Compensation for unfair dismissal; contingencies

“As I set out in an earlier decision (see Mr Michael Efford v BTE Technology [2016] FWC 657):
“It is necessary to take into account actual and, where relevant, prospective earnings, over the period of anticipated employment. In Bresatz v Przibilla (1962) 108 CLR 541, Windeyer J commented as follows in relation to contingencies of both a negative kind (which reduce the likelihood of earnings) and a positive kind (which increase the likelihood of earnings) to the award of compensation for damages:
Turning then to the first head commonly called loss of future earnings – a common method of estimating the loss of prospective earnings is to take the annual earnings at the date of the accident and multiply this by the number of prospective working years lost. Then it is said “the resulting amount must then be scaled down by reason of two considerations, first that a lump sum is being given instead of the various sums over the years, and second that contingencies might have arisen to cut off the earnings before the period of disability would otherwise have come to its end”: Mayne & McGregor, Damages (1961) p. 767. The first of the two considerations mentioned does, of course, in every case demand that the product of the initial multiplication must be discounted at some assumed rate of interest to ascertain the present value of the notional future earnings. Nothing here turns upon the individual. This “scaling down” is a mere process of arithmetic applicable to all cases; and there are tables from which the result is readily ascertainable. But the second consideration is altogether different. It is a mistake to suppose that it necessarily involves a “scaling down”. What it involves depends, not on arithmetic, but on considering what the future might have held for the particular individual concerned. He might have fallen sick from time to time, been away from work and unpaid. He might have become unemployed and unable to get work. He might have been injured in circumstances in which he would receive no compensation from any source. He might have met an untimely death. Allowance must be made for these “contingencies”, or the “vicissitudes of life” as they are glibly called. But this ought not to be done by ignoring the individual case and making some arbitrary subtraction. We were told that in South Australia it is a common practice to subtract twenty-five per cent “for contingencies”. Indeed counsel for the appellant, in the calculations he made in support of his claim for higher damages, conceded that this should be done. But he did not explain why. I know of no reason for assuming that everyone who is injured and rendered for a period unable to work would probably in any event have been for a quarter of that period out of work, or away from work and unpaid. No statistics were presented to justify this assumption. Moreover, the generalization, that there must be a “scaling down” for contingencies, seems mistaken. All “contingencies” are not adverse: all “vicissitudes” are not harmful. A particular plaintiff might have had prospects or chances of advancement and increasingly remunerative employment. Why count the possible buffets and ignore the rewards of fortune? Each case depends upon its own facts. In some it may seem that the chance of good fortune might have balanced or even outweighed the risk of bad. With these considerations in mind I turn to the element of loss of future earnings in this case and to what the learned trial judge said on this aspect.
The judgment of Windeyer J is commented upon favourably by the High Court in its judgment in Wynn v NSW Insurance Ministerial Council (1995) 133 ALR 154, which itself is quoted favourably inEllawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000 Print S5109), which itself noted that included in the scope for contingencies were:
“positive considerations which might have resulted in advancement and increased earnings are also taken into account”
In Tabro Meat Pty Ltd v Heffernan [2011] FWAFB 1080, a Full Bench of (what was then) Fair Work Australia took into account the possibility of prospective earnings (where the Applicant concerned had obtained a temporary employment position only following dismissal) in reducing the amount to be awarded by 25% as a result of uncertainty as to the extent of on-going unemployment.
Demonstrably, the likelihood of prospective earnings is a matter that is taken into account for purposes of determining the amount the Commission may order that an employer pay a person. Equally, the extent of such prospective earnings must form a criterion to be taken into account when determining whether it is appropriate to make an order for compensation itself.”

See Baker v The trustee for Theo Sourlos Family Trust No. 2 (2016) FWC 3641 delivered 7 July 2016 per Richards SDP