Compensation for unfair dismissal despite valid reason

These concluding comments by a member of the Fair Work Commission when delivering a decision in a defended unfair dismissal claim show that an employee can succeed in such a claim despite the Commission having found that there was a valid reason for the dismissal given the particular personal circumstances of the employee and the case overall.
“Conclusion

[153] I am satisfied and find that the Applicant was not the PI for the Covid Supplementary Funding Pool Project when he submitted his reimbursement claim.

[154] I am also satisfied and find that the Respondent made a mistake by not informing the Applicant, either in writing or verbally, that he was no longer the PI for the Covid Supplementary Funding Pool Project.

[155] I am satisfied and find that the Respondent made a mistake in not correcting its records in relation to who was the PI for some 18 months.

[156] I am satisfied and find that the Respondent made a mistake in paying the Applicant before checking whether he was actually the PI after Professor Greenland’s email.

[157] I am satisfied and find that the Respondent made a mistake by informing the Applicant that he could use the money in the Covid Supplementary Funding Pool Project in June 2023.

[158] I am satisfied that the decision of the Full Court in Cornwall is of relevance in this matter. The Applicant would not have been dismissed if his reimbursement claim had been rejected. The Applicant’s claim was approved because of a compilation of errors and mistakes identified above. Therefore, I find that the Respondent must take responsibility for the error in paying the Applicant.

[159] Further, taking into account the decision in Byrne, the personal consequences for the
Applicant in being dismissed are disproportionate to the gravity of the Applicant’s conduct. I am satisfied and find that the termination of the Applicant would destroy his reputation on the global stage. Such an outcome is harsh when the Respondent’s actions, or in fact their lack of appropriate governance, resulted in the Applicant being reimbursed.

[160] The Applicant was entitled to a ‘fair go’. I am satisfied and find that the Applicant did not receive this statutory entitlement.

[161] For the above reasons, I find that the Applicant’s termination was harsh.

[162] Whilst I have previously found that the Respondent had a valid reason to terminate the Applicant, I find that the Applicant was unfairly dismissed.

Remedy

[163] Having found that the Applicant was unfairly dismissed, I now turn to the issue of an appropriate remedy.

[164] The relevant provisions of the FW Act in relation to a remedy for an unfair dismissal are:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal
(see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.”

“391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or
(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer; the order under subsection (1) may be an order to the associated entity to: (c) appoint the person to the position in which the person was employed immediately before the dismissal; or
(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) 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; and
(f) 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
(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[165] The Applicant seeks reinstatement and compensation for lost wages.

[166] I am not satisfied that the necessary trust and confidence can be re-established to allow for the Applicant to be reinstated. This scenario is not one where re-employment might be a little embarrassing for the Respondent as per the obiter in Nguyen v Vietnamese Community in Australia.19

[167] Unsurprisingly, the Respondent has lost trust in the Applicant due to his behaviour. It is not appropriate to change the scope of a Commonwealth Government funded project by way of a telephone call. Such a significant decision needs a paper trail. Further, the Applicant’s arrogance and the contempt he showed for his superior in not contacting Professor Low when requested, behaviour which the Applicant still tries to justify, identifies an employee who does not want to work as part of that team.

[168] I am satisfied and find that reinstatement is not an appropriate remedy in this circumstance.

Compensation

[169] I now turn to the factors to be considered in relation to any award of compensation.

Section 392(2)(a) – effect of order on employer’s viability

[170] I am satisfied that my order will not affect the viability of the Respondent. I have taken this into account.

Section 392(2)(b) – length of service

[171] I have taken into account that the Applicant had worked for the Respondent for approximately 6 and a half years.

Section 392(2)(c) – remuneration received if not dismissed

[172] Based on the comments of the Vice Chancellor (see above at paragraph [147]), I am satisfied and find that the Applicant would have continued to be employed until the end of 2024. The Applicant would have continued to receive his annual salary of $3,566.17 per week. From the date of his dismissal on 21 May 2024 until the end of the year, that would be 32 weeks x $3,566.17 = $114,117.44. I have taken this into account.

Section 392(2)(d) – effort to mitigate loss

[173] The Applicant has been successful in gaining a casual lecturing role at Canterbury Institute of Management from 10 June 2024. Making an estimation from the information provided by the Applicant, he has earned around $1,000 per week in this new role. From 10 June 2024, this is about $22,000 in casual earnings (22 weeks x $1,000). I also note that the Respondent is the only University in Darwin, so lecturing opportunities with the Applicant’s skillset are very limited. I have taken this into account.

Section 392(2)(e) – amount of remuneration received by the Applicant

[174] As outlined above, the Applicant earns around $1,000 a week for this casual role. I have taken this into account.

Section 392(2)(f) – amount likely to be earned

[175] I have taken into account the information identified above.

Section 392(2)(g) – any other matter

[176] In calculating the appropriate level of compensation, I am cognisant of the method identified in Sprigg v Paul’s Licensed Festival Supermarket,20 which involves the following steps:-

Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

[177] In Hanson Construction Materials v Pericich,21 a Full Bench of the Commission held that:

“[39]…Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission ‘must take into account all of the circumstances of the case’ including the particular matters set out at s.392(2)(a)to(g).”

I have taken this into account.

[178] Applying the four steps of the Sprigg Formula, I have determined as follows.

[179] I am satisfied that the Applicant would have been employed until the end of 2024.

[180] I have deducted contingencies of 33.33%.

[181] The ordered amount is to be taxed in accordance with Australian Law.

[182] I note that the amount ordered is below the legislated compensation cap.

Conclusion

[183] Based on the calculation above:-

$114,117.44

– $22,000

= $92,117.44

$92,117.44