Compensation for unfair dismissal; the principles

When  a former employee wins an unfair dismissal case and the Fair Work Commission determines that reinstatement is inappropriate, the Commission will ordinarily set about calculating compensation for the effects of the unfair dismissal and one of the immediate factors in that assessment is how long the employee would have continued on in employment had there not been an unfair dismissal. Here is the hypothetical principle in practice.

“The amount of remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation.

I have adopted the approach of the Full Bench of the AIRC in Ellawala v Australian Postal Corporation 34 as follows:

“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”. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the “anticipated period of employment” are deducted. An example may assist to illustrate the approach to be taken.

In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first 12 months after termination (that is $36,000) is deducted from the Commission’s estimate of the applicant’s lost remuneration. Monies earned after the end of the “anticipated period of employment”, 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.”

Ms Buratto submits she has not received any remuneration from other employment or work from the period between her dismissal to when she filed her remedy submissions on 9 November 2020, and therefore no discount ought to be applied. 35 In respect to remuneration earned from social security payments, Ms Buratto submits that the Full Bench in McCulloch v Calvary Health Care Adelaide36 made it clear that the Commission and its predecessors believe social security payments do not constitute ‘remuneration earned from employment … or other work’ for the purposes of s.392(d).37 Ms Buratto further submits that any reference to JobSeeker is irrelevant, that the most recent consideration of this issue can be observed Jarvis v Crystal Pictures Pty Ltd38 in which Cloghan C declined to make any deduction on account of the receipt of Centrelink payments, for the following reasons:

“[74] I should note for the benefit of both parties that Ms Jarvis advised that during between her termination of employment and 15 April 2010, she received Centrelink payments. Ms Jarvis did not disclose the amount received. For my purposes under s.392(e) of the Act, I do not consider Centrelink payments as “…remuneration earned by [Ms Jarvis] from employment or work during the period between the dismissal and the making of the order for compensation”. Further, I do not consider it “relevant” for the purposes of s.392(g) of the Act, as it would be inappropriate for Australian taxpayers to effectively subsidise compensation (foregone wages) payable to an employee, where the employer has instantly dismissed that employee unfairly.”

Accordingly, Ms Buratto submits that no discount ought to be applied.

I am satisfied that Ms Buratto has not made any additional earnings during the period from her termination to the making of this order. I therefore make no deductions for earning from the compensation order.”

Buratto v Peter Sheppard Footwear Pty Ltd – [2020] FWC 6486 – 16 December 2020 – Harper-Greenwell C