THE GO AWAY MONEY ECONOMY
HOW AUSTRALIA TURNED UNFAIR DISMISSAL INTO A SETTLEMENT INDUSTRY
Employers face $2.3 billion hit over five years as unfair dismissal claims surge under Labor’s workplace laws.
Key findings from the report:
• The average employer cost per unfair dismissal claim is estimated at $18,200.
• Unfair dismissal claims cost employers approximately $300 million last financial year.
• The cumulative employer cost over the past nine years is estimated at $2.25 billion.
• Unfair dismissal claims are projected to exceed 30,000 by 2029–30.
• Projected employer costs over the next five years are estimated at $2.3 billion.
• Only around 1.9 per cent of unfair dismissal applications proceed to a final decision on the merits.
• The current application fee is less than $90.
HR Nicholls has today released a major new report, The Go Away Money Economy: How Australia Turned Unfair Dismissal into a Settlement Industry, exposing how Australia’s unfair dismissal system has become a low-cost, high-volume claims machine that is punishing employers regardless of whether they have done anything wrong.
The report is the first major statistical and economic analysis by an Australian think tank to model the employer cost of unfair dismissal claims over time, quantify the cumulative burden across the past decade, and project claims and costs through to 2030.
The findings are stark.
Unfair dismissal claims have surged from 11,017 in 2022–23 to a projected 19,900 in 2025–26 - a 76 per cent increase in just three years. On current trajectories, claims are projected to exceed 30,000 by 2029–30, with a high-growth scenario approaching 41,000.
The report estimates unfair dismissal claims have already cost employers $2.25 billion over the last nine years, with a further $2.3 billion projected over the next five years.
HR Nicholls Executive Director James Mathias said the report shows Australia has turned unfair dismissal into a settlement industry.
“This report confirms what employers have known for years: the system itself has become the punishment,” Mr Mathias said.
“In Australia’s unfair dismissal regime, a claim does not need to succeed to be expensive. It does not need to be strong to create leverage. The filing of the claim is often enough.”
“For less than $90, someone can trigger a process that may cost an employer tens of thousands of dollars in legal fees, management time, settlement payments and operational disruption. That imbalance is indefensible.”
The report finds the average cost to an employer per unfair dismissal claim is now estimated at $18,200, once settlement costs, legal advice, management time and internal disruption are included.
Last financial year alone, unfair dismissal claims cost employers an estimated $300 million. In the first half of 2025–26, claims have already imposed a cost burden of approximately $177 million, meaning each quarter is now adding roughly $88 million to the cumulative employer cost total - almost $1 million per day.
Mr Mathias said the economic incentives now push employers toward settlement even when they believe they would win.
“Employers are settling not because they are guilty, but because the maths are brutal,” Mr Mathias said.
“When it costs more to prove you are right than to pay the claim to disappear, the system is no longer delivering justice. It is delivering leverage.”
“That is the essence of the go away money economy: weak claims extracting strong settlements because the cost of defence is higher than the cost of surrender.”
The report also finds that only around 1.9 per cent of unfair dismissal applications over the past decade have proceeded to a final decision on the merits.
Mr Mathias said this shows the unfair dismissal system has become overwhelmingly settlement driven.
“The overwhelming majority of matters never reach a proper determination. That means employers are paying for process, not justice,” Mr Mathias said.
“The system has become a toll booth on ordinary employment decisions. It is now cheap to claim, costly to defend, and rational to settle.”
The report links the post-2022 surge in claims to the Albanese Government’s industrial relations changes, including expanded worker definitions, restrictions on fixed-term contracts, the reclassification of casuals and contractors, new protected workplace rights, and new dismissal-style jurisdictions for gig economy and transport workers.
Mr Mathias said Labor’s workplace agenda had expanded the reach of employment litigation at precisely the wrong time.
“The Albanese Government has widened the front door to workplace claims while doing almost nothing to stop speculative or weak applications from walking straight through it,” Mr Mathias said.
“Since 2022, the Government has expanded who can claim, expanded what can be claimed, and expanded the legal uncertainty employers must navigate.”
“The result is exactly what any rational person would expect: more claims, more settlements, more cost, and less confidence to employ.”
The report warns that, without reform, Australia is heading toward a structurally more defensive labour market where businesses become slower to hire, slower to manage poor performance, and more reluctant to dismiss unsuitable employees.
Small businesses are particularly exposed. The report estimates that small business unfair dismissal applications have imposed a cumulative cost burden of approximately $300 million to $350 million over the past nine complete years.
“For a large corporation, an unfair dismissal claim is a compliance irritation. For a small business, it can be a week of lost time, stress, legal bills and settlement pressure,” Mr Mathias said.
“Small business owners do not have armies of lawyers and HR departments sitting around waiting for the next claim. They have customers to serve, staff to pay, bills to meet, and businesses to run.”
The report also highlights the negligible application fee, currently below $90, as a key driver of speculative claims.
“The entry price is absurdly low and the potential pressure on employers is enormous,” Mr Mathias said.
“A filing fee that is less than many parking fines can activate the full machinery of the Fair Work Commission. That is not access to justice. It is an invitation to roll the dice.”
Mathias said the report does not argue against genuine protections from arbitrary dismissal. "No serious reform agenda should abolish basic protections at work. But Australia has lost balance. A system meant to protect workers from injustice has become one that increasingly discourages employment itself."
The HR Nicholls Society is calling for major reform of Australia’s unfair dismissal system, including stronger upfront merit filtering, higher two-stage filing fees with hardship waivers, simplified small business protections, safe-harbour arrangements for compliant employers, tougher consequences for unmeritorious claims, and reform of tribunal discretion where a valid reason for dismissal exists.
“Australia can protect workers from genuine injustice without turning every dismissal into a commercial hostage negotiation,” Mr Mathias said.
“The choice is not between fairness and reform. Reform is now necessary to restore fairness.”
“The go away money economy must be dismantled before it becomes the permanent operating model of Australian employment.”
ENDS
Media contact:
James Mathias
Executive Director
The HR Nicholls Society
+61 418 858 925
