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Employee who refused settlement offer ordered to pay employer's cost

In our recent blog we discussed the Fair Work Commission (FWC)’s discretion to make a costs order in exceptional circumstances.  The FWC in F v GHS Regional Pty Ltd [2016] FWC 3120 has decided to exercise its discretion to award costs in favour of the Employer once again.

In our recent blog article Running Man – Employee Who Faked Test Results Abandons Hearing we discussed the Fair Work Commission (FWC)’s discretion to make a costs order in exceptional circumstances. The FWC in F v GHS Regional Pty Ltd [2016] FWC 3120 has decided to exercise its discretion to award costs in favour of the Employer once again.

By way of background, Mr F was dismissed after entering his workplace after hours and removing company property without authorisation. Mr F was dismissed in October 2014 on the basis that he failed to comply with GHS’ directives regarding access to premises after hours and the removal of GHS’ property without permission (directives of which Mr F was well aware). In this earlier decision, it was found that GHS did not unfairly dismiss Mr F.

Prior to the Hearing, a series of conciliation meetings were held. During the process Mr F was offered $3,000 on a without prejudice basis to settle his unfair dismissal claim. This was set out in a Letter of Offer to Mr F which made clear that if he refused the offer and his unfair dismissal claim failed, GHS would rely on the letter in pursuit of its costs.

Mr F refused the offer proposed by GHS and did not make a counter offer. Mr F also informed the FWC of his decision to refuse the offer proposed by GHS.

In light of the FWC’s findings at hearing, GHS made an application for an order for costs under section 400A of the Fair Work Act 2009 (Cth) (FW Act). GHS argued that Mr F caused it to incur costs because of an unreasonable act or omission in connection with the conduct or continuation of the matter - specifically, that Mr F failed to accept the without prejudice offer.

In its assessment of whether it should award costs, the FWC took into account that whilst Mr F was self represented and was not a “seasoned negotiator”, he was aware that his case was unlikely to be successful. This was further highlighted in the offer to settle the unfair dismissal matter. In addition to this, the FWC concluded that Mr F had unreasonably assessed the prospects of success of his case despite already having in his possession a copy of GHS’ witness statements, supporting documents and outline of submissions.

By not making a counter offer or accepting the offer proposed by GHS, the FWC found that this constituted an unreasonable act or omission which required GHS to incur further costs that went beyond the concept of “hard bargaining.”

As a result, the FWC awarded costs to GHS on an indemnity basis under section 400A of the FW Act. Mr F was ordered to pay GHS at total of $13,875.50.


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