Employment law for employers

Cost awards in unfair dismissal cases – part 1

HomePrivate: BlogLegal insightsCost awards in unfair dismissal cases – part 1

by

reviewed by

Malcolm Burrows

Reading Time:

3–5 minutes

Being in business is hard work at the best of times; having to juggle the needs of customers, the demands of financiers and earning a dollar at the end of the day.  One of the most demanding aspects for many business owners is managing the performance of employees.  Given the industrial relations landscape in Australia, employers need to take care if wanting to terminate an employee because of misconduct or ongoing poor performance, lest they risk an unfair dismissal claim.

The unfair dismissal process

Despite the best efforts of employers in managing the dismissal process, many claims for unfair dismissal are still pursued by aggrieved employees before the Fair Work Commission (FWC).  While most unfair dismissal claims are settled at the conciliation stage, it is not uncommon for unmeritorious unfair dismissal claims to still be pursued before the FWC by way of a formal hearing.

Employers in response have little option but to incur costs in defending such claims so as to limit exposure to compensation orders of up to twenty-six (26) weeks of the employee’s wage at the time of termination.

In the event the employer prevails in defending an unfair dismissal claim at a formal hearing, the question asked is what costs is the employer entitled to recover from the unsuccessful employee complainant?

Fair Work Act provisions

The Fair Work Act 2009 (Qld) (FWA) is the piece of legislation that governs, together with any relevant modern award, the employment relationship for most employers and employees in Australia.

Within the context of an unfair dismissal claim, under the FWA the starting position is that a complainant employee or respondent employer must obtain the leave of the FWC in order to be legally represented at a hearing.[1]   In other words, each party in the first instance is expected to conduct their own case.

Even if an employer is not legally represented, it will potentially still incur significant costs in defending an unfair dismissal claim in a formal hearing.  For example, evidence is usually led by way of affidavit from each witness to be called in support of the case.  Considerable time will be involved in preparing the required affidavit evidence.  In addition, any witness swearing the affidavit to be relied upon at the hearing will be required to attend the hearing to tender their affidavit evidence and to be cross-examined upon it.

Considering the number of matters dealt with by the FWC on a daily basis, even a simple unfair dismissal case with only one complainant and one respondent can be expected to consume at least half a day.  That is wasted, unproductive time.

Costs

If the employer is successful in defending the unfair dismissal claim, one would assume the employer would be entitled to some type of compensation for the loss and inconvenience incurred in defending the claim.

Unfortunately, the starting position is that this is not the case.  Under the FWC, a party to an unfair dismissal application, be it the complainant employee or the respondent employer, must bear its own costs in relation to a matter.[2]  This starting position applies regardless of whether or not a party is legally represented.  Costs can however be ordered against a party if the FWC is satisfied that:

  • the applicant or the respondent was acting vexatiously or without reasonable cause; or
  • it should have been reasonably apparent to the relevant party that they had no reasonable prospect of success.[3]

Costs can also be ordered against a party if the FWC is satisfied the party caused those costs to be incurred because of an unreasonable act or omission in connection with the conduct or continuation of the matter.[4]  Unfortunately for an employer successfully defending an unfair dismissal application, the bar to get a costs order is in most cases too high.

Takeaways

Costs will in most, but not all cases, will not be awarded against the unsuccessful party in an unfair dismissal application.

Links and further references

Legislation

Fair Work Act 2009 (Qld)

Further information on unfair dismissal application

If you need advice on unfair dismissal claims, contact Dundas Lawyers Gold Coast for a confidential and obligation-free discussion:

Mitch Brown - Dundas Lawyers

[1] Section 596.

[2] Section 611(1).

[3] Section 611(2).

[4] Section 400A.


Related insights about unfair dismissal applications

  • Resale price maintenance restrictions

    Resale price maintenance restrictions

    Businesses should take care when making forecasts to avoid potential legal consequences under the Australian Consumer Law (ACL). Ensure that reasonable grounds, reasonable care, and accuracy of the basis of the forecast are all proven at the time it was made.

    Read more …

  • What exactly is a strike out application?

    What exactly is a strike out application?

    Find out how striking out pleadings can affect litigious matters in Queensland with this article from Dundas Lawyers. Discover the requirements and implications of this process.

    Read more …

  • Discovery process in the Federal Court of Australia

    Discovery process in the Federal Court of Australia

    Discover the process for seeking documents in the Federal Court of Australia. Learn about the roles of the parties, criteria for standard and non-standard discovery, and the process of giving discovery. Get the full details on the Federal Court Rules 2011 and its revised regime for discovery.

    Read more …

  • What are your disclosure obligations?

    What are your disclosure obligations?

    Litigation proceedings in Queensland are subject to disclosure obligations. This article explains when disclosure is due, what documents must be disclosed, and documents that do not need to be disclosed under the Uniform Civil Procedure Rules 1999 (Qld).

    Read more …

  • Anton Piller orders – preventing evidence destruction

    Anton Piller orders – preventing evidence destruction

    An Anton Piller order is an extraordinary remedy used to prevent evidence destruction. This article explores scenarios in which it may be granted and the Court safeguards imposed.

    Read more …

  • Enforcing QCAT decisions in practice

    Enforcing QCAT decisions in practice

    Queensland Civil and Administrative Tribunal (QCAT) has been established to provide the public with a fast, cost-effective way to resolve disputes. Proposed amendments to the Justice and Other Legislation Amendment Bill 2014 could help streamline the process, providing immunity for members and clarifying ambiguities in the Queensland Civil and Administrative Tribunal Act 2009.

    Read more …

  • Shareholder oppression – Victorian Supreme Court adopts pilot program to resolve oppression disputes

    Shareholder oppression – Victorian Supreme Court adopts pilot program to resolve oppression disputes

    The Victorian Supreme Court has launched a pilot program to help resolve shareholder oppression disputes in a more efficient and cost-effective way. Find out more about the program and its implications for shareholders.

    Read more …

  • ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634

    ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634

    In Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634, Coles has been accused of misleading customers over their partially-baked bread. Learn more, including the obiter suggested by Allsop CJ, by clicking through to the article.

    Read more …

  • Shareholder oppression

    Shareholder oppression

    What is shareholder oppression? Shareholder oppression can occur when the majority shareholders in a company misuse their power to oppress the minority shareholders.

    Read more …

Send this to a friend