The bar for "unreasonable conduct" sits higher than many employers think
An Australian employer beat an unfair dismissal claim, beat the appeal, then asked the Fair Work Commission to make the worker cover its costs. It lost.
On 28 April 2026, Commissioner Connolly of the Fair Work Commission dismissed an application by Lumia Care Services Pty Ltd to recover costs from a former employee, Luca Yin, who had unsuccessfully challenged his redundancy. The costs application was brought under sections 400A and 611 of the Fair Work Act 2009.
The backstory will sound familiar to any HR leader who has managed a contested exit. Yin lodged his unfair dismissal application on 2 May 2025, arguing his role had not been made genuinely redundant. He represented himself and, notably, was assisted by generative AI in preparing his submissions. Lumia Care was represented in-house by Mr R. Medina, the lead member of its people team.
After a hearing on 13 August 2025, the Commissioner ruled in the company's favour on 21 October 2025, finding Yin's dismissal was a genuine redundancy. Lumia Care filed its costs application shortly afterwards, on 27 October 2025. Yin separately pursued an appeal, which a Full Bench of the Commission dismissed on 22 January 2026.
Lumia Care's costs argument was straightforward: back on 3 July 2025, it had offered Yin $5,192.30 to settle the matter, and he had refused. The offer remained open until 7 July. The company said his refusal, combined with a notice to produce documents (a Form F52) and what it described as unreasonable extension requests, had needlessly driven up its costs.
The Commissioner did not buy it.
Central to the decision was the nature of Yin's original case. While the redundancy was ultimately found to be genuine, the Commissioner accepted that Yin had real points to make. The circumstances of his absence from work, his medical requirements, and Lumia Care's decision to bring in a short-term contractor to cover his role were, in the Commissioner's view, legitimate matters to test. "I am not satisfied that Mr Yin did not have an argument to make in support of his contention that he was unfairly dismissed," the Commissioner wrote.
The fact that Yin ran the case himself also weighed in his favour. "Mr Yin was not legally represented in these proceedings and may not have had the benefit of advice to assist in distinguishing between a genuine redundancy and an unfair dismissal," the Commissioner observed.
On the rejected settlement offer, the Commissioner found Yin had not acted unreasonably in turning it down while running his own case. The notice to produce was also found to be a fair use of process, helped along by the fact that Lumia Care had filed its own F52 application, and neither side ultimately secured an order. Examples of conduct that might have crossed the line, the Commissioner noted, include failing to comply with directions, failing to attend hearings, or the timing of filing an appeal notice shortly before a hearing. None of those applied here.
The case is a useful reality check on costs strategy. Winning an unfair dismissal claim, even where an appeal is also dismissed, does not automatically open the door to recovering legal or management time. A rejected settlement offer, on its own, is rarely enough. The bar for "unreasonable conduct" under s.400A sits high, and self-represented applicants, including those leaning on AI tools, tend to be given latitude.
The practical message: build the redundancy process to withstand scrutiny on its own merits, because the costs lever is harder to pull than many employers assume.
