3 key criteria for reasonable offers in the Fair Work jurisdiction

The threshold for obtaining a costs order in claims brought under the Fair Work Act 2009 (Cth) (FW Act) jurisdiction is high. The Court can only order costs in limited circumstances, such as if a party has commenced proceedings vexatiously or without reasonable cause, or acted unreasonably in the course of the proceedings. In certain circumstances, a party may act unreasonably if they refuse a reasonable offer.

In Fair Work Ombudsman v Construction, Forestry and Maritime Employees Union (Kwinana Bulk Jetty Case) (2026), the Federal Court considered whether a costs order should be made against the Fair Work Ombudsman (FWO), after the FWO refused the union’s offer for the parties to walk away with each bearing their own costs.

The Court subsequently dismissed the FWO’s case against the union.

The union applied for the FWO to pay its costs, on the basis that the FWO had acted unreasonably by refusing its offer.

The Federal Court ultimately dismissed the costs application.

In its decision, the Court set out the following checklist of a reasonable offer:

The offer identifies whether it was either:

A Calderbank offer (i.e. a settlement offer made “without prejudice save as to costs,” allowing it to be considered by the court when determining costs if the offer is rejected and the final judgment is less favourable than the offer). In this case, the question of whether a party should be ordered to pay the costs of another party depends on the application of principles enunciated by courts over time.
An offer of compromise made pursuant to the Court’s rules. In this case, the question of whether a party should be ordered to pay the costs of another party depends on the interpretation of those rules.

The offer explains with sufficient detail why it is reasonable, or why it would be unreasonable for the offer’s recipient to refuse it, e.g. why the other party’s case is weak or unlikely to succeed.
The offer provides a sufficient window of time for the recipient to accept the offer. For example, an offer that expires in 3 days may not suffice if final hearing is, say, 2 months away. The standard is normally 7 to 14 days.

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