When Should an SME Bring in HR for Employee Relations?
Employee relations for Australian SMEs
Bring HR in before the decision becomes difficult to unwind.
An Australian SME should consider bringing in HR when an employee issue moves beyond a normal manager conversation and starts involving performance, misconduct, complaints, warnings, investigations, workplace rights, redundancy or possible termination.
The most useful time to get employee relations support is often before the first formal warning, investigation meeting or termination discussion, while there is still time to clarify the facts and choose the right process.
The Fair Work Ombudsman notes that workplace problems can escalate into disputes if they are not resolved quickly.
My approach is simple. If a manager can deal with an issue fairly and confidently through a normal conversation, HR does not need to make it more complicated. But once warnings, disputed allegations, complaints or termination are being considered, the risk of getting the process wrong increases significantly.
When SMEs usually need employee relations support
The issue often starts small. The risk comes from what happens next.
Poor performance
Work quality, deadlines or targets are becoming a concern. HR can help define the performance gap and decide whether clearer expectations, coaching or a formal improvement process is appropriate.
Warnings and disciplinary action
A manager wants to issue a warning or final warning. The business should first be clear about the concern, evidence, employee response and required improvement.
Conduct and misconduct
An employee is alleged to have breached policy, behaved inappropriately or failed to follow a direction. The facts should be established before conclusions are reached.
Complaints and conflict
An employee raises a grievance, bullying allegation, harassment concern or complaint. The business needs to decide whether informal resolution or a structured process is appropriate.
Termination decisions
Employment may need to end because of performance or conduct. The reason, process, response opportunity, warnings and employment obligations should be reviewed first.
Restructure and redundancy
A role may no longer be required. HR can help distinguish redundancy from performance management and identify consultation and redeployment considerations.
Scenario one
“We have already spoken to them three times. Can we just give them a final warning?”
Before answering, I would want to understand what those earlier conversations actually covered. Was the required standard clear? Was the employee told what needed to improve? What explanation did they give? Is the issue really performance, or is it conduct?
The Fair Work Commission confirms there is no rule requiring three written warnings before dismissal.
However, where dismissal relates to unsatisfactory performance, section 387 of the Fair Work Act 2009 requires the Commission to consider whether the employee had been warned about their unsatisfactory performance.
A warning should identify what is deficient, what needs to improve and that employment may be at risk if the issue continues. Simply saying “you need to lift your game” is not the same as a structured performance process.
Good HR support should therefore do more than draft a warning letter. The first job is to establish what problem the business is actually trying to solve and what process fits it.
You can also read our guide to managing poor performance in an Australian SME.
- What specifically has happened?
- What evidence supports the concern?
- What standard was expected?
- What explanation has the employee given?
- Is this performance or conduct?
- Could leave or another workplace right be relevant?
- What outcome is genuinely being considered?
Scenario two
“There has been a complaint. I think I already know what happened.”
Another common risk is deciding the outcome before completing the process.
If an employee alleges bullying, harassment or inappropriate conduct, the better starting question is:
What needs to be established, who needs to be heard and what is a proportionate way to deal with the issue?
Not every complaint needs a formal investigation. Some matters can be addressed through clarification, management intervention or facilitated discussion. Where allegations are serious or disputed, a structured investigation may be appropriate.
The Fair Work Commission considers matters such as whether an investigation was reasonably thorough and whether the employee had a reasonable opportunity to respond.
Workplace complaints can also have a safety dimension. Safe Work Australia identifies bullying, harassment, violence, aggression and poor workplace relationships as psychosocial hazards.
Understand and test the allegations before making findings.
A complaint may involve workplace rights, safety or repeated conduct.
The employee’s response should genuinely be capable of affecting the final decision.
What Fair Work cases teach SMEs
A genuine concern does not automatically make the process fair.
Two recent Fair Work Commission matters illustrate why the reason, evidence and process all matter.
Royal Crest Blinds was a seven-person business that had raised genuine performance concerns with an employee. However, the Commission found the eventual dismissal unfair because the employee was not properly given the actual reason for dismissal or an opportunity to respond. The employer’s reasoning was also affected by frustration surrounding legitimate carer’s leave.
In this 2026 matter, the Commission found there was no valid reason for dismissal and that the employee had not been given a genuine opportunity to respond.
The Commission also considered the employer’s small size and absence of dedicated HR expertise, as required under section 387, but those factors did not make an otherwise unfair dismissal fair.
These cases do not prove that engaging HR would have changed the outcome. They do show why getting the reason, evidence and process clear before dismissal matters.
A trusted adviser who knows your business
Employee relations advice is rarely just an answer to one question.
The right approach often depends on what has happened before, who is involved, what managers have already said and what outcome the business is trying to achieve.
HR Excellence Partners is deliberately founder-led. I have more than 20 years of HR and leadership experience across Australian businesses.
When you contact me about an employee relations issue, my role is to understand the context, identify the risks and, where the facts allow it, recommend the way I believe the business should move forward.
I do not want an SME owner finishing an HR conversation with three theoretical options and no clearer idea what to do next.
If more information is needed, I will tell you what needs to be established. If specialist legal advice is required, I will tell you that as well.
Advice should reflect what has already happened in the business.
Where the facts allow it, I will tell you the way I recommend moving forward.
Support can continue through the meeting, documentation and implementation.
Australian peer-reviewed research also supports the broader importance of close adviser relationships. A study of more than 400 Australian SME owners found that variables relating to client intimacy were the strongest predictors of trust in the public accountant-SME relationship.
The study concerned accountants rather than HR advisers, so it should not be treated as HR-specific evidence. It does, however, support the broader importance of understanding the client and maintaining continuity in professional advisory relationships.
Different HR support models
Advice line or a named adviser who stays with the issue?
Large Australian workplace relations providers including Peninsula Australia, Citation HR and Australian Industry Group publicly operate telephone advice-line services.
- Access to a larger adviser team
- Telephone support for workplace questions
- High availability can be a key feature
- Useful where immediate advice is the priority
- A named senior adviser who learns your business
- Continuity from advice through to implementation
- A clear recommendation where the facts allow one
- Support with meetings, documentation and next steps
Those providers also describe their services as specialist or tailored, so it would not be accurate to suggest that every large provider gives generic advice. The difference is the service model.
Common mistakes
What turns a manageable issue into a bigger problem?
Starting with the outcome
Deciding to terminate and then building the process backwards can create procedural problems.
Mixing performance and misconduct
Capability concerns and deliberate misconduct are different issues and may require different processes.
Using vague warnings
A useful warning identifies the concern, expected standard, required improvement and potential consequence.
Ignoring the employee’s response
A meeting alone is not enough. The employee’s explanation needs to be genuinely considered.
Overlooking workplace rights
Leave, complaints and inquiries about employment can involve protected workplace rights under the Fair Work Act.
Assuming software makes the decision
Employment Hero can hold the records. It cannot determine the appropriate employee relations process or make the management judgement.
A simple decision checklist
When should you call HR?
If several of these apply, it is worth reviewing the issue before the next formal conversation.
That final question is particularly useful. If you would be uncomfortable explaining why the business acted, what evidence it relied on and how the employee’s response was considered, review the process before taking the next formal step.
Common questions
Employee relations FAQs for Australian SMEs
Do I need HR before giving an employee a warning?
There is no general legal requirement to engage an HR consultant first. HR support becomes particularly useful where facts are disputed, termination could follow or the manager is unsure how to structure the process.
Does an employee need three warnings before dismissal?
No. There is no general three-warning rule. For performance-related dismissal, however, section 387 of the Fair Work Act requires the Commission to consider whether the employee had been warned about their unsatisfactory performance.
Can an SME investigate a complaint itself?
Yes. Not every investigation needs to be external. The right approach depends on the seriousness, complexity, independence required and capability of the person managing the process.
What if the employee recently made a workplace complaint?
Take particular care. The Fair Work Act protects employees from adverse action for prohibited reasons, including certain circumstances involving workplace rights and complaints or inquiries about employment.
Can HR Excellence Partners work with Employment Hero?
Yes. Employment Hero can support records, goals, reviews and documentation. HR Excellence Partners provides the judgement, manager coaching and employee relations support around the issue itself.
Do I need ongoing outsourced HR?
Not necessarily. Some businesses need help with one matter. Growing SMEs may instead benefit from fractional HR where the adviser becomes familiar with the business and managers over time.
Sources
References
Legal statements have been checked against Australian primary sources. Commercial provider sources are used only to describe their published service models.
- Fair Work Ombudsman, Common workplace problems
https://www.fairwork.gov.au/workplace-problems/common-workplace-problems - Fair Work Ombudsman, Managing performance and warnings
https://www.fairwork.gov.au/employment-conditions/performance-in-the-workplace - Fair Work Commission, Warnings – unsatisfactory performance
https://www.fwc.gov.au/warnings-unsatisfactory-performance - Fair Work Commission, Valid reason relating to capacity or conduct
https://www.fwc.gov.au/valid-reason-relating-capacity-or-conduct - Australian Government, Fair Work Act 2009, including ss 340, 341 and 387
https://www.legislation.gov.au/C2009A00028/latest/text - Fair Work Commission, Gao v Royal Crest Blinds Pty Ltd [2025] FWC 63
https://www.fwc.gov.au/documents/bulletin/bulletin-ending-2025-01-31.htm - Fair Work Commission, Knott v Tru Ninja Pty Ltd [2026] FWC 298
https://www.fwc.gov.au/documents/bulletin/bulletin-ending-2026-02-28.htm - Safe Work Australia, Psychosocial hazards
https://www.safeworkaustralia.gov.au/safety-topic/managing-health-and-safety/mental-health/psychosocial-hazards - Cherry, M., McGrath, D. & Baumann, C. (2018), Client Intimacy & Performance Advice: Determinants of Trust in the Public Accountant-SME Client Relationship, Australasian Accounting, Business and Finance Journal, 12(1), 3–32
https://doi.org/10.14453/aabfj.v12i1.2 - Peninsula Australia, Peninsula HR Frequently Asked Questions
https://peninsulagrouplimited.com.au/faq - Citation HR, HR Advice Line for Employers
https://citationgroup.com.au/hr/hr-advice-line/ - Australian Industry Group, Workplace Advice Line
https://www.aigroup.com.au/services-and-advice/workplace-relations/workplace-advice-line/
General information only: This article provides general HR and workplace relations information for Australian SMEs. It is not legal advice and does not take account of the specific facts, applicable Modern Award or enterprise agreement, employment contract, state or territory laws or other circumstances of a particular workplace.
How HR Excellence Partners Supports SMEs
Get the process clear before the next employee conversation.
HR Excellence Partners supports Australian SMEs with employee relations, performance management, conduct matters, workplace complaints, warnings, investigations, termination, redundancy and manager coaching.
Engage HR Excellence Partners for one immediate issue, or use fractional HR support where your business would benefit from an experienced HR partner who understands your team and remains involved over time.
We can also help connect Employment Hero with the manager coaching and HR judgement required to manage employee matters properly.
If you are unsure where your wider HR risks sit, an HR Health Check can provide a starting point. Use code HEPFREE at checkout to have the cost of your HR Health Check waived.
Vas Papadopoulos
Founder & Principal HR Consultant
HR Excellence Partners
vas@hrexcellencepartners.com.au
hrexcellencepartners.com.au
+61 432 244 744
