In a decision which highlights the pitfalls of employers representing themselves in the Fair Work Commission, a business has been ordered to pay a former employee’s legal costs after unsuccessfully attempting to defend an unfair dismissal case.
The employer chose not to engage legal representation to defend the unfair dismissal case, despite the employee having engaged solicitors to act for him.
The business decided instead to represent itself with its Managing Director, during both conciliation and the subsequent hearing.
Unfortunately the business failed to appreciate its exposure to an adverse outcome – in other words, the risk of losing the case, which led it to taking an aggressive stance during conciliation.
It then reneged on a settlement agreement of just two weeks pay that had been agreed to during the conciliation process.
It failed to ensure its communications regarding settlement were marked ‘without prejudice’, and in the process of reneging on that settlement, the business disclosed details of the settlement offers in ‘open’ correspondence sent to the Commission.
The business 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.
In addition, the oral witness testimony given by the Managing Director during the hearing contradicted parts of the other witness statements.
Unsurprisingly, the employer lost the unfair dismissal case and was ordered to pay $10,695 compensation to the employee, which was about 13 weeks pay.
Further, 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.
The business was ordered to pay a further $3,000,
Lessons to be learned
Industrial advocate Miles Heffernan from Employer Advisors says a short term saving usually costs in the long run.
“It is understandable that some businesses want to avoid using lawyers or industrial relations professionals as a way to minimise costs, but as this case shows, costly problems arise when businesses attempt to represent themselves,” he said.
“If you don’t know how the Fair Work Commission works, or what costly pitfalls might present themselves, you can end up in all sorts of trouble.
“Without a good understanding of the rules of evidence, legal privilege and the Fair Work Act, businesses will end up shooting themselves in the foot defending matters like unfair dismissal.
“If you are managing a difficult employee, or are dealing with an unfair dismissal, you should always obtain specialist legal advice at an early stage, particularly when one considers the financial and reputational consequences associated with an adverse outcome in a Fair Work matter.”
If you are dealing with a difficult employee or need assistance managing a dismissal so you don’t end up in the Fair Work Commission, we can help.
Please call our team at Employer Advisors today on 1300 853 837.