When it comes to General Protections claims under the Fair Work Act 2009 (Cth), the rules around legal costs are very strict. These cost limits are designed to make sure everyone has fair access to justice, while still holding people accountable if they act unreasonably during a case.
Under section 570 of the Fair Work Act, costs can only be ordered in special circumstances. This is a major difference from most other court cases where the losing party usually pays the winner’s costs.
In this article, our Brisbane employment lawyer discusses when costs may be awarded against a party in General Protections proceedings, how they’re assessed, and what recent legal changes mean for both employers and employees.
Key Takeways
- Under section 570 of the Fair Work Act, each party generally bears their own legal costs.
- Costs may only be ordered if a party acts vexatiously, without reasonable cause, or unreasonably during the proceedings.
- Ignoring court directions, rejecting reasonable settlement offers, or running a hopeless case can lead to a costs order.
- Courts assess costs carefully – often using a lump-sum approach under the Federal Court Rules.
- While rare, recent decisions show courts are increasingly prepared to award costs for clearly unreasonable conduct.
When Can a Court Order Legal Costs?
Under section 570(2) of the Fair Work Act, a court can only make someone pay legal costs in three specific situations:
1. Vexatious Proceedings
A case is brought vexatiously when the main purpose is to harass or embarrass the other party, not to genuinely pursue legal rights. The focus is on the person’s real motive, not just whether their case was weak.
2. Without Reasonable Cause
This means that, based on what was known at the time the case started, there was no real chance of success. It’s judged objectively, without using hindsight. If there were legitimate legal arguments to be made, the case isn’t necessarily “without reasonable cause.”
3. Unreasonable Acts or Omissions
This covers behaviour during the case that causes unnecessary costs, such as:
- Refusing a reasonable settlement offer and ending up worse off
- Withdrawing arguments late in the hearing
- Continuing a case that’s clearly not supported by the evidence
- Ignoring court directions or orders
For a broader overview of employer responsibilities under the Fair Work Act 2009 (Cth), you may find our detailed guide here.
How Courts Decide Whether to Award Costs
1. Settlement Offers and Calderbank Letters
If a party rejects a reasonable offer to settle, the court may see that as unreasonable behaviour under section 570(2)(b).
However, courts are careful when relying on Calderbank letters (written offers to settle) because they assume that a right to costs already exists – which isn’t always the case under the Fair Work Act.
2. Proportionality and Case Management
Courts look at whether the costs spent were proportionate to what was in dispute and whether both sides followed court directions.
If a party fails to comply with case management orders, that may justify a costs order against them.
3. Amount of Costs (Quantum) and How They’re Assessed
When a costs order is made, the court decides how much should be paid.
The Federal Court often uses a lump-sum approach based on affidavit evidence rather than a detailed bill.
The assessment follows the Federal Court Rules, which set standard rates for tasks like preparing documents or attending hearings.All of this must still comply with the section 570 limitations in Fair Work matters.
Legal Tip: Whether a costs order is made under the Fair Work Act 2009 (Cth) depends entirely on the discretion of the Fair Work Commission or the Court. Even if a party believes the other side acted unreasonably, there is no automatic entitlement to recover legal costs. Each case is assessed on its own facts – always seek advice from an experienced employment lawyer before assuming costs will be awarded.
Procedural Steps for Costs Applications
Timing Requirements
An application for costs can be made at any stage of the proceedings, or within 28 days after final orders are issued.
Forms and Documentation
Under the National Court Framework, parties applying for lump-sum costs must file the required affidavits in line with the Costs Practice Note, including a:
- Costs Summary (Affidavit); and
- where relevant, a Costs Response.
In Division 2 proceedings of the Federal Circuit and Family Court, costs applications are made using the general federal law forms – typically an Interlocutory Application accompanied by an Affidavit.
Assessment and Taxation Procedures
Scale-Based Assessment
The Federal Court Rules provide for costs to be assessed using Schedule 3 rates, which set standard amounts for different types of legal work. The updated rates apply from 2 September 2025.
Courts may also issue lump-sum costs orders as a simpler alternative to detailed assessments.
Taxation Fees
If costs are formally assessed (or “taxed”) rather than fixed as a lump sum, taxation fees apply. These fees are based on the value of the claim and are structured in tiered bands.
Recent Procedural Changes
- The General Federal Law Rules 2025, which came into effect on 1 September 2025, replaced the 2021 Rules.
- Schedule 2 continues to set out the scale of costs for assessment purposes.
- Additionally, from September 2024, the Federal Circuit and Family Court introduced a National General Protections List to improve the management and consistency of general protections cases.
Frequently Asked Questions
1. What is the general rule about costs in Fair Work Commission matters?
The general rule is that parties typically bear their own costs. The FWC can only order costs in limited circumstances set out in FW Act s 611(2).
Typical FWC applications where this comes up include unfair dismissal, general protections, and unlawful termination. The Commission’s costs overview pages confirm the “no costs” default.
Application fees are separate from legal costs. Current FWC filing fees (for example, unfair dismissal, general protections) are published annually. As at 1 July 2025, most application fees are $89.70.
Need help understanding Fair Work Act cost rules or facing a potential costs order? Our employer employment lawyers can advise you on risk, settlement strategy, and compliance.
2. Can the FWC order costs against my client’s lawyer or paid agent?
Yes, but only in prescribed circumstances.
For example:
- Unfair dismissal: under section 401 (encouraging a hopeless case; unreasonable act/omission).
- General protections/unlawful termination: under s 376 and s 780.
FWC guidance pages outline how these provisions operate.
For further clarity on which terminations don’t qualify as unfair dismissal, see our article ‘What Is Not Unfair Dismissal in Australia?’
3.What are common “costs risk” scenarios for employers and employees?
- Persisting with a clearly weak case or response after it becomes apparent it has no reasonable prospects (e.g. after key evidence emerges).
- Unreasonable acts/omissions that cause the other side to incur costs, including repeated non‑compliance with directions, failing to file material, unnecessary adjournments, or failing to discontinue after it is clear the matter should not continue.
- Representatives who encourage hopeless proceedings or act unreasonably in the conduct/continuation of the matter.
- In Court FW Act matters, instituting proceedings vexatiously/without reasonable cause, unreasonable conduct causing costs, or refusing to participate in the related FWC matter.
4. Are there different costs rules for sexual harassment claims?
Within the FWC under the FW Act (for example, “stop sexual harassment” orders), the Commission’s general costs framework above applies (s 611, with orders only in limited circumstances).
Separate to the FW Act, and since 1 October 2024, the Australian Human Rights Commission Amendment (Costs Protection) Act 2024 introduced a new model where successful applicants can generally recover costs, while respondents can only recover in limited cases of vexatious or unreasonable conduct.
5. What is the difference between party–party and indemnity costs in the FWC?
- Party–party costs: only the necessary and reasonable legal work for the matter.
- Indemnity costs: a higher recovery basis (solicitor–client) typically where there is misconduct or comparable delinquency by the paying party.
