New laws have come into effect this week giving applicants beneficial costs protections in discrimination claims.
The Australian Human Rights Commission Amendment (Costs Protections) Act 2024 implements an equal access costs model. Under the new laws, the Court must order that a respondent pay an applicant’s legal costs if they are successful in the claim on one or more grounds and acted reasonably in the proceeding.
Further, if the applicant is unsuccessful in their claim, the applicant cannot be ordered to pay the respondent’s costs, except in exceptional circumstances.
In employment discrimination litigation, the costs provisions are set out to work as follows:
The purpose of this new law is to address the power imbalances between individual applicants and their opponents, typically their employers. Small businesses or individual respondents who do not have a significant resourcing or power advantage over an applicant will still have to bear their own costs of the proceeding, even if they are successful in the defence of the proceeding. An employer in these situations can only recover their costs in these circumstances where they can demonstrate that the applicant instituted the proceeding vexatiously or acted unreasonably.
This is a significant new protection for employees who make discrimination claims under the federal legislation. Employment litigation is set to change and we may see a shift away from claims in the Fair Work Commission for employment disputes.
Employers and their management personnel face the risk of an increase in the number of claims commenced under the new laws, potentially increased settlement expectations and a reduced likelihood of issues being resolved early in the workplace or before litigation is commenced.
Please contact our Employment, Discrimination and Equality team if you have any questions about the changes, or if you require any assistance with a dispute.