates how statutory clarity can enable earlier, calmer conversations. For HR leaders focused on psychological safety, risk reduction, and humane workforce transitions, this model aligns closely with modern people and culture priorities.

Why is this relevant for Australian workplaces?

Claims are rising in the Fair Work Commission in areas including unfair dismissal and general protections. Frequently, employees are resorting to third parties, such as unions and plaintiff lawyers, to address workplace grievances. Legal frameworks that support mature dialogue rather than forcing issues straight into formal dispute can improve both organisational outcomes and employee experience.

Should Australia adopt protected conversations into law?

The UK model offers a compelling case study for Australian workplaces. A clear statutory framework for protected conversations could help Australian organisations resolve issues earlier, reduce legal and emotional costs, and promote a more human-centred approach to workplace exits. There are currently no such legislative reforms on the horizon in Australia. In the meantime, employers will need to seek advice about strategic and innovative ways of using existing “without prejudice” approaches to encouraging litigation-free workplace exits.

Paul O’Halloran is a partner and accredited specialist in workplace relations at Dentons Australia.