This extract from an unfair dismissal case sets out the legal principles involved in determining the amount of compensation for unfair dismissal.
“Remedy
[24] Mr Mathew seeks compensation rather than reinstatement. Section 390(3) of the Act provides that the Commission must not order the payment of compensation unless it is satisfied both that the reinstatement of the person is inappropriate, and that it considers an order for the payment of compensation is appropriate in all the circumstances. Reinstatement is not sought and is inappropriate because the position is not needed.
[25] Section 392(2) provides that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(a) to (g). The principles that apply to the question of how compensation should be calculated are well-established. The method for calculating compensation under s 392 of the Act is informed by the decision of the Full Bench in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc [2013] FWCFB 431. (See also Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21 and Ellawala v Australian Postal Corporation AIRCFB, Print S5109, 17 April 2000), [33])
[26] No submissions were made as to what effect any compensation order would have on the viability of the employer’s enterprise (s 392(2)(a)). As to Mr Mathew’s length of service (s 392(2)(b)), I note that he had worked for the company for several years. Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. This requires the Commission to consider what would have occurred if the person was not dismissed, and in particular, how long the person would have remained employed. In light of the numerous concerns, it is highly improbable that the process would have resulted in a decision to continue with the employment. Further, the company had decided that it did not need the position in any event. This does not mean that affording Mr Mathew a chance to respond to the performance concerns would have been a pointless and perfunctory exercise. A fair process is not only for the purpose of ensuring that a dismissal occurs for reasons that are substantiated. It also has an intrinsic worth. Here, even if dismissal was inevitable, a fair dismissal would have allowed Mr Mathew a chance to have his say about the allegations of poor performance. I estimate that a fair process would have taken one week. This marks the limit of compensable loss in this case.
[27] However, s 392(d) requires the Commission to take into account the person’s efforts to mitigate the loss suffered because of the dismissal. At the proceeding, Mr Mathew’s representative said that following his dismissal, Mr Mathew did not apply for any jobs, and that he had been thinking about retiring. She said that from around 4 or 5 weeks after dismissal, Mr Mathew was too unwell to apply for jobs, or to work. In my view, the failure to take any steps to mitigate loss means that it would be inappropriate to award compensation in this case. Although I accept that Mr Mathew was later too ill to work, if no efforts were made to look for jobs in the first 5 weeks, I am not persuaded that, but for the onset of illness, Mr Mathew would have changed his mind and started to look for work. I do not consider that an award of compensation is appropriate in this case.
[28] I note that s 392(4) of the Act prohibits the Commission from awarding compensation in respect of shock, distress, humiliation or other analogous hurt caused by the manner of the dismissal. Mr Mathew alleged that he had been underpaid in various respects, but the Commission has no power to deal with such matters.
Conclusion
[29] Mr Mathew was a person protected from unfair dismissal. His dismissal was not consistent with the Code. The dismissal occurred for good reasons but was procedurally unfair. However, taking into account the matters in s 392, it is not appropriate to award compensation.”
Mathew v Australian Guild Of Education Pty Ltd – [2025] FWC 3760 delivered 9 December 2025 per Colman DP