How much compensation for unfair dismissal

When calculating compensation for unfair dismissal, the Fair Work Commission starts by doing its best to estimate how long the employee but for the termination of employment would have remained in employment for (called the anticipated period of employment) and deducts remuneration which was earned during the period between the dismissal and that hypothetical date. It then applies various other calculations called the Sprigg formula. The process is dealt with in this passage from a recent appeal case in the Commission.

“Consideration

(a) Public Interest

[28] We have considered the submissions advanced by the Appellant and have been unable to identify any sustainable public interest grounds. The Appellant has not satisfied us that the Decision raises any issues of importance or of general application, nor has the Appellant identified any decisions of a similar nature to allege a disharmony with other decided cases.

[29] To the extent that the Appellant’s Submission raise any contention of appealable error we do not consider them to be seriously arguable having regard to the fact that no specific reference is made to any of the Deputy President’s findings.

[30] We have, however, identified other material error in the exercise of the Commission’s discretion to award compensation than that identified by the Appellant. That error involved the Deputy President acting upon a wrong principle in the calculation of compensation of the kind discussed in House v King, 7 We consider it in the public interest to grant permission to appeal pursuant to s.400(1) of the Act.

(b) The Error of Principle

[31] In assessing compensation, it is necessary to take into account all the circumstances of the case, including the specific matters identified in s.392(2)(a) to (g), and to consider the other relevant requirements of s.392.

[32] The well-established approach to the assessment of compensation under s.392 is to apply the ‘Sprigg Formula’, derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. 8 This approach was articulated in the context of the current legislative framework in Bowden v Ottrey Homes Cobram and District Retirement Villages9 (Bowden). 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 (the Anticipated Period of Employment). 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’…”

[33] Once the first step of determining the Anticipated Period of Employment 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.

[34] As is apparent in the compensation calculation table extracted from the Decision above, the Deputy President misapplied the Sprigg Formula by deducting all of the amount of monies earned since termination from the amount she had determined as the Anticipated Period of Employment, being six weeks. The Appellant had obtained employment within three weeks of the cessation of employment.

[35] Only monies earned by the Appellant since the dismissal until the end of the Anticipated Period of Employment should have been deducted. The Deputy President deducted all remuneration earned in 27 weeks since termination, 10 rather than such remuneration received in the six weeks of the Anticipated Period of Employment. In doing so the Deputy President erred in misapplying the Sprigg Formula.

[36] The Appellant’s remuneration in her post termination employment was less than that received when employed by the Respondent because she received a lower hourly rate of pay and had only secured 32 hours of work per week. Her weekly remuneration with the Respondent was $1,872.45 including superannuation. In her post termination employment, the Appellant’s weekly remuneration was $1,401.60 including superannuation, being $470.85 per week less. The compensation that should have been awarded to the Appellant pursuant to the Sprigg Formula is:

3 Weeks at $1,872.45 = $5,617.35
3 Weeks at $470.85    = $1,412.55
________
Total: $7,029.90

Conclusion

[37] We are satisfied that appealable error has been established. The Decision of the Deputy President proceeded on a wrong principle in the calculation of compensation. Permission to appeal is granted, and the appeal should be upheld, albeit on different grounds than those advanced by the Appellant.

[38] We are satisfied that an order for payment of compensation to the Appellant by the Respondent of $7,029.90 inclusive of superannuation, less taxation, is appropriate in all the circumstances of the case.

[39] The compensation payment, less any required deduction in taxation, is to be made within 14 days of this decision. An order to that effect is set out below.

Order

[40] We order as follows:

  1. Permission to appeal is granted;
  2. So much of the appeal as contended error in the calculation of the compensation amount is upheld;
  3. The appeal is otherwise dismissed;
  4. As compensation, Bunbury Medical Imaging Pty Ltd must pay $7,029.90 inclusive of superannuation, less taxation, within 14 days of the date of this decision.”

 

Thurston v Bunbury Medical Imaging  [2021] FWCFB 280  29 January 2021 per Catanzariti VP, Cross DP and Lee C