In Ferry v GHS Regional WA Pty Ltd (2016) FWC 3120, an employee was dismissed by his employer (GHS) for entering the workplace outside of work hours and removing GHS’s property without authorisation. The employee was also dishonest when questioned about his conduct by GHS.

The employee filed an unfair dismissal claim. After the matter failed to resolve at conciliation, GHS made a settlement offer, which was rejected by the employee.

The unfair dismissal claim was ultimately unsuccessful and GHS sought to recover its costs in defending it. GHS relied on s 400A of the Fair Work Act 2009 (Cth), alleging that the employee’s refusal of a settlement offer constituted an unreasonable act in connection with continuation of the matter.

The decision

The FWC accepted GHS’s argument that the employee’s rejection of a settlement offer was an unreasonable act in connection with continuing the application.

Importantly, the offer of settlement:

  • stated that GHS would rely on the letter of offer in recovering its costs if the offer was not accepted and his claim was unsuccessful; and
  • was made when the applicant had knowledge of all relevant matters in defence of the claim
  • to be able to conclude that his claim was unlikely to succeed.

The employee was ordered to pay the employer’s legal fees of $14,000

Key lessons

Costs are not readily ordered in the FWC, which starts from the position that parties should bear their own costs. The FWC may exercise its discretion to award costs under s 400A where a party has refused a settlement offer and does so with deliberate disregard of the known facts, which goes beyond merely ‘hard bargaining’.

Seek legal advice before making or rejecting a settlement offer. Settlement offers will need to be carefully drafted to be relied on in an application for costs. Furthermore, rejecting a settlement offer without proper consideration may expose you to costs.

Article by Lauren Drummond of Holding Redlich