Compensation for unfair redundancy

This is a portion of an unfair dismissal decision of the Fair Work Commission which explains how compensation for unfair dismissal is calculated when a person’s job has truly become redundant in the sense that it has ceased to be but the employer cannot rely upon the statutory jurisdictional defence of genuine redundancy because the employer did not adequately comply with the consultation obligations of an applicable industrial instrument.

“Remedy

[77] Having found that Ms English was protected from unfair dismissal, and that her

dismissal was harsh and unreasonable, it is necessary to consider what, if any, remedy should

be granted to her. Ms English did not seek the remedy of reinstatement. In any event, I am

satisfied that reinstatement would be inappropriate in all the circumstances because Tee Ink has

suffered a downturn in its business and does not have positions available for Ms English.

[78] Section 390(3)(b) of the Act provides the Commission may only issue an order for

compensation if it is appropriate in all the circumstances. A compensation remedy is designed

to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably

attributable to the unfair dismissal within the bounds of the statutory cap on compensation that

is to be applied.43

[79] Having regard to all the circumstances of the case, including the fact that Ms English

has suffered financial loss as a result of her unfair dismissal, I consider that an order for payment

of compensation to her is appropriate.

[80] It is necessary therefore for me to assess the amount of compensation that should be

ordered to be paid to Ms English. In assessing compensation, I am required by s 392(2) of the

Act to take into account all the circumstances of the case including the specific matters

identified in paragraphs (a) to (g) of this subsection.

[81] I will use the established methodology for assessing compensation in unfair dismissal

cases which was set out in Sprigg v Paul Licensed Festival Supermarket44 and applied and

elaborated upon in the context of the current Act by Full Benches of the Commission in a

number of cases.45 The approach to calculating compensation in accordance with these

authorities is as follows:

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.

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.

Step 5: Apply the legislative cap on compensation.

[2023] FWC 2328

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Remuneration Ms English would have received, or would have been likely to receive, if she

had not been dismissed (s 392(2)(c))

[82] Like all calculations of damages or compensation, there is an element of speculation in

determining an employee’s anticipated period of employment because the task involves an

assessment of what would have been likely to happen in the future had the employee not been

dismissed.46

[83] I am satisfied on the balance of probabilities that if Ms English had not been dismissed

on the grounds of redundancy on 29 June 2023, her employment would have terminated at the

conclusion of a proper consultation process, which would have lasted a period of two weeks.

That is, Ms English would have been made redundant on 13 July 2023. My reasons for making

this finding are set out above.

[84] Ms English was paid an annual salary of $100,000 plus superannuation. Hence, I am

satisfied that if Ms English had remained employed from 30 June 2023 until 13 July 2023

(inclusive) she would have received $3,846.15 plus $423.08 in statutory superannuation.

Remuneration earned (s 392(2)(e)) and income reasonably likely to be earned (s 392(2)(f))

[85] In the period from 30 June 2023 until 13 July 2023 (inclusive), Ms English did not

receive or earn any remuneration.

[86] Thus, my view is that $3,846.15 plus $423.08 in statutory superannuation is the gross

amount of remuneration Ms English would likely have earned had she not been dismissed by

Tee Ink and instead continued to be employed until the conclusion of a further two-week period

commencing on 30 June 2023 and concluding on 13 July 2023. This calculation is intended to

put Ms English in the position she would have been in but for the termination of her

employment.47

Viability (s 392(2)(a))

[87] No submission was made on behalf of Tee Ink that any particular amount of

compensation would affect the viability of Tee Ink’s enterprise.

[88] My view is that no adjustment is required on this account.

Length of service (s 392(2)(b))

[89] My view is that Ms English’s period of service with Tee Ink (about 2.25 years) does not

justify any adjustment to the amount of compensation.

Mitigation efforts (s 392(2)(d))

[90] The evidence establishes that Ms English has made reasonable efforts to obtain

alternative employment following her dismissal on 29 June 2023. She has made a number of

direct applications for jobs and has recruiters seeking employment opportunities for her. In the

[2023] FWC 2328

20

past four weeks, Ms English has undertaken some freelance work while she continues to look

for full time employment.

[91] In all the circumstances, my view is that Ms English acted reasonably to mitigate the

loss suffered by her because of the dismissal and I do not consider it appropriate to reduce the

compensation on this account.

Any other relevant matter (s 392(2)(g))

[92] It is necessary to consider whether to discount the remaining amount ($3,846.15 plus

$423.08 in statutory superannuation) for “contingencies”. This step is a means of taking into

account the possibility that the occurrence of contingencies to which Ms English was subject

might have brought about some change in earning capacity or earnings.48 Positive

considerations which might have resulted in advancement and increased earnings are also taken

into account.

[93] The discount for contingencies should only be applied in respect to an “anticipated

period of employment” that is not actually known, that is a period that is prospective to the date

of the decision.49

[94] Because I am looking in this matter at an anticipated period of employment which has

already passed (30 June 2023 to 13 July 2023), there is no uncertainty about Ms English’s

earnings, capacity or any other matters during that period of time. In all the circumstances, my

view is that it is not appropriate to discount or increase the figure of $3,846.15 plus $423.08 in

statutory superannuation for contingencies.

[95] Save for the matters referred to in this decision, my view is that there are no other matters

which I consider relevant to the task of determining an amount for the purposes of an order

under s 392(1) of the Act.

[96] I have considered the impact of taxation, but my view is that I prefer to determine

compensation as a gross amount and leave taxation for determination.

Misconduct (s 392(3))

[97] Ms English did not commit any misconduct, so my view is that this has no relevance to

the assessment of compensation.

Shock, distress or humiliation, or other analogous hurt (s 392(4))

[98] I note that in accordance with s 392(4) of the Act, the amount of compensation

calculated does not include a component for shock, humiliation or distress.

Compensation cap (s 392(5)-(6))

[99] The amount of $3,846.15 plus $423.08 in statutory superannuation is less than half the

amount of the high income threshold immediately before the dismissal. It is also less than the

total amount of remuneration to which Ms English was entitled in her employment with Tee

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21

Ink during the 26 weeks immediately before her dismissal. In those circumstances, my view is

that there is no basis to reduce the amount of $3,846.15 plus $423.08 in statutory superannuation

by reason of s 392(5) of the Act.

Instalments (s 393)

[100] No application has been made to date by Tee Ink for any amount of compensation

awarded to be paid in the form of instalments.

Conclusion on compensation

[101] In my view, the application of the Sprigg formula does not, in this case, yield an amount

that is clearly excessive or clearly inadequate. Accordingly, my view is that there is no basis

for me to reassess the assumptions made in reaching the amount of $3,846.15 plus $423.08 in

statutory superannuation.

50

[102] For the reasons I have given, my view is that a remedy of compensation in the sum of

$3,846.15 (less taxation as required by law) plus superannuation at the statutory rate of 11%

($423.08) in favour of Ms English is appropriate in the circumstances of this case. An order

will be made to that effect [PR766114].”

 

English v Tee Ink Pty Ltd T/A Charlie Holiday [2023] FWC 2328 12 September 2023 delivered Saunders DP