Home' HR Monthly : May 2017 Contents 38
here is nothing more frustrating for
employers than receiving an unfair
dismissal claim when the employer feels
they have done everything by the book.
The reality is that any aggrieved employee can
file an unfair dismissal claim, regardless of the
merits. The barriers to entry are very low: an
application can be filed for around $70.
With employers facing the uncertainty of
defending a claim (including the cost, stress and
time associated with it), many businesses opt for
settling the claim as quickly and cost effectively
as possible (something which is frequently
described as paying ‘go away’ money).
However, it takes two to tango, and it’s not
always possible to settle claims on reasonable
terms, particularly where the former employee
takes an unreasonable approach and demands
the maximum compensation of six months’ pay,
or is hell bent on having their day in court.
This puts employers in a difficult position,
even where the complaint lacks any obvious
merit. Faced with the prospect of incu rring
significant legal fees in defending the claim,
employers understandably ask whether they can
get costs paid if they win.
What are the circumstances
where you can get costs paid?
The general rule is that parties in matters
before the Fair Work Commission must pay
their own costs. However, in certain (limited)
circumstances the Commission can depart from
that general rule and order a party to pay some
of the other party’s costs.
The Commission has discretion to make costs
orders where it considers that:
• a party has acted unreasonably, thereby
causing the other party to incur costs;
• a party has made an application vexatiously
or without reasonable cause; or
• it should have been apparent to the party
that the application had no reasonable
prospects of success.
However, even where one of the above
requirements is established, the Commission still
has the discretion not to award costs if it does
not consider it appropriate.
Winning a costs application
When faced with having to defend an unfair
dismissal claim which you consider to be
baseless, there are several things that can be
done to help a successful costs application.
• Where an employer makes a reasonable
set tlement offer and the offer is rejected
by the applicant, this can provide evidence
of the party acting unreasonably. For this
reason, when faced with an applicant
who is determined to go to court, the
employer should make numerous
settlement offers at strategic times
to demonstrate the applicant’s
Access our online AHRI:ASSIST
resources for HR guidelines, checklists
and policy templates on a wide range of
HR topics. Exclusive to AHRI members.
How to get your costs paid
in an unfair dismissal case.
BY KYLE SCOTT AND MADELEINE
TIEDEMAN AUSTRALIAN BUSINESS
LAWYERS & ADVISORS
• Settlement offers should be made on a
‘without prejudice save as to costs’ basis.
This means the offer is privileged and
generally cannot be used as evidence in
the proceedings, but can be relied upon in
any subsequent costs application once the
matter has been determined.
• Employers should file evidence which
unequivocally highlights the lack of merit
in the applicant’s complaint. This can help
to show either that the application was
made without reasonable cause or merit,
or alternatively, that it should have become
apparent at the time the employer’s evidence
• Employers should aim to be squeaky clean
when asking for a costs order, which means
not having acted unreasonably or caused
any delay you rself. Adopting strategies that
delay or frustrate the progress of the case
will damage your chances of a favourable
• Even where costs orders are successfully
obtained, employers will almost never be
able to recover all of their costs. There are
limits on the amount that can be awarded,
so it’s important to avoid incurring
unnecessary legal costs. •••
“When faced with an
applicant who is
determined to go to court,
the employer should make
numerous settlement offers.”
20/04/2017 7:24 PM
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