The Fair Work legislation provides that parties should usually
bear their own costs in relation to matters before the Fair Work
Commission. This is an exception to the general rule applicable in
court proceedings where costs follow the event i.e. the losing
party pays the winning party's costs. The fact that parties
usually bear their own costs in Fair Work Commission proceedings
even if they win is thought to be the reason that employers often
settle claims, even unmeritorious claims, by the payment of so
called "go away" money, rather than incur significant
legal costs to vindicate their legal position.
This is all the more the case in unfair dismissal claims where
applicants are often represented by paid agents or lawyers acting
on a "no-win no-fee" basis. This means that the employee
carries no risk with proceeding with a claim, whereas the employer
with legal representation is likely to incur significant legal
costs at a hearing.
In the case of Colin Ferry v GHS Regional WA Pty Ltd
 FWC 3120 trading as GHS Solutions, the employer successfully
defended an unfair dismissal claim at hearing and then made a
separate application for payment of its legal costs on an indemnity
basis i.e. for full reimbursement of the legal costs incurred.
The facts of the case were that the employee had been summarily
dismissed for entering the employer's premises on an
unauthorised basis after hours and removing items of scrap
property. When the employee was confronted with the fact that the
employer was aware of his actions, the employee failed to be open
and honest and did not provide any satisfactory explanation for his
Prior to the hearing, the parties had participated in three
separate telephone conciliations before the Fair Work Commission.
Conciliations are conducted on a without prejudice basis and any
offers made at the conciliations cannot be referred to in open
hearing. However, after the third telephone conciliation the
employer made an open offer of settlement in writing to the
employee, which was communicated to the Fair Work Commission. This
was the offer of settlement which the employer relied on in its
subsequent costs application.
The offer also put the employee on notice that if rejected and
the employer incurred further legal costs, the employer would rely
on the letter to recover its costs. The employee rejected the offer
of settlement and then lost at the hearing.
After the hearing, the employer sought an order from the same
Commissioner on the grounds that the employee engaged in an
unreasonable act or omission in connection with the conduct or
continuation of the matter when the applicant refused to accept the
settlement offer prior to the hearing.
The employee represented himself throughout the proceedings and
was not legally qualified or experienced in the Fair Work
Commission, nor expected to have brought the level of understanding
or judgement to the matter that may be expected of a person with
experience in the jurisdiction.
Nonetheless, the Fair Work Commission was satisfied that the
employee's failure to accept the offer of settlement involved
the continuation or proceedings in wilful disregard of known facts
and also was an imprudent refusal of an offer of compromise.
This delinquent conduct went beyond "hard bargaining"
by the employee and warranted the Commission exercising its
jurisdiction to award indemnity costs to the employer under the
Fair Work Act 2009 (Cth).
The employee was ordered to pay the employer's costs in the
amount of $13,875.50 having received an offer to settle of
Final points to note
The Fair Work Commission can only make a costs order against an
unsuccessful employee if the employer makes application after the
hearing for recovery of its costs because of the unreasonable act
or omission of the employee in connection with the conduct or
continuation of the matter.
A successful employer can also make application against the
employee's representative (ie lawyer or paid agent), if the
representative encouraged the employee to start or continue the
matter when it should have been reasonably apparent to the
representative that the employee had no reasonable prospects of
success or costs were incurred because of an unreasonable act or
omission of the representative in connection with the conduct or
continuation of the matter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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An employee that refused a reasonable offer of settlement was ordered by the FWC to pay his ex-employer's legal costs.
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