ACCC issues warning over businesses offering dodgy ‘no-win-no-fee’ unfair dismissal service

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Consumers are being warned by the Australian Competition and Consumer Commission (ACCC) about the alleged misconduct of ‘no-win-no-fee’ legal service Unfair Dismissals Direct.

The ACCC issued a public warning last week after it received 18 complaints from consumers who said Unfair Dismissals Direct did not pay them their settlement after deducting its fees.

The ACCC said these consumers allege they are owed settlements of varying amounts up to $7,000.

“The ACCC has reasonable grounds to suspect that Unfair Dismissals Direct may have engaged in misleading and deceptive conduct, and made false or misleading representations,” it said in a statement.

Workplace Law principal and director Athena Koelmeyer says small businesses should be cautious if they are contacted by no-win-no-fee legal advocates on behalf of a past employee.

“It’s certainly something for small businesses to watch out for,” Koelmeyer tells SmartCompany.

Businesses such as Unfair Dismissals Direct have representatives who seek out employees who have been dismissed, and offer to bring an unfair dismissal application to the Fair Work Commission on their behalf, without any upfront payment.

“There are an interesting variety of them out there, and of course, often you’ve got potentially uneducated employees who think that it’s a great idea because they don’t have to pay this representative or legal advocate upfront,” Koelmeyer says.

“They know that they’ll just have to fork over a cut of whatever payment comes their way during the process.”

Koelmeyer says it is common for these businesses to write to SMEs informing them they are representing an employee the business owner dismissed and that money is now owed.

“Quite rightly, the majority of those letters should be ignored, because they’re a speculative attempt to get money, both for the advocate and the worker,” Koelmeyer says.

Business owners in contact with no-win-no-fee unfair dismissal companies should closely look at any payment agreement at the start of the process.

According to Koelmeyer, often a no-win-no-fee representative will request an employer to pay settlement money into a trust.

“So, the employer, not suspecting that anything is wrong with that, pays a settlement account as directed by the no-win-no-fee advocate into their trust,” she says.

“Small businesses should never pay settlement money to anybody other than the employee without a direction to pay signed by the employee.”

Unfair dismissal disputes usually settle at the conciliation stage, which is before a case is brought to the Fair Work Commission.

While the Fair Work Commission advertises itself as a jurisdiction where employees and employers can represent themselves, Koelmeyer says small businesses most often seek legal assistance after the conciliation stage.

“This year has been fertile ground for these advocates because there’s been a lot of unfortunate reasons for small businesses to let go of staff during the COVID-19 dramas,” Koelmeyer says.

SmartCompany attempted to contact Unfair Dismissals Direct for comment, but the business’ website and phone number have been taken down.

However, according to the Business Register, a company with the same ABN, Unfair Terminations Australia, is currently trading.

SmartCompany contacted Unfair Terminations Australia for comment but did not receive a response prior to publication.

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