Most Unfair Dismissal Claims Start Long Before Termination: What Real Estate Agencies Need to Know
Many agency owners think: “They were underperforming. Surely we could let them go.”
Unfortunately, employment law is rarely that simple.
Managing staff is one of the hardest parts of running a real estate agency. You are balancing personalities, KPIs, commissions, stress, client pressure, and performance expectations all at once.
Eventually, many agencies face a difficult situation where an employee is no longer the right fit.
Maybe they are underperforming. Maybe there are behavioural issues. Maybe the business is restructuring. Maybe trust has broken down. But here is the problem.
Many unfair dismissal claims are not necessarily about whether the employee should have left.
They are about how the process was handled.
In 2026, employees are more aware of their workplace rights than ever before. That means agencies need to be far more careful about documentation, performance management, workplace conduct, and termination procedures.
The good news?
Most unfair dismissal risks can be significantly reduced with proper systems and legal guidance.
What is an Unfair Dismissal Claim?
An unfair dismissal claim is generally when an employee alleges they were dismissed in a way that was:
Harsh
Unjust
Unreasonable
These claims are commonly dealt with through the Fair Work Commission.
Importantly, a claim is not automatically avoided simply because:
The employee was underperforming
The workplace was stressful
The employer was frustrated
The employee was difficult to manage
The Fair Work Commission will usually look at:
Whether there was a valid reason for dismissal
Whether the employee was told about concerns
Whether they were given an opportunity to respond
Whether proper procedures were followed
Whether the dismissal process was reasonable overall
For many agencies, this is where problems begin.
The Biggest Mistakes Real Estate Agencies Make
No Proper Employment Contracts
Many agencies still rely on outdated contracts, generic templates, or verbal arrangements.
This becomes dangerous when disputes arise around:
Commission structures
KPIs
Duties
Restraints
Termination rights
Contractor vs employee status
Poor contracts create uncertainty and increase legal exposure.
Avoiding Difficult Conversations
This is incredibly common in agency environments.
A principal becomes frustrated with a staff member’s performance but avoids formally addressing the issue.
Months later, they suddenly terminate the employee without a clear paper trail. The employee then claims: “I was never warned.” Without documentation, these cases become much harder to defend.
Treating Contractors Like Employees
The real estate industry has long relied on contractor models. But in 2026, contractor classification remains a major legal risk area.
If someone is labelled a contractor but treated like an employee in practice, agencies may face:
Unfair dismissal risks
Underpayment claims
Superannuation issues
Payroll tax issues
Employment entitlement disputes
The label in the agreement is not the only thing that matters. The actual working relationship matters too.
Emotional or Reactive Terminations
Many unfair dismissal claims happen after emotional exits.
Examples include:
Arguments in the office
Public confrontations
Instant dismissals
Poorly worded text messages
Locking staff out immediately without proper process
Even where there are genuine concerns, a rushed or emotional process can create unnecessary legal risk.
Performance Management Matters More Than Most Agencies Realise
One of the best ways to reduce unfair dismissal risk is proper performance management.
This means:
Clear expectations
Regular feedback
Documented discussions
Reasonable improvement opportunities
Consistent processes
Employees should not be genuinely surprised that their employment is at risk.
And importantly, agencies should avoid vague statements like: “You just are not the right fit anymore.”
Instead, concerns should be specific, documented, and linked to identifiable issues.
Case Studies: How We Help Agencies Reduce Employment Risk
Case Study 1: The Abrupt Termination
An agency terminated a property manager after ongoing frustration around communication and missed tasks.
Unfortunately, there had been very little formal documentation.
The employee threatened unfair dismissal proceedings.
We helped the agency negotiate an early commercial resolution and implement stronger performance management systems moving forward.
Case Study 2: The Contractor Who Was Really an Employee
An agency had sales staff engaged as contractors for years. After the relationship ended badly, one worker challenged their classification.
We helped review the arrangement, assess risk exposure, and restructure future agreements properly.
Case Study 3: The Agency With No HR Framework
A growing agency had no formal warning process, inconsistent contracts, and no staff policies.
We helped implement updated employment agreements, workplace procedures, and management processes to reduce future employment disputes.
The Hidden Costs of Getting It Wrong
Many principals focus only on whether they will “win” a claim. But employment disputes create broader business costs too.
This may include:
Legal expenses
Management time
Staff morale issues
Reputational damage
Recruitment disruption
Lost productivity
And even when claims settle early, the process itself can become expensive and stressful.
How Agencies Can Reduce Unfair Dismissal Risk
Start With Strong Contracts
Your contracts should properly reflect:
Employment status
Commission structures
KPIs
Duties'
Confidentiality obligations
Termination rights
Create Clear Workplace Policies
Policies help create consistency and set expectations around:
Conduct
Performance
Leave
Social media
Complaints
Bullying and harassment
Document Performance Issues Early
If concerns exist, address them properly. Avoid waiting until frustration builds up.
Get Advice Before Major Decisions
A quick legal review before termination often costs far less than defending a claim later.
Key Takeaways
Many unfair dismissal claims are caused by poor process rather than one major mistake
Proper documentation and performance management are critical
Contractor arrangements can create major legal risk
Emotional terminations often increase exposure
Strong contracts and policies help reduce disputes
Next Steps
Employment issues can escalate quickly in real estate agencies, especially when performance concerns, contractor arrangements, or emotional exits are involved.
The best time to reduce unfair dismissal risk is before a dispute happens.
We help agencies review contracts, improve workplace processes, manage difficult staff situations, and reduce employment law exposure before problems escalate.
Frequently Asked Questions (FAQ)
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Yes, but agencies should follow proper performance management and procedural fairness processes before termination.
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A dismissal may be considered unfair if it is harsh, unjust, or unreasonable.
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Sometimes. If a contractor relationship is really an employment relationship in practice, legal risks can arise.
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Verbal discussions help, but documented processes are far stronger evidence if disputes arise.
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Strong contracts, clear policies, proper documentation, and early legal advice significantly reduce risk.
Luke Shumack – Partner, O*NO Legal
Luke Shumack is one of the Partners at O*NO Legal with a Bachelor of Laws and a sharp focus on helping agencies and business owners stay compliant while scaling with confidence. Since starting his legal career in 2021, Luke has worked closely with real estate agencies, startups, and established businesses on privacy compliance, employment law, contractor agreements, mergers and acquisitions, and corporate governance. Known for his tech-savvy approach and love of efficiency, Luke blends legal precision with practical business strategy—making the complex simple for clients who want to move fast without risk.
Boring legal stuff: This article is general information only and cannot be regarded as legal, financial or accounting advice as it does not take into account your personal circumstances. For tailored advice, please contact us. PS - congratulations if you have read this far, you must love legal disclaimers or are a sucker for punishment.