This extract from a recent decision of the Fair Work Commission contains a very useful analysis of howe thew Commission calculates compensation for unfair dismissal.
“Consideration
[3] Pursuant to s 392(1) of the Act, the Commission may order that the Respondent pay an
amount of compensation to the Applicant in lieu of reinstatement. The assessment of
compensation I am required to undertake is directed towards the remuneration lost in
consequence of the Applicant having been unfairly dismissed.
[4] The method for calculating compensation under s.392 of the Act was considered by a
Full Bench of the Commission in Johnson v Northwest Supermarkets T/A Castlemaine IGA
(Johnson) in the following way:
“[41] The well-established approach to the assessment of compensation under s 392 is to
apply the ‘Sprigg formula’, derived from the Australian Industrial Relations
[2026] FWC 1860
DECISION
[2026] FWC 1860
2
Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. This
approach was articulated in the context of the current legislative framework in Bowden
v Ottrey Homes Cobram and District Retirement Villages. Under that approach, the first
step to be taken in assessing compensation is to consider s.392(2)(c), that is, to determine
what the applicant would have received, or would have been likely to receive, if the
person had not been dismissed. In Bowden this was described in the following way:
“[33] The first step in this process – the assessment of remuneration lost – is a
necessary element in determining an amount to be ordered in lieu of
reinstatement. Such an assessment is often difficult, but it must be done. As the
Full Bench observed in Sprigg:
‘… we acknowledge that there is a speculative element involved in all such
assessments. We believe it is a necessary step by virtue of the
requirement of s.170CH(7)(c). We accept that assessment of relative
likelihoods is integral to most assessments of compensation or damages
in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the
employee would have remained in the relevant employment but for the
termination of their employment. We refer to this period as the ‘anticipated
period of employment’…”
[42] The identification of this starting point amount ‘necessarily involves assessments
as to future events that will often be problematic,’ but, as the Full Bench observed in
McCulloch v Calvary Health Care Adelaide, ‘while the task of determining an
anticipated period of employment can be difficult, it must be done.’
[43] Once this first step has been undertaken, various adjustments are made in
accordance with s.392 and the formula for matters including monies earned since
dismissal, contingencies, any reduction on account of the employee’s misconduct and
the application of the cap of six months’ pay. This approach is however subject to the
overarching requirement to ensure that the level of compensation is in an amount
that is considered appropriate having regard to all the circumstances of the case.”
2
(my emphasis, references omitted)
[5] In Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra v Darren Nurcombe,3
the
Full Bench stated that in quantifying compensation, it is necessary to set out, with some
precision the way in which the various matters required to be taken into account under s.392(2)
(and s.392(3) if relevant), and the steps in the Sprigg formula, have been assessed and
quantified. The Full Bench also proffered that the way in which a final compensation amount
has been arrived at should be readily apparent and explicable from the reasons of the decisionmaker.
[6] Section 392(2) of the Act prescribes that, in making such an order for an amount of
compensation, the Commission must take into account all of the circumstances of the case,
including the factors listed in that subsection. I have taken into account all of the factors listed
in that subsection, as set out below.
[2026] FWC 1860
3
Remuneration that the Applicant would have received or would have been likely to receive, if
she had not been dismissed: s.392(2)(c)
[7] As was outlined by the Full Bench in Johnson, the identification of the starting point
amount in s.392(2)(c) “necessarily involves assessments as to future events that will often be
problematic”.4
It has previously been held that an assessment of the likely period of
employment is not to be conducted in a vacuum but rather against the backdrop of the
circumstances of the dismissal and the reasons for concluding that the dismissal was unfair.5
I
have previously concluded that the Applicant was dismissed within the meaning of s.386(1)(a)
and have rejected any suggestion that there was a dismissal within the meaning of s.386(1)(b).
I determined I was satisfied that the Respondent elected to bring the employment to end on 8
October 2025 with immediate effect, before the expiration of the notice period that the
Applicant had communicated.
[8] For the purposes of s.392(2)(c), I consider that the outer limit of the period for which
the Applicant would have remained in employment with the Respondent was the notice period
of approximately 5.5 weeks she had given from 7 October 2025 (i.e. until close of business on
14 November 2025). My assessment, therefore, is that the Applicant would have remained in
employment with the Respondent for a further period of 5.5 weeks. The evidence before me
suggested the Applicant worked an average of 33 hours per week at the gross hourly rate of
$49.0663,
6
producing a gross weekly sum of $1,629.19. Multiplying this by 5.5 weeks produces
total remuneration comprising $8,905.53 gross salary plus $1,068.66 superannuation, the gross
sum of $9,974.19.
“Remuneration earned” – s.392(2)(e) and “Income reasonably likely to be earned” –
s.392(2)(f) and s.392(2)(g).
[9] Remuneration earned from the date of dismissal to the date of any compensation order
is required to be taken into account under s.392(2)(e) of the Act. In addition, income reasonably
likely to be earned from the date of any compensation order to the date the compensation is
paid is to be taken into account under s.392(2)(f) of the Act.
[10] The Applicant was unemployed for just 21 weeks following her dismissal until
commencing part time in a new role on 3 March 2026. From this new role, she disclosed earning
$25.30 gross per hour for a 15.5 hour working week ($392.15 per week). Therefore, for the 10-
week period 3 March 2026 to date, I have assessed the gross earnings of the Applicant for the
purposes on s.392(2)(e) of the Act to be $3,921.15 plus $470.54 superannuation ($4391.69).
[11] To be added to this is the amount assessed for the purposes of s.392(2)(f), i.e. any
income reasonably likely to be earned by the Applicant between now and the actual
compensation. I assess the Applicant’s gross income for this forthcoming 3-week period to be
$1,176.45. As such, the gross amount for the purposes of ss.392(2)(e) and (f) is $5,568.14.
[12] Any deduction for contingencies is to be applied to prospective losses, that is a loss
occasioned after the date of the hearing.7 However, based on the factual scenario before me, I
am not persuaded to make any discount for contingencies.
[2026] FWC 1860
4
Any other matters – s.392(2)(g)
[13] I have noted that the Applicant was denied approximately five weeks’ pay in lieu of
notice when summarily dismissed on 8 October 2025 for conduct I have previously concluded
did not rise to such a level so as to constitute a valid reason for her dismissal.
Viability – s.392(2)(a)
[14] There has been no evidence or submission advanced to suggest that an order for
compensation would have any adverse effect on the viability of the Respondent. There will be
no deduction made having regard to this factor.
Length of service – s.392(2)(b)
[15] There is no dispute that the Applicant had completed 5 years’ service with the
Respondent before her dismissal. That the Applicant’s period of employment was for a not
insignificant period of time weighs against a negative adjustment of the compensation amount.
Mitigation efforts – s.392(2)(d)
[16] The Full Bench of the Commission in McCulloch v Calvary Health Care Adelaide,8
confirmed that the reasonableness of an applicant’s efforts taken to mitigate loss depends on
the circumstances of the case. The Applicant stated that she had applied for approximately 30
positions per week in the period between her dismissal and 21 April 2026, albeit she disclosed
that she “self-sabotaged” her candidacy in some instances. Notwithstanding this, I am prepared
to conclude that the Applicant acted reasonably in her mitigation, and I am not persuaded that
a deduction in the amount of compensation on account of s.392(2)(d) is warranted in this case.
Misconduct – s.392(3)
[17] Pursuant to s.392(3) of the Act, the Commission must reduce the amount of a
compensation order by an appropriate amount if it is satisfied that the misconduct of a person
contributed to the employer’s decision to dismiss them. As I have not found that there was
misconduct, I am not required to make any deduction on the basis of this factor.
Compensation cap: s.392(5) & (6) and Instalments: s.393
[18] The amount of compensation I will order does not exceed the compensation cap and I
do not consider that there is any reason for compensation to be paid by way of instalments.
Shock, Distress: s.392(4)
[19] The amount of compensation calculated must not, and does not, include a component
for shock, distress, humiliation or other analogous hurt caused to the Applicant by the manner
of her dismissal.
[2026] FWC 1860
5
Conclusion
[20] The overarching requirement in assessing compensation is to ensure that the level of
compensation is in an amount that is considered appropriate having regard to all the
circumstances of the case.9
In this case, I consider the appropriate amount of compensation to
be awarded to the Applicant is $4,406.05 gross less taxation required by law ($9,974.19 –
$5,568.14 = $4,406.05 gross).
[21] The order I make will require payment of the compensation amount by the Respondent
within 21 days after the date of the order. “
James (Gemma) Moore v Bytewize Pty Ltd [2026] FWC 1860 per Clancy DP