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A significant new law has been passed in Australia, providing more protection to employees who take legal action against workplace harassment or discrimination. 

Under this new costs protection law, employees who bring claims to court for sexual harassment, discrimination, or similar grievances will not be responsible for covering their employer’s legal fees if they lose the case. 

This change aims to make it easier and less financially risky for individuals to pursue justice in the workplace.

Why Was the Costs Protection Law Introduced?

Taking legal action for workplace discrimination or harassment can be daunting, especially when considering the costs involved. Previously, if an employee lost their case in court, they could be ordered to pay not only their own legal fees but also their employer’s, leading to potentially crippling financial consequences. This “costs order” system acted as a significant deterrent for many people, leaving many cases unresolved or settled outside of court under strict non-disclosure agreements.

Research from the Australian National University (ANU) highlighted that legal fees and the threat of being ordered to pay an employer’s costs kept many employees from pursuing claims they might otherwise win. With around one in three Australians reporting experiences of sexual harassment in the workplace over the past five years, it became clear that reform was needed to encourage victim-survivors to seek justice without fear of financial ruin.

The New Law in Practice

Under the new costs protection law, which is part of the government’s response to the 2020 Respect@Work report, an employee who takes their employer to court for claims of sexual harassment or discrimination will not be liable for their employer’s legal fees if they lose. 

This protection extends to cases involving racial, religious, and LGBTQ+ discrimination, ensuring broad coverage for various types of workplace harassment claims.

However, there are limits to this protection. 

The law will not apply if the court finds the claim was unreasonable or made without a serious basis. It also does not cover cases where the alleged perpetrator is a coworker without a power advantage, meaning in those situations, legal fees might still be shared between the parties.

Benefits of the New Law

The main goal of the costs protection law is to remove the financial barriers that previously prevented many employees from bringing valid claims to court. By protecting employees from the risk of paying hefty legal fees if they lose their cases, the law encourages more individuals to pursue their rights and hold employers accountable for workplace harassment and discrimination. This creates a safer and more equitable working environment for all.

Additionally, the new law provides relief for employees working in large corporations or hierarchical organizations where power dynamics can make harassment or discrimination more difficult to challenge. These protections ensure that individuals are not deterred from seeking justice due to the financial strength of their employer.

Concerns About the New Law

While many have welcomed the law as a much-needed reform, it has also sparked concerns, particularly from the business community. 

Some worry that the new law may expose employers, especially small businesses, to greater financial risk. There is also a fear that frivolous or baseless claims could lead to significant legal costs for employers, even if they are found not guilty.

This concern was key to the opposition’s stance against the bill. Critics argue that while employees should not be discouraged from pursuing legitimate claims, the law may unintentionally create financial burdens for businesses, particularly those without large legal budgets. Small businesses, in particular, may be vulnerable to high legal costs, even in cases where they have done nothing wrong.

Moving Forward

The new costs protection law is a critical step in creating a fairer legal process for employees facing workplace harassment or discrimination. It aims to strike a balance by protecting those who need legal recourse without exposing them to undue financial hardship. At the same time, it maintains safeguards to prevent abuse of the system by ensuring that claims must have a serious basis before proceeding.

As this law is implemented, employees and employers must be aware of its nuances. For those dealing with workplace harassment or discrimination, this law offers hope and a pathway to justice without the overwhelming threat of legal costs. For businesses, it emphasises the importance of maintaining a safe and respectful workplace as the stakes of legal challenges continue to evolve.

The introduction of the costs protection law represents a shift towards greater employee protection and a more accessible legal system for workplace harassment and discrimination cases.

By reducing the financial risks of going to court, this law empowers individuals to stand up for their rights while also fostering a culture of accountability in workplaces across Australia. As with any legal change, it’s essential for both employees and employers to stay informed and prepared for the potential impact on their rights and responsibilities.