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‘Delinquent’ unfair dismissal applicant ordered to pay employer’s costs

AREEA principal employee relations consultant in Hobart, Bill FitzGerald, is known as one of Tasmania’s leading specialists in disciplinary procedures, validating dismissals and other workplace procedural matters. With a common grievance of AREEA members being the inability to recover costs from unmerited unfair dismissal claims, Bill writes how a recent case shows all hope is not lost.

Bill FitzGerald
Bill FitzGerald

ONE of the key issues of Australia’s current unfair dismissal laws, and a primary target for policy reform in this area, is the ability for employees to make frivolous and vexatious claims with little risk of incurring the costs involved.

The flip-side to this is that it has become very difficult for employers, in many cases AREEA members, to recover the costs (both monetary and in productivity/time wasted) of claims that are later withdrawn or ruled to be unmerited and unfounded by the tribunals or courts.

The current approach by the Fair Work Commission is akin to a playground scenario where “every child gets a prize”.

As such, there are no real disincentives for employees to desist in making an application or to ‘forum shop’ to try and get the best outcome for their claim. Exacerbating this is that employees (or former employees) can have their filing fee refunded even if they decide to withdraw after recognising that they may not have a case after all.

Commission orders employee to pay indemnity costs

In Post v NTI Limited [2016] FWC 1059 (4 March 2016), the Fair Work Commission did in fact order a former employee of truck insurance company NTI Limited to pay the indemnity costs incurred by the employer in defending what was described as a ‘hopeless’ unfair dismissal claim.

Commissioner Williams made the order in accordance with s.400A of the Fair Work Act 2009, after ruling that the employee’s action were ‘unreasonable’ after he rejected a settlement offer of six months’ pay to instead pursue his claim in the FWC.

The employee’s unfair dismissal claim was ultimately rejected by a Full Bench after frivolously claiming that he was denied an opportunity to respond to allegations relating to conflict of interest that led to his dismissal. He then lodged proceedings in the Federal Court for a judicial review but withdrew the application earlier this year.

In ruling on NTI’s application for costs earlier this month, Commissioner Williams found that it should have been reasonably apparent to the employee that his application was ‘hopeless’, lacking in merit and had no reasonable prospects of success.

He said that failure to accept the offers made by the employer and his ‘delinquent conduct’ warranted the Commission exercising its discretion to award indemnity costs in accordance with s400A.

The Commissioner made the point that costs are not made to punish the unsuccessful party, but rather some cases that involve delinquency warrant indemnity costs.

Implications for AREEA members

AREEA recommends that where members have clearly defensible cases after a procedurally fair process and valid reason for dismissal, that it should be made known to any potential employee applicant that the company will always defend these matters and pursue costs in accordance with the Fair Work Act.

Ultimately, the message will get through to the workforce that you have a robust disciplinary policy in place and will strictly comply with that policy. It is important to demonstrate that as an employer, you are not in the business of doing ‘quick and easy’ settlements, and in addition will take action to recover costs if claims are made frivolously or vexatiously.

If you require any assistance with unfair dismissal proceedings, defending your action in the Fair Work Commission or any other workplace matters, AREEA is the answer. Contact 1800 627 771 or email [email protected] to talk to one of our employee relations specialists.


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