Remedies for unfair dismissal; compensation

Where an employee wins an unfair dismissal case, but the Commission does not order that the employee be reinstated to his or her former job, the Commission may order that the employee receive compensation; sub- sec  390(3).

Compensation may be considered only after the Commission is satisfied that reinstatement is inappropriate. Compensation will only be ordered where the Commission considers it appropriate. It is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal. Compensation cannot be awarded for shock, distress or humiliation, or other analogous hurt, caused to a dismissed employee by the manner of the person’s dismissal.

Section 392(2) of the Fair Work Act sets out the criteria for determining the amount of compensation that may be ordered. The Commission is to take all circumstances into account, including:

  • the effect of the order on the viability of the employer’s enterprise
  • the length of the person’s service with the employer
  • the remuneration that the person would have received, or would have been likely to receive, if they had not been dismissed
  • the efforts of the person (if any) to mitigate the loss suffered because of the dismissal
  • the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation
  • the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation, and
  • any other matter that the Commission considers relevant. No one consideration ‘is to be regarded as paramount but regard must still be had to each of them