Last updated: April 2026

Running a business means navigating employment law: discrimination laws, privacy regulations, Fair Work legislation, and more. Over time, myths build up about what employers can and can't do. Let's bust five of them today.

MYTH 1: It’s illegal to give a bad reference

False.   

Many people believe that giving a "bad" reference is somehow against the law. In fact, there is no legal obligation to provide an employee (or former employee) any sort of reference – good or bad.

The law steps in only if you provide deliberately dishonest or misleading information that harms the employee, or if you give false positive information that causes harm to another business relying on your feedback. Either party could sue for damages.

To avoid any issues, many employers adopt the position of just providing a statement of service confirming an employee's length of service and position, but not commenting further.

Our tips:

1. Make a decision on whether you will or will not provide references for exiting employees. Don’t cherry pick amongst your staff – have one rule for all.
2. Brief your referees. Anyone giving a reference must understand their legal obligation to provide truthful information only.
3. Have a policy that any person providing references should only answer the questions asked and not provide additional information
4. Honour agreements. If you have amicably dissolved an employment relationship and the agreement is that for the record the employee resigned, then this is the information you must provide as part of your reference.
5. Keep records for seven years. Australian Fair Work requires you retain employee records for this period.

MYTH 2: You Need to Give Three Warnings Before Dismissing an Employee

No you don’t.

There's no magic number of warnings. What matters is whether you've followed five key steps:

1. Did you give the employee a fair and reasonable opportunity to improve?

This might be a formal disciplinary process that included a performance improvement plan and/or any number of formal warnings – even just one warning. It could also be as a result of ongoing informal conversations where you advised their employee that they need to improve. As long as they knew there was a problem and had time to fix it. Fairness depends on context: fixing lateness might take a week; improving sales results might take 4–6 weeks. Crucially, they must also understand their employment is at risk if they don't improve.

2. Was It Serious Misconduct?

You can terminate an employee for serious misconduct immediately without providing any prior warnings, an opportunity to improve or a notice period, if the behaviour or issue is serious. But serious misconduct must be purposeful; not accidental. A mechanic damaging a customer's car by accident isn't serious misconduct; a rogue employee deliberately sabotaging assets is.

3. Did You Follow Procedural Fairness

Even if the grounds for formal warnings or termination are clear, you must engage in a fair process to take any action.

This includes:

• providing the employee with notice that you would like to meet with them
• advising them they may bring a support person to the meeting
• advising them of any likely outcomes of the meeting,
• not going into a meeting with a pre-determined outcome – ie. considering the employee’s responses prior to making any decision
• undertaking a full investigation if required.

In short, don’t make a decision and take action without giving the employee an opportunity to present their side of the story in a fair and reasoned way.

4. Is the Termination Harsh, Unjust, or Unreasonable?

The punishment must fit the crime. For example, an employee has been late to work on several occasions and you've provided them with an opportunity to improve and a warning. One late arrival three months after a warning? That would likely be deemed harsh by the Fair Work Commision

An employee constantly missing targets despite being on a Performance Improvement Plan and provided with ample support? Thats usually reasonable as they cannot deliver on the inherent requirements of the job.

5. Did They Recently Exercise a Workplace Right?

If you're terminating them right after they complained about a supervisor, asked about pay, or took sick leave, that's grounds for an adverse action claim.

Bottom line: No set number of warnings, but you must be fair, transparent, and follow process.

MYTH 3: You Can Freely Make Deductions From Employee Pay

Not really.

Under the Fair Work Act, you can only deduct pay if:

• the employee agrees in writing to the deduction and the amount, and the deduction is principally for the employee’s benefit. (They can withdraw this permission at any time.)
• The deduction is authorised by law, an industrial instrument, or a court order.

You may well have a clause within your employment contracts regarding deductions you may make regarding any money owed to the employer, but be aware of the requirements that must be met.  If you are looking to manage deductions regarding social clubs, payments for professional development or the like, you would be better served having these as separate agreements that meet the requirements of the Fair Work Act.

MYTH 4: You Can't Specify a Female Worker for a Role

Actually, you can. If it's genuine.

You can ask for a specific person for a role (this might be gender, age or religion specific) if it's a genuine, job-related requirement.

It’s discrimination when you use a protected attribute (gender, age, race, sexuality and so on) as a reason to NOT employ someone when that characteristic has no bearing on the job at all. Sometimes you actually do need to make a specific characteristic an important element of the job requirement.

Real Examples

• Restroom attendant for a female facility? Specify female.
• Counsellor for LGBTQ+ youth? It's reasonable to seek someone with lived experience.
• Church minister's assistant writing sermons? It's fair to consider faith background.

The test: Is the characteristic a genuine requirement, or just your preference?

When in doubt, seek advice from the relevant regulator to keep your recruitment above board.

MYTH 5: You Only Need to Share Policies at Induction

Wrong.

Well-communicated, up-to-date policies show you've taken "reasonable steps" to prevent unlawful and dangerous behaviour. The key words: well-communicated and up-to-date.

Policies gathering dust in a manager's drawer are useless. Neither are policies from years ago that don't reflect current law.

And this is why you don’t just keep them for new employees.

When legislation changes, you must communicate new versions clearly and keep proof that employees read and agreed to them.

Employment law is complex, and myths abound. With significant legislative changes in recent years, and more coming, it's easy to feel overwhelmed. That's where we come in. Get in touch if you need support or guidance on any HR matter.

FAQs on HR Myths

Is it illegal to give a bad employee reference?

No. There's no legal requirement to provide a reference at all. You're only liable if you deliberately give false or misleading information that causes harm.

How many warnings do I need to give before firing someone?

There's no fixed number. What matters is that the employee had fair opportunity to improve, understood their job was at risk, and you followed a fair process, unless it's serious misconduct, which allows immediate termination.

Can I deduct money from an employee's salary?

Only with their written agreement and if it benefits them, or if the deduction is authorised by law or court order. Social club fees and professional development are usually safer as separate agreements.

Can I require a specific gender for a job?

Yes, if it's a genuine job requirement - like a female restroom attendant or counsellor for a specific community. It's only discrimination if the attribute has no bearing on the role.