Articles

Recovering legal costs in Fair Work claims

After locking horns in a contentious employment dispute, parties commonly ask if they can recover costs incurred before the Fair Work Commission (Commission).

On one hand, the Commission is designed to be a simple and less formal Court to resolve disputes between employees and employers, in particular for claims of Unfair Dismissal or individual remedies for workplace industrial award issues.

Employees in particular, through this system are encouraged to be able to represent themselves and apply for remedies.

However, it is not uncommon for lawyers and agents to also be involved in employment disputes on behalf of employer or employee.

To be represented by a lawyer or agent in the Commission leave by the Commission is required.

General Rule

The general rule for costs in is that a person must pay their own costs in the Commission[1].

However, there are exceptions:

  1. Applications with no reasonable cause or prospects of success

The Commission may order a person to bear some or all of the costs of the other person if the Commission;

  1. is satisfied that the first person made the application vexatiously or without reasonable cause; or
  2. that it should have been reasonably apparent to the first person that the first person’s application has no reasonable prospect of success[2].
  1. Unreasonable acts or conduct shown by a party during the matter

The Commission may also make an order for costs against a party if the Commission is satisfied that a party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter[3].

  1. A Lawyer or agent has caused the costs

In Unfair Dismissal claims[4] where leave has been granted for a lawyer or agent to represent a party, the Commission may make an order for costs against the lawyer or agent of one party.

This is in the event that the Commission is satisfied that the party’s representative caused those costs to be incurred because:

  1. The representative encouraged the person to start, continue or respond to the matter and it should have been reasonably apparent that the person had no reasonable prospects of success in the matter; or
  2. Of an unreasonable act or omission of the lawyer in connection with the conduct or continuation of the matter.

The Commission can only consider or make such orders against a lawyer or representative if the other party has applied for this order[5].

Timeframe

With the above in mind, it is important to note that any application for costs under the above 3 categories[6] must be made within 14 days after the FWC determines the matter or the matter is discontinued[7].

Case

In a recent case of Steven Post v NTI Limited [2016] FWC 1059, an employee who commenced an unfair dismissal claim against his employer, was found to have a ‘hopeless’ unfair dismissal claim when he prolonged and refused to accept offers, which included payment of 6 months wages, by the Commission.

The Commission ordered the former employee to pay all of his former employer’s legal costs on an indemnity basis.

This decision serves as a useful reminder that the FWC is prepared to pay the costs of a party where their conduct has been shown to be unreasonable or delinquent in the circumstances.

Takeaway

Before starting and during proceedings, the Commission will look closely at the merits of an application and conduct by the parties (and their lawyer or agent in Unfair Dismissal Claims).

Carefully ensuring that any application has prospects of success is important and also monitoring a matter as it progresses can affect the award of costs by the Commission.

[1] S.611(1) of Fair Work Act 2009 (Cth)

[2] S.611(2)

[3] S.400A

[4] S.394

[5] S.402

[6] See s.400A, s.401 or s.611 for further details on the 3 categories in this article.

[7] S.402

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

2018-07-18T15:17:46+00:00 June 4th, 2018|Commercial & Corporate Advisory|