Legal decision shows employers have some protection from unreasonable unfair dismissal claims

A recent decision by the full bench of the Australian Industrial Relations Commission shows employers should be protected from costs incurred with defending unreasonable unfair dismissal claims.

The case involved the termination of the applicant, Natasha Vukadinovic, for lying about the death of her mother and father and seeking compassionate leave as a result of those apparent deaths.

Her legal representative, Gary Dircks (with whom Vukadinovic had entered into a “no-win-no-fee” agreement – known as a contingency fee) continued to push the employer, JimRoy Pty Ltd, for a financial settlement, even after Dircks acknowledged to JimRoy’s lawyer, Deacons’ partner Stuart Kollmorgen that he could not dispute that Vukadinovic had lied about her parents’ death.

As a result of Dircks continuing to pursue the claim, JimRoy was forced to prepare for the hearing, incurring unnecessary costs. But then Dircks and then Vukadanovic withdrew from the proceedings.

AIRC Commissioner John Tolley then made an order against Dircks and Vukadanovic to pay JimRoy’s costs.

“I am satisfied that he was well aware of the hopelessness of his client’s case,” Tolley said in his judgment.

Dircks appealed to the full bench of the AIRC. While the full bench did limit Dircks’ liability for costs to a shorter time period, it confirmed Tolley’s decision.

“The application had no chance of success and Mr. Dircks’ dragging out of the matter and his continual attempts to extract monies from the employer were wrong actions in the face of the knowledge he had of the applicant’s actions.”

Deacons’ partner Sarah Ralph says the full bench made it clear that Dircks had an obligation to take immediate steps to ensure the unfair dismissal claim was withdrawn once he knew it was bound to fail.

She says employers hit with an unreasonable unfair dismissal claim should inform the employee and their legal representatives on notice – in writing, preferably – that they will be seeking costs.

“If an employer is subject to an unfair dismissal claim that really has very little chance of success, they need to put the applicant on notice that they will pursue costs,” Ralph says.

While this decision was not made under the new Fair Work industrial relations regime, Ralph says there is provision in the new laws to protect employers from unreasonable unfair dismissal claims.