Compensation for unfair dismissal; discounts for contingencies

One of the principles which attends the Fair Work Commission’s work when calculating or assessing compensation for unfair dismissal is to account for so-called “contingencies”. This is a notional discount to the amount assessed as representing the loss of remuneration caused by an unfair or otherwise wrongful dismissal. The calculation of the remuneration lost by an unfair dismissal is usually a simple arithmetic calculation since unfair dismissal cases can take a year to get to trial after the dismissal. Then, assuming the applicant wins on the issue of whether the dismissal was relevantly unfair, it is a reasonably simple matter for the member of the Commission to apply the evidence and calculate what has been lost. That amount is then subject to the wholly artificial 6 months’ cap plus various other statutory and common law (or more correctly since we are discussing the Fair Work Commission) “case-law” discounts.

One of these requires the Commission to discount any component representing future loss for what are called “contingencies” such as a hypothetical provision to give the respondent employer (who has just lost I must add) the possibility that the applicant may be hit by a bus when he or she leaves the Commission hearing and  the respondent employer should not bear financial responsibility for the such possibilities because if the applicant was to (hypothetically) die any component of economic loss from that moment forward would be double dipping so to speak.

Here is another example.

“I will deduct an amount of 15% for the possibility that in the 2 years Ms Mulhallen may have been made redundant or had her shifts reduced by such an amount that she chose to resign.’

Mulhallen v Roy Morgan Interviewing Services Pty Ltd (2017) FWC1942 delivered 6 April 2017 per Gooley DP