Employee ordered to pay thousands in legal costs after dismissal claims found to be “without reasonable cause”

A former employee was ordered to pay his employer’s legal costs of more $12,000 after the Federal Circuit Court of Australia found the employee’s general protections claim was made without reasonable cause.

The employee was employed as a fire services technician, and in August 2016, his employment was terminated as the result of redundancy.

The employee lodged an application for breaches of the general protections provisions of the Fair Work Act with the Fair Work Commission and then later with the Federal Circuit Court of Australia. The employee claimed his position was not genuinely redundant but he was dismissed in “retaliation” for making a complaint or enquiry about an alleged underpayment.

The employee’s application was ultimately unsuccessful, owing largely to the fact the employee failed to provide evidence to support his claim.

Following the Court’s decision, the employer brought separate proceedings seeking orders the employee pay the costs incurred a as result of having to defend itself against the employee’s claim. The employer argued the employee should be ordered to pay costs on the basis the employee had instituted proceedings that were “vexatious or without reasonable cause”.

Federal Circuit Court of Australia’s decision

The Court considered the background to the matter and the case law interpretations of the phrase “vexatious or without reasonable cause”.

The Court found at the time the employee initiated proceedings against the employer he held a “genuine belief” the termination of his employment was retaliation and asking the Court to decide his grievance was the appropriate course of action. However, the material supplied to the Court in support of the employee’s case lacked substance. So, while the Court found there was no vexatious motive on the part of the employee, it did find there was a lack of reasonable cause.

In particular, the Court noted the employee’s allegations (which were numerous) lacked evidentiary support. The Court stated:

“Even a layperson can be reasonably expected to know that proceedings in Courts rely on evidence for their proper prosecution. [The employees]’s allegations, at the time of instituting proceedings, were presented as allegations which lacked an appropriate evidentiary context, as to causal link between the making of the complaint and the termination of his employment. Indeed, his application (and accompanying affidavit) lacked even an indication as to any such evidentiary context.”

The Court commented it approached the awarding of costs cautiously due to the Fair Work jurisdiction of the employee’s application (which is normally a no costs jurisdiction) but said the Fair Work Act “still makes it clear that instituting proceedings without reasonable cause renders an applicant liable to pay costs”.

The Court ordered the employee to pay the employer’s costs of $12,491.50.

So what can your business learn from this decision?

Where an employee institutes proceedings that are vexatious or without reasonable cause, including in circumstances where the employee has no evidentiary basis for their claim, the employer may make an application to the court for orders that the employee pay the employer’s legal costs.

This article was first published on the Workplace Law website.

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