Unfair Dismissal Costs Application Dismissed: WhatManzoor v Loan Base Pty LtdTells Us About Costs in the Fair Work Commission

A recurring concern for workers considering an unfair dismissal application is the fear of being ordered to pay their employer’s legal costs if the matter does not proceed to a final determination.

The Fair Work Commission’s decision in Sakib Manzoor v Loan Base Pty Ltd [2026] FWC 54 provides an important and instructive reminder that costs orders in unfair dismissal matters remain exceptional, even where an application is ultimately discontinued.

Background to the Unfair Dismissal Case

Mr Sakib Manzoor was employed by Loan Base Pty Ltd from October 2022 until his dismissal on 28 April 2025. At the time of his dismissal, he held the position of Chief Executive Officer and was also a director of the company.

Following his dismissal, Mr Manzoor lodged an unfair dismissal application under section 394 of the Fair Work Act 2009 (Cth). He denied allegations of serious misconduct and raised issues concerning procedural fairness, including the absence of a separate termination notice relating specifically to his role as CEO.

The employer, Loan Base Pty Ltd, opposed the unfair dismissal application, relying on allegations of serious misconduct, performance concerns, and compliance with the Small Business Fair Dismissal Code.

The matter progressed beyond conciliation, witness evidence was filed, and the hearing commenced. Before final submissions were lodged, Mr Manzoor discontinued his unfair dismissal application.

The Employer’s Costs Application

Following the discontinuance, Loan Base Pty Ltd applied for a costs order against Mr Manzoor, seeking to recover costs exceeding $126,000.

The employer relied on two provisions of the Fair Work Act:

• Section 611(2) — alleging the unfair dismissal application was made without reasonable cause or that it should have been reasonably apparent it had no reasonable prospects of success; and

• Section 400A — alleging Mr Manzoor engaged in unreasonable acts or omissions that caused the employer to incur costs.

The employer argued, among other things, that:

• The unfair dismissal application should never have been brought;

• Mr Manzoor persisted with the matter despite evidence of misconduct; and

• He unreasonably rejected a settlement offer relating to costs.

The Commission’s Approach to Costs in Unfair Dismissal Matters

Deputy President Slevin began by reaffirming the general rule in section 611(1) of the Fair Work Act: parties before the Commission bear their own costs.

Departures from that rule require strict statutory thresholds to be met.

In considering those thresholds, the Commission relied on established Full Bench authority, including Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956, which confirms that the power to order costs must be exercised with caution and only in a clear case.

The decision also relied on Church v Eastern Health, which sets out the well-established test that an application is made “without reasonable cause” only where it is so obviously untenable that it cannot possibly succeed.

Importantly, the Commission emphasised that an unfair dismissal application is not without reasonable cause merely because it is unsuccessful or discontinued.

Section 611: No Reasonable Cause or Prospects?

Applying the Full Bench authorities, the Commission found that Mr Manzoor’s unfair dismissal application was not manifestly groundless.

There were genuine factual contests, including:

• Whether the employer had knowledge of referral arrangements involving another business;

• Whether performance issues were tolerated without warning; and

• Whether procedural fairness was afforded in the dismissal process.

Even though the Commission was not ultimately required to determine those disputes due to discontinuance, the existence of contested issues meant the application could not be characterised as obviously untenable.

Accordingly, the statutory preconditions under section 611(2) were not satisfied  .

Section 400A: Unreasonable Acts or Omissions?

The employer also relied on section 400A, which permits costs orders where a party’s unreasonable conduct in the continuation or conduct of proceedings causes another party to incur costs.

Here, the Commission relied on Full Bench authority including Gugiatti v SolarisCare Foundation Ltd [2016] FWCFB 2478, which makes clear that section 400A is not concerned with whether it was reasonable to commence proceedings, but rather with how the proceedings were conducted once instituted.

The Commission rejected each alleged ground of unreasonable conduct, finding that:

• Continuing the unfair dismissal claim to hearing in circumstances of contested evidence was not unreasonable;

• Discontinuing after the hearing but before submissions did not amount to unreasonable conduct; and

• Rejecting a settlement offer does not, of itself, enliven section 400A, particularly where the costs application ultimately fails.

As a result, the Commission found the statutory preconditions under section 400A were also not met  .

Discretion and the Broader Context

Notably, the Commission went further. Deputy President Slevin stated that even if the statutory thresholds had been met, he would not have exercised his discretion to award costs.

The Commission observed that the dispute was not straightforward, involved fault on both sides, and raised legitimate questions about the manner in which the employment relationship ended.

This reinforces a consistent theme in unfair dismissal jurisprudence: costs are not used as a punitive mechanism to deter workers from accessing the Commission.

Key Takeaways for Workers and Employers

This decision underscores several important principles in unfair dismissal law:

• Costs orders in unfair dismissal matters remain exceptional.

• Discontinuing an application does not automatically expose a worker to costs.

• Employers face a high evidentiary and legal threshold when seeking costs.

• Legitimate factual disputes and procedural fairness issues can provide a reasonable basis for bringing an unfair dismissal application.

Reading the Full Decision

The full decision of the Fair Work Commission is publicly available and should be read in its entirety by anyone concerned about costs risks in unfair dismissal proceedings.

Reference:

Sakib Manzoor v Loan Base Pty Ltd [2026] FWC 54

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