Unfair Dismissal and Costs Orders: Legal Principles and Key Cases
When an employee pursues an unfair dismissal claim, the Fair Work Commission (FWC) generally operates under a "no costs" jurisdiction, meaning that each party typically bears its own legal costs. However, section 400A of the Fair Work Act 2009 (Cth) (the FWA) introduces an important exception to this rule, allowing the FWC to order costs against a party if it is satisfied that the party caused the other side to incur costs due to an unreasonable act or omission during the conduct or continuation of the matter.
Understanding Section 400A of the FWA
Section 400A of the FW Act represents a departure from the usual "no-costs" rule in Commission proceedings, where each party generally bears its own costs. According to section 400A(1), the FWC may order costs if satisfied that one party caused the other party to incur costs due to an unreasonable act or omission in connection with the conduct or continuation of the matter. This provision was introduced by the Fair Work Amendment Act 2012 to address the conduct of litigants who unreasonably pursue or defend claims.
The discretionary nature of this power is underscored by the fact that even if the preconditions for awarding costs are met, it does not automatically follow that the FWC will make a costs order. The decision to do so depends on the specific circumstances of the case and the conduct of the parties involved.
Key Precedents
In Jeske v Noosa Confidential Pty Ltd [2024] FWC 2041, the Fair Work Commission (FWC) provides critical insights into the application of costs orders under section 400A of the Fair Work Act 2009 (Cth). This case illustrates the nuanced approach the FWC takes when determining whether to impose costs on a party for unreasonable conduct in unfair dismissal proceedings, based on the following factors:
1. Discretionary Power: The FWC's authority to award costs is discretionary. In Jeske, although the conduct of the respondent was deemed unreasonable, the FWC opted not to impose costs. The decision reflects the Commission’s careful consideration of whether awarding costs serves the interests of justice and encourages parties to engage reasonably in disputes.
2. Criteria for Unreasonable Conduct: The FWC assesses whether a party’s actions or omissions were sufficiently unreasonable to warrant a costs order. In Jeske, the respondent’s refusal to settle and actions that prolonged the proceedings were scrutinized. Despite these findings, the FWC's discretion led to a decision against awarding costs.
The Jeske decision highlights that, even with a finding of unreasonable conduct, costs orders are not a certainty. This reinforces the need for parties to act reasonably and the importance of evaluating the potential financial implications of their conduct in disputes.
How Bentham Sydney Employment Lawyers Can Help
Navigating unfair dismissal claims and understanding the implications of costs orders can be complex. At Bentham Sydney Employment Lawyers, we offer expert guidance to help you manage these challenges effectively. Whether you are facing potential costs orders or need support in an unfair dismissal matter, our team is here to provide you with strategic advice and representation.
Employers or employees seeking advice on their prospects of successfully obtaining a costs order should contact Bentham Sydney Employment Lawyers for advice.
