The ‘unfairness’ of some Unfair Dismissal Claims

The process for employees commencing Unfair Dismissal Claims is simple and inexpensive. It costs $59.50 for an employee to lodge a claim and they can represent themselves, with no need to consult legal representation or advice as to whether they have a legitimate claim.

Fair Work Australia (FWA) has the power to dismiss a claim where it has no reasonable prospect of success, but not until the matter goes to hearing. There’s no power to dismiss a clam at conciliation where it becomes obvious it has no substance.

Employers need to have a valid reason to dismiss an employee and use a fair and reasonable procedure when doing so. To defend a claim, they need a strong case against the allegations of unfairness. In most cases, the employer will settle the claim for commercial reasons rather than incur the costs of defending it on its merits.

The Government’s intention of putting in place a system to decrease the instances of employers paying ‘go away money’ is not working. The fact is, an employee can commence an unfair dismissal claim that’s completely lacking in substance and the employer must attend mandatory conciliation where they’ll be encouraged to settle the claim effectively by paying ‘go away money’. Any settlement is usually a fraction of the cost to defend the claim at hearing, leading to the employer making a commercial decision. The outcome is that an employee - who may be unworthy - receives compensation and an employer who acted within its rights to dismiss an unsuitable employee is out-of-pocket thousands of dollars and many hours of management time. This is where the unfairness really lays with a large number of unfair dismissal claims.

However, because there are also legitimate claims from employees, FWA will continue to follow this procedure on the basis that all claims should be heard to determine if they have substance. Where substance is lacking, employers can make an application for costs against the employee but these applications are only successful in extreme cases.