HR botches unfair dismissal case, incurs $40k in compo

by Stephanie Zillman14 Aug 2012

An employer has been ordered to pay nearly $40,000 in compensation to a former employee following an unfair dismissal hearing – the arbitrator said the employer’s response had, from the very outset, “no reasonable prospect of success”.

In the case of Stan Kunce v Deliver Australia Pty Ltd (U2012/6097), Fair Work Australia found that while the employer had lodged material in response to an unfair dismissal claim, on the day of the hearing it withdrew its witnesses and failed to make any submissions.

The employer was represented by its HR manager, and Commissioner Bissett was scathing of the manager’s preparedness. “The only motive that can be attributed to the (employer) for its behaviour in the hearing is that it maintained its opposition to the claim of the (employee) when, on some reflection in the days prior to the hearing, it was apparent that its position was not defensible,” Commissioner Bissett said. “It was only after the decision was made and the order for compensation was issued did the (employer) seek to engage in dialogue with the (employee) on some other basis for settling the claim,” she added.

The Fair Work Act allows for one party to pay another party’s costs if their application (or response to an application) is vexatious, without reasonable cause or where it should have been apparent that is had no reasonable prospect of success.

In this particular case, the unfairly dismissed employee submitted that the employer changed the reasons it relied on for termination, produced no evidence in relation to its reasons, failed to cross-examine its own evidence and provided “limited” submissions in its defence. As such, the former employee argued that the employer’s lack of response could be seen as acceptance that it had little chance of success. “Whilst the [employer] now pleads naivety and inexperience with tribunal procedures, no such matter was brought to the tribunal’s attention during or prior to the hearing,” Bissett found.

The employer has some 40 employees on staff, and the HR manager had ample opportunity to seek advice or assistance prior to the hearing, but chose not to. Bissett found that while the reasons for termination weren’t changed as alleged by the aggrieved employee, it must have been ‘reasonably apparent’ immediately before and during the hearing that the employer’s response had no reasonable prospect of success.

In making her decision, the arbitrator took into consideration the employer’s apparent lack of knowledge of the tribunal procedures, but was also mindful that having withdrawn its witnesses the employer was aware, by its response to questions by the tribunal, that without its witnesses it could not substantiate its allegations. “Ignorance, however, can be no satisfactory defence against the claim for costs,” Bissett ruled.

Commissioner Bissett ruled that the employer pay costs incurred the day before and on the day of the hearing.

HR takeaway

The case serves as warning for HR to assess the risks that can come with defending claims. All up, the employer was ordered to pay the maximum penalty of 26 weeks’ pay, coupled with the costs for representation during the hearing. It's important to seek accurate, strategic advice as soon as a claim is received to ensure risks are minimised.


  • by Stuart King 20/08/2012 11:57:18 AM

    Too often HR generalists are tasked with responding to IR issues like this and they are not equipped. The impact on Brand and reputation is significant. Lesson - if you don't know, don't claim to know, and outsource to experts.

  • by Paulette McCormack 28/08/2012 9:24:01 PM

    I agree with Stuart - HR generalists must not be afraid to ask for assistance when faced with a situation outside of their remit. The hiring of an expert would have had less financial impact and serve as a learning tool for the HR person.

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