How to calculate compensation for unfair dismissal

In assessing compensation for unfair dismissal, the Fair Work Commission consistently applies a formula known as Sprigg, named after a significant case which set done the basic principles. Here it is on show in this passage from a recent unfair dismissal case of the Commission.

“In determining the amount of compensation, all the circumstances are to be considered, including those prescribed by s 392(2) of the Act. The ‘Sprigg’ formula is to be applied to arrive at an appropriate amount. 7 The method for calculating compensation under s 392 is also informed by the decision of the Full Bench in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc.8

In Haigh v Bradken Resources, 9 the Full Bench reaffirmed the principles set out within Sprigg, and the steps that need to be taken into account when assessing compensation. The first of those steps is to estimate the amount the employee would have received, or would have been likely to receive, if the employment had not been terminated; the second step being to deduct moneys earned since termination; the third, to make deductions for contingencies; fourth, to calculate any impact of taxation; and fifth, to apply the legislative cap.10

The Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries 11 noted that identification of the starting point for assessment ‘necessarily involves assessments as to future events that will often be problematic’. Further, the Full Bench emphasised there was an overarching requirement to ensure that the level of compensation was an amount considered appropriate, having regard to all of the circumstances of a case.

The notion of ‘taking into account’ a matter (such as those factors described in s 392 of the Act) connotes a genuine consideration of the relevant provision and the apportionment of the appropriate weight in the circumstances. 12 In Construction, Forestry, Mining and Energy Union v Hamberger and Another,13 Katzmann J pointed out that ‘[t]o take a matter into account means to evaluate it and give it due weight’14 and that ‘mere advertence will not be enough.’15”

Thurston v Bunbury Medical Imaging (2020) FWC 4840 delivered 25 September 2020 per Beaumont DP