When engaging in proceedings before the Fair Work Commission (FWC), it's important to understand the financial obligations involved. Generally, each party is responsible for covering their own costs. However, there are exceptions where the FWC may order one party to pay some or all of the costs incurred by the other party, under specific circumstances. In this newsletter, we'll explore the conditions under which cost orders can be made and what employers and employees should be aware of when navigating these proceedings.

The Fair Work Commission (FWC) can order costs if it determines that:

1. Vexatious Conduct: A party filed or responded to an application primarily to harass or embarrass the other party or to gain an unfair advantage.
2. Lack of Reasonable Cause: A party's application or response lacked reasonable grounds, indicating no substantial prospects of success based on the case's facts.
3. No Reasonable Prospect of Success: The application or response was not reasonably arguable, was clearly groundless, or disclosed a case that had no chance of succeeding.

Recovering Costs in Unfair Dismissal Cases

In unfair dismissal cases, there are extra ways to recover costs if the Fair Work Commission (FWC) finds that one party caused those costs by acting unreasonably or failing to act appropriately. The factors taken into account include:

• How reasonable it was to reject a settlement offer compared to what was being asked.
• The strengths of each party’s case and their chances of winning on both liability and the relief sought.
• The expected duration and cost of going to a hearing if the matter doesn’t settle.
• The potential downsides of accepting a settlement instead of continuing with the case.

A Case before the Fair Work Commission: Bracken v OzForex Limited (2024)

In this case, the Fair Work Commission (FWC) considered a request for costs related to an unfair dismissal claim. After a five-day hearing, the employee's initial claim was dismissed, and subsequent appeals were also turned down.

The employer sought costs for the second appeal, arguing the employee unreasonably rejected a 14-week pay offer during initial settlement talks. The FWC ruled that this refusal wasn't an unreasonable action in connection with the appeal.

The employer further claimed the employee's second appeal was unreasonable, but the FWC disagreed, noting that the employee’s arguments were understandable since he represented himself. Consequently, no costs were awarded to the employer.

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