The approach taken by the Fair Work Commission to assessing compensation for unfair dismissal is to make a finding about the probable length of employment the dismissed employee would have served but for the dimissal as the starting point. It then calculates the assumed loss by using the length of that lost earning potential and the remuneration being earned at the time of the dismissal. The task of making a judgement about the expected tenure which was lost is in a sense a stab in the dark, in much the same way as courts approach the assessment of damages, using the evidence lead at the hearing together with reasoned speculation about the probabilities of life.
The Commission will then discount that sum by what it considers to be a fair discount for what the law calls contingencies which is a theoretical deduction intended to reflect a realistic reduction for life’s exigencies, for exampe that life will never play out according to plan; we might be run down by a bus tomorrow in which case we won’t benefit from compensation!
Sec 392 of the Fair Work Act 2009 sets out a number of matters which the Commission must expressly address including lost remuneration to the date of the assessement and the employee’s obligation to mitigate his or her loss.
By this process, the Commission will reach a figure which it regards as a fair estimate of what the employee is entitled to for the unfair dismissal, and a sum will begin to emerge as appropriate.
In one case the Commission even added to that sum to acknowdge the length of service which the employee had given the employee; although more typically length of service is used where it is not significant to discount the award of compensation. If the amount thus reached is less than the statutory cap of 26 weeks’, then that will be ordered to be paid by the employer to the employee, sometimes in instalments.
The critical issue is the evidence adduced at the hearing.