An employee that refused a reasonable offer of settlement has
been ordered by the Fair Work Commission (FWC) to pay his
ex-employer's legal costs of $14,000, after his unfair
dismissal application was dismissed.
In Ferry v GHS Regional WA Pty Ltd (2016) FWC 3120, an
employee was dismissed by his employer (GHS) for entering the
workplace outside of work hours and removing GHS's property
without authorisation. The employee was also dishonest when
questioned about his conduct by GHS.
The employee filed an unfair dismissal claim. After the matter
failed to resolve at conciliation, GHS made a settlement offer,
which was rejected by the employee.
The unfair dismissal claim was ultimately unsuccessful and GHS
sought to recover its costs in defending it. GHS relied on s 400A
of the Fair Work Act 2009 (Cth), alleging that the
employee's refusal of a settlement offer constituted an
unreasonable act in connection with continuation of the matter.
The FWC accepted GHS's argument that the employee's
rejection of a settlement offer was an unreasonable act in
connection with continuing the application.
Importantly, the offer of settlement:
stated that GHS would rely on the letter of offer in recovering
its costs if the offer was not accepted and his claim was
was made when the applicant had knowledge of all relevant
matters in defence of the claim
to be able to conclude that his claim was unlikely to
The employee was ordered to pay the employer's legal fees of
Costs are not readily ordered in the FWC, which starts from the
position that parties should bear their own costs. The FWC may
exercise its discretion to award costs under s 400A where a party
has refused a settlement offer and does so with deliberate
disregard of the known facts, which goes beyond merely 'hard
Seek legal advice before making or rejecting a settlement offer.
Settlement offers will need to be carefully drafted to be relied on
in an application for costs. Furthermore, rejecting a settlement
offer without proper consideration may expose you to costs.
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We discuss the case of Heraud v Roy Morgan Research Limited ( FCCA 1797).
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