Why does the Fair Work Court plan worry small business owners?

Prime Minister Anthony Albanese has announced a new Fair Work Court, headed by specialist judges, sitting alongside the Fair Work Commission. The government says it will make justice faster and cheaper for workers and employers. Business groups aren’t so sure, and if you run a small business, neither should you be.

Here’s what’s actually going on, and why another layer of workplace bureaucracy should worry every small business owner in Australia.

What is the Fair Work Court?

Announced at Labor’s national conference in Adelaide, the Fair Work Court will be a new federal court staffed by specialist workplace judges, working alongside the Fair Work Commission. It’s designed to hear underpayment claims and other employment disputes that currently sit with the Federal Court.

It’s the first dedicated industrial court since the Howard government abolished the old Industrial Relations Court in 1997. Unions have wanted this back for almost three decades. Now they’ve got it.

1. It hands unions exactly what they’ve been asking for

This isn’t a mystery wishlist item. Unions have pushed for a specialist workers’ court since the Industrial Relations Court was scrapped in 1997. The ACTU called the announcement a significant win before the ink was even dry, with secretary Sally McManus framing it as levelling the field against “companies that can afford law firms from the big end of town.”

That’s a good line for a union press release. It’s a worry for a small business owner who isn’t the big end of town, doesn’t have a legal team on retainer, and now has to work out how a brand new court fits into an already complicated system.

2. Business groups are flagging a stacked bench

The Australian Resources and Energy Employer Association pointed out that 21 of the Albanese government’s 22 appointments to the Fair Work Commission have come from union or Labor-aligned law firm backgrounds. Chief executive Steve Knott put it plainly: business is entitled to ask whether a new industrial court would extend that same pattern.

Australian Industry Group chief executive Innes Willox raised the same concern, warning that specialist courts risk developing views out of step with the broader judiciary over time. If the appointments process looks one sided, small business owners have every reason to expect the decisions will too.

3. There’s no clear problem this actually solves

Innes Willox said it outright: it isn’t clear there’s a problem with federal court judges’ ability to handle workplace matters, and a low cost small claims jurisdiction already exists. The Australian Chamber of Commerce and Industry made a similar point, noting Labor didn’t take a Fair Work Court to the last election.

When a government creates a new institution nobody voted for, to fix a problem business groups say doesn’t clearly exist, small business owners are right to ask who this is really for.

4. More complexity, not less

Employer groups have warned a new court will add complexity to a system that’s already hard to navigate, and expose employers to more disputes, not fewer. Andrew McKellar from the Australian Chamber of Commerce and Industry raised a genuinely practical concern: this risks divorcing decisions from the broader principles of commercial, administrative and constitutional law that currently apply.

For a business owner already juggling awards, the NES, state and federal obligations, and whatever the Fair Work Commission decides this month, one more jurisdiction to understand is not a small ask.

5. It’s arriving while the system is already swamped

The Fair Work Commission has seen claims jump more than 70 per cent in the past three years, some of it driven by AI-generated submissions. Adverse action claims in the Federal Court rose 128 per cent between 2022 and 2025. Layering a brand new court on top of a system already under that kind of pressure isn’t obviously going to make things faster. It could just as easily mean more forums, more lodging points, and more ways for a dispute to drag on.

6. Small business gets the cost, without the capacity to manage it

A new specialist court sounds neutral on paper. In practice, businesses with in-house legal teams and retained law firms will adapt fine. A ten person business without an HR function will feel every bit of the added complexity, cost and uncertainty, with none of the resourcing to absorb it.

One founder we worked with recently said it best: “I don’t need another place I could get dragged to. I need clarity on what I’m already required to do.” That’s the gap between what this announcement promises and what it will actually feel like for most small employers.

What this means for your business

The detail of the Fair Work Court, including how it interacts with the Commission and what it will cost to access, is still subject to consultation. Nothing changes today. But the direction is clear: another layer of workplace regulation is coming, and it’s being built with union input at the table from day one.

The businesses that come out ahead of this won’t be the ones that wait and see. They’ll be the ones with clean contracts, documented processes and proper HR support already in place, so a new court is background noise instead of a new front door for risk.

FAQ

What is the Fair Work Court?

A new federal court announced by the Albanese Government, staffed by specialist workplace judges, designed to work alongside the Fair Work Commission on underpayment and other employment disputes.

When will the Fair Work Court start operating?

There’s no start date yet. The government has said it will consult on the court’s design, including how it works with the Fair Work Commission, before finalising details.

Does this change anything for my business right now?

Not immediately. But it signals more regulatory change is coming, so it’s worth using this window to tighten up contracts, policies and HR processes rather than waiting for the detail.

Why are business groups against it?

Groups including the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Australian Resources and Energy Employer Association have raised concerns about judicial appointments, added system complexity, and a lack of clear evidence the current system is failing.

Ready to stop reacting to workplace law changes and get ahead of them?

HR Gurus helps Australian SMEs cut through the BS on employment law, so you’re never caught out by the next announcement. Get in touch for a People and Performance Review and find out exactly where your risk sits today.

Sources

Australian Financial Review, “Business fears ‘stacked’ bench as Albanese revives workers’ court”, 23 July 2026
Sydney Morning Herald, “Fair Work Court to assist Australian workers with employment, underpayment issues”, 23 July 2026
Prime Minister of Australia, media statement, 23 July 2026