Cost Orders in the Fair Work Jurisdiction

16 September, 2016

In the Fair Work Commission, applicants are generally liable to pay their own costs (which may be substantial) of an unfair dismissal or general protections application. However, the law is changing, and it is now more likely that you could recover your costs in certain circumstances.

Why?

Traditionally, the Fair Work Commission has been considered a ‘no cost’ jurisdiction. The system is intended to be fair and accessible for workers, allowing them to bring a claim without the risk of being liable for costs. However, as a result of this system, frivolous and/or vexatious claims are common. Employers would often decide to settle proceedings, and “pay out” undeserving employees, instead of spending, and not recovering, thousands of dollars in costs.

The system does not always provide a fair outcome, and cost orders seek to remedy this. By making cost orders available, a successful party will be able to recover the costs they have spent in making or responding to an application.

How?

Applications for cost orders can be brought where proceedings are commenced without reasonable cause, where a claim has no prospects of success, or where there has been an unreasonable act/omission by a party.

An unreasonable act has even been held to include an unreasonable refusal of a settlement offer. For example, in the matter of Post v NTI Limited [2016] 1059, an employee unreasonably refused a number of settlement offers, including the maximum of 26 weeks compensation. It was further found that his claim had no prospects of success.

What does this mean for Employers?

The rising prominence of cost orders means that employers are now able to contest unmeritous or vexatious claims with the knowledge that their costs may be recoverable. It may be said that the system now more fairly balances the interests of employers. The risk of a cost order also provides a stronger deterrent for employees seeking to bring claims with no reasonable prospects of success. If you are an employer, and need advice concerning an application under the Fair Work Act, contact Access Law Group to arrange a consultation.

What does this mean for Employees?

The ability to recover costs means that employees can now commence proceedings knowing that some of their costs may be recoverable. This evens the playing field between employees and employers, who often have “unlimited” resources to defend such claims. However, the possibility of a cost order being awarded also means that employees should carefully consider the merit of their claim prior to filing an application.

Prior to commencing a claim, an employee should seek legal advice. Access Law Group have extensive experience in workplace and industrial law, and can assist you with your unfair dismissal or general protections application.