Basic error costs employer over $10,000 in unfair dismissal case

In a decision which highlights the pitfalls of employers representing themselves in the Fair Work Commission (FWC), a business has been ordered to pay a former employee’s legal costs after unsuccessfully attempting to defend an unfair dismissal case.

The employer (who shall remain nameless) decided not to engage legal representatives to defend the unfair dismissal case, despite the employee having engaged solicitors to act for him. The business was represented by its Managing Director during both the conciliation conference and the subsequent hearing.

There were a number of deficiencies in the business’s defence of the claim, including:

• it failed to appreciate its exposure to an adverse outcome (ie. the risk of losing the case), which led it to take an aggressive stance during the conciliation;
• it then reneged on a settlement agreement (of two weeks’ pay) that had been reached during the conciliation conference;
• it failed to ensure its communications regarding settlement were marked ‘without prejudice’;
• in the process of reneging on that settlement, the business disclosed details of the settlement offers in ‘open’ correspondence sent to the Commission;
• it relied on a number of witness statements during the hearing, but those witnesses then failed to attend the hearing to give evidence (meaning they could not be cross-examined and resulting in the Commission attributing “limited weight” to their evidence);
• it was apparent that the witnesses had reviewed each other’s statements in the process of preparing their own, thereby affecting the credibility of the evidence (and therefore its weight); and
• the oral witness testimony given by the Managing Director during the hearing contradicted parts of the other witness statements.

The outcome

Unsurprisingly, the employer lost the unfair dismissal case and was ordered to pay compensation to the employee in the amount of $10,695 (approximately 13 weeks’ pay). The employer’s interests were further damaged when the Managing Director failed to advance relevant submissions on the issue of compensation, but instead sought to re-agitate the merits of the case.

Adding insult to injury, the employee then sought a cost order against the business, arguing it had acted unreasonably during the proceedings. The Managing Director yet again represented the business during the costs hearing.

The costs application was successful, with the Commission finding that the business acted unreasonably when it reneged on the “entirely reasonable” settlement struck during conciliation without any proper basis for doing so.  A costs order in the amount of almost $3,000 was ordered against the business (on top of the $10,695 in compensation).

Lessons to be learned

It is understandable that some businesses look to avoid the use of lawyers as a way to minimise their costs, or due to a belief they are unnecessary. However, this case highlights many of the problems that play out when businesses attempt to represent themselves in the FWC.

While this might seem to be a self-serving comment, the reality for businesses is that proceedings in the FWC (particularly hearings or arbitrations) continue to be conducted in a formal manner, and those without a working understanding of the rules of evidence, legal privilege or the Fair Work Act, or those without experience in court advocacy, will often not be able to best protect the business’s legal interests.

This case highlights the importance of obtaining specialist legal or other advice, and the value in doing so at an early stage, particularly when one considers the financial and reputational consequences associated with an adverse outcome in a FWC matter. 

If this article has raised any questions for your business, contact us at info@ablawyers.com.au.