Paying the other parties cost

Awarded costs in an unfair dismissal context are those that the Fair Work Commission (FWC) requires one party to pay the other. For example, an employee may be ordered to pay the costs their employer incurred due to their unfair dismissal application. Or it could work the other way around. Generally, awarded costs means one party must pay the fees for any legal or workplace advisory services the other party incurred.

However, in most unfair dismissal cases, both parties are expected to pay their own costs. So, in what situations are costs awarded to one party? Lets read on and find out. Always be aware of all consequences if going to the Fair work Commission or any other tribunal for that matter.

The rules around awarded costs

There are certain circumstances when the Fair work Commission awards the costs of one party to be paid by the other. This is outlined in section 611 of the Fair Work Act (2009). The FWC must be satisfied that the unfair dismissal application was commenced or responded to:

• Vexatiously – the driving force behind the unfair dismissal application or the response to it is to harass, irritate or embarrass the opposing party.
  
• Without reasonable cause – whether the party submitting the application or a response could see that their case was so obviously untenable, groundless and faulty that it had no conceivable chance of succeeding. This is a subjective assessment.
  
• With no reasonable prospect of success – whether to a reasonable person the application or response is manifestly untenable or groundless. This is an objective assessment differentiated from the previous criterion.

Awarded costs: What happens if you win your unfair dismissal case?

It must be noted that in most circumstances, the winning party’s costs are not awarded against the losing party. Both parties are required to pay their own costs related to a Fair work hearing even if they win their unfair dismissal case. If the application or response is dismissed by the Fair work, that doesn’t mean it was “without reasonable cause” or “without a reasonable prospect of success.” Having a legal argument rejected by the FWC is different to not having any prospect of success.

The fact that the successful party must bear their own costs is one of the reasons why so many unfair dismissal cases are resolved before going to a formal hearing. The latest FWC figures reveal that:

• 19 per cent of unfair dismissal cases are either resolved or discontinued before conciliation.

• 61 per cent were resolved at conciliation.
  
• 14 per cent were resolved after conciliation and prior to an FWC hearing.

Awarded costs example #1: Employee fails to show at FWC hearing

A recent unfair dismissal case in which costs were awarded to an employer came to light recently. It involved an employee who was challenging his dismissal on the basis of the unreasonableness of his employer’s COVID-19 vaccination policy. In the case, the employee failed to show up for his unfair dismissal hearing with the FWC. And following his no-show, the employee also failed to comply with the FWC’s procedural directions.

This case highlights the specific factors the Fair work Commission considers when making a decision about awarding costs. It also demonstrates how the criteria we outlined earlier are applied in practice.

Employer makes application for awarded costs

Following the employee’s no-show, the employer made an application for costs to be awarded against him. The employer contended that the employee’s unreasonable acts or omissions led to it incurring costs. The employer also submitted that the employee should have realized that his unfair dismissal application had no reasonable prospect of success.

Fair work considers evidence for awarded costs

To award costs in this unfair dismissal case, the FWC had to be certain that there was a causal link between the unreasonable acts of the employee, and the costs incurred by the employer. The FWC also had to establish the precise time at which the employee acted unreasonably. The FWC outlined several facts that proved the unreasonable acts and omissions of the employee.

Firstly, when asked to provide evidence to support his case, the employee had only filed a dubious COVID-19 vaccine medical contraindication certificate. This was considered an unreasonable act. And the lack of evidence provided an unreasonable omission. Secondly, the employee didn’t show up for his unfair dismissal hearing with the FWC. Nor did he provide an explanation for his no-show. And the employee didn’t take any steps to discontinue his unfair dismissal application.

FWC decides to award costs to employer

Based on these facts, the FWC found that the employee’s unreasonable acts and omissions caused the employer to incur legal costs. The FWC, however, didn’t agree with the employer that the employee’s unfair dismissal application had no chance of success. Therefore, the costs awarded applied only to part of the proceedings, which the employee was ordered to pay on an indemnity basis.

The FWC also deemed that the costs incurred by the employer to defend against the employee’s unfair dismissal claim were recoverable. It therefore adjusted the bill of costs filed by the employer.

Awarded costs example #2: Employee rejects settlement then loses at hearing

Another example of costs awarded against an employee was the unfair dismissal case Colin Ferry vs GHS Regional WA [2016]. The employer, GHS Regional, had just successfully defended the unfair dismissal claim of Colin Ferry at a formal hearing with the FWC. However, prior to the hearing, GHS and Mr Ferry had engaged in three telephone conciliations which were mediated by the Fair work Commission.

Following the third conciliation, GHS proposed a written offer of settlement to Mr Ferry, which included a $3,000 payment. As part of the offer, GHS maintained that if it was rejected by Mr Ferry, and he proceeded to lose his formal FWC hearing, he would be beholden to pay the company’s legal costs.

Why the employer sought awarded costs

Following it successful defense of Mr Ferry’s unfair dismissal claim, GHS requested that costs be awarded against him. The reason for this was that Mr Ferry had engaged in an unreasonable act or omission. Namely, by proceeding with his unfair dismissal claim after refusing the settlement offer prior to the hearing.

The FWC agreed that Mr Ferry’s rejection of the settlement offer amounted to an intransigent refusal to compromise. It stated that his conduct went “beyond mere hard bargaining and ventured into the realm of a refusal to reasonably assess the prospects of his case.” The FWC awarded costs against Mr Ferry, and he was ordered to pay GHS’ $13,875.50.

In what situations are costs awarded against an employer?

Of course, it’s not only employees who can have costs awarded against them. In the unfair dismissal case Walker vs Mittagong Sands (2011), the FWC decided to award costs against the employer. The employee, Wayne Walker, had successfully challenged his dismissal by Mittagong Sands, which was deemed by the FWC to be harsh, unjust and unreasonable. He subsequently made an application to have the costs he incurred during the hearing awarded against his employer.  

In his awarded costs application, Mr Walker contended that Mittagong Sands had responded to his unfair dismissal application without reasonable cause. Also, that it should’ve been reasonably apparent that Mittagong Sands’ response had no reasonable prospect of success.

Why the employee applied for awarded costs

The reason Mr Walker made these claims is that Mittagong Sands had made the decision to dismiss him based on false evidence. The company had claimed that Mr Walker had stolen oil from a drum of oil in its workshop. However, Mittagong Sands didn’t provide any direct evidence that Mr Walker had in fact stolen the oil.

The company had submitted the oil Mr Walker allegedly stole for testing. And when the results came back, it was found to be a different type of oil than that in the workshop oil drum. Knowing that it did not have any evidence that Mr Walker stole the oil, Mittagong Sands decided to dismiss him for theft anyway.

FWC awards costs against the employer

Based on these facts, the FWC ruled that it should have been reasonably apparent to Mittagong Sands that its opposition to Mr Walker’s unfair dismissal application had no reasonable prospect of success.

The FWC said that “Mr Walker was put to considerable expense to meet a case that was without substance.” It subsequently awarded costs against Mittagong Sands. The company was required to bear all of Mr Walker’s legal and professional costs related to his unfair dismissal application.

Conclusion to: Unfair dismissals & awarded costs:

We have found over time the reasons employees don’t turn up or make themselves available for their unfair dismissal conciliation. generally fall into several categories.

1) They have settled down, after the shock of losing their job and realize they are not blameless.

2) They have got another job and have moved on, forgetting about their previous employer.

3) Realize that arguing their claim now that they have seen the response by the employer is complicated, and they give up.

There is a very strict 21 day rule to lodge a unfair dismissal claim. Employees have very little choice but to lodge a claim in some circumstances without the time to think the whole matter through. The key is if your not going to pursue your claim for whatever reason you must inform the Fair work Commission by lodging a Notice of Discontinuance (F50) as early as possible

Do you think you’ve been unfairly dismissed?

A Whole New Approach are Australia’s leading workplace advisors and commentators. Over the last 20 years, our dedicated team have assisted over 16,000 employees to make an unfair dismissal claim in every state. AWNA are proud of their staff and the outcomes we have got for our clients. We can help guide you through the process of making a claim and ensure you tick all the boxes to ensure success. Been sacked, issues of sick leave, forced resignation, give us a call

Call us today on 1800 333 666 for a free and confidential conversation.

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