This is a very useful decision of the Fair Work Commission dealing with how to calculate compensation for an unfair dismissal.
“Application for an unfair dismissal – Remedy – Compensation ordered
[1]
On 26 February 2026, the Fair Work Commission (the Commission) issued a Decision finding that Mr David McCormick (Mr McCormick or the Applicant) had been unfairly dismissed by his employer, Western Australian Honey Pty Ltd (the Respondent), owned and operated by Mr Kim Fewster (Mr Fewster), in reference to section 394 of the Fair Work Act 2009 (Cth) (the Act).1
[2]
Subsequently, the parties were directed to file submissions in relation to remedy. Mr McCormick filed materials on 16 March and 30 March 2026. The Respondent filed materials on 26 March and 2 April 2026. A determinative conference was held by the Commission, on 2 April 2026.
Background
[3]
I have found that Mr McCormick was protected by unfair dismissal at the time of being dismissed and that he was unfairly dismissed from his employment by the Respondent.
[4]
Accordingly, I am satisfied that Mr McCormick:
•
made an application for an order granting a remedy under section 394;
•
was a person protected from unfair dismissal; and
•
was unfairly dismissed within the meaning of section 385 of the Act.
[5]
I now turn to addressing the element of remedy, as prescribed under section 390 of the Act.
[6]
Subject to the prescribed requirements under section 390 of the Act, I will consider ordering Mr McCormick’s reinstatement or the payment of compensation to Mr McCormick if satisfied that such an order is appropriate in all the circumstances of the matter.
[2026] FWC 2179
DECISION
[2026] FWC 2179
2
[7]
Under section 390(3) of the Act, I must not order the payment of compensation to Mr McCormick unless:
(a)
I am satisfied that reinstatement of Mr McCormick is inappropriate; and
(b)
I consider an order for payment of compensation is appropriate in all the circumstances of the case.
Legislation
[8]
Section 392 of the Act provides:
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts (2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including: (a) the effect of the order on the viability of the employer’s enterprise; and (b) the length of the person’s service with the employer; and (c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and (d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and (e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and (f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and (g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(2) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(3) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
[2026] FWC 2179
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Compensation cap (5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of: (a) the amount worked out under subsection (6); and (b) half the amount of the high income threshold immediately before the dismissal. (6) The amount is the total of the following amounts: (a) the total amount of remuneration: (i) received by the person; or (ii) to which the person was entitled; (whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(c) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
[9]
In relation to reinstatement, section 391 of the Act provides that: “391 Remedy—reinstatement etc. Reinstatement (1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by: (a) reappointing the person to the position in which the person was employed immediately before the dismissal; or (b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal. (1A) If: (a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and (b) that position, or an equivalent position, is a position with an associated entity of the employer; the order under subsection (1) may be an order to the associated entity to: (c) appoint the person to the position in which the person was employed immediately before the dismissal; or (d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal. Order to maintain continuity (2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following: (a) the continuity of the person’s employment; (b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity. Order to restore lost pay
[2026] FWC 2179
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(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal. (4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account: (a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and (b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”
[10]
Mr McCormick confirms that he is not seeking reinstatement with the Respondent. Mr McCormick submitted that, due to the nature of the ending of his employment relationship with the Respondent and Mr Fewster of the Respondent, it would not be practical for him to return to the workplace. The Respondent concurs that reinstatement is not the appropriate remedy.
[11]
Having considered the submissions of the parties, I do not feel that reinstatement is an appropriate remedy in this circumstance. I will now consider whether a payment for compensation is appropriate in all the circumstances.
Compensation – Appropriateness
[12]
Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench in Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter:2
“[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”3
[13]
Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.4
[14]
Mr McCormick submits that compensation is an appropriate remedy in the circumstances.
[15]
Mr McCormick states that it was his intention to remain in employment with the Respondent until he reached retirement age. Mr McCormick confirmed that he worked 38 hours per week and that his hourly rate of pay was $40 per hour.
[16]
Accordingly, due to the harsh, unjust, and unreasonable manner in which Mr McCormick’s employment was terminated, and the impact this decision had on Mr McCormick; I consider that an order for the payment of compensation is appropriate in the circumstances of this matter.
Compensation – Considerations
[2026] FWC 2179
5
[17]
Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:
(a)
the effect of the order on the viability of the Respondent’s enterprise;
(b)
the length of the Applicant’s service;
(c)
the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;
(d)
the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;
(e)
the amount of any remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation;
(f)
the amount of any income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation; and
(g)
any other matter that the Commission considers relevant.
[18]
I consider all the circumstances of the case currently before the Commission below.
Effect of the order on the viability of the Respondent’s enterprise
[19]
The Respondent did not make any submissions that an order for compensation would impact the viability of the Respondent’s enterprise. However, I note that the Respondent is a small business.
Length of the Applicant’s service
[20]
Mr McCormick had been employed with the Respondent for over four (4) years prior to his dismissal as a permanent employee and had been casually employed by the Respondent prior to commencing permanent employment. I find that this duration of service is neither an exceptionally short period nor an exceptionally long period of employment.
[21]
I consider that the Applicant’s length of service does not support increasing or decreasing the amount of compensation ordered.
Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed
[22]
As stated by a majority of the Full Court of the Federal Court in He v Lewin;5
[2026] FWC 2179
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“[i]n determining the remuneration that the Applicant would have received or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.” 6
[23]
From the evidence of both Mr McCormick and Mr Fewster at the hearing it was apparent that, by February 2025, the relationship between the two was strained and, in all probability, was deteriorating to a point at which the employment relationship was not salvageable. Neither Mr McCormick nor Mr Fewster were complimentary about the other as an employee or as an employer. Mr Fewster had complaints about the quality of the work performed by Mr McCormick and his dedication to his employment. Whilst Mr McCormick had complaints about how Mr Fewster treated him in the workplace.
[24]
As Mr McCormick has pointed out that given his age of 60 years at the time of his dismissal, I agree it was reasonable to assume that he would have attempted to tough it out for as long as possible, noting the challenges he has faced finding new employment.
[25]
Having considered the volatile nature of the relationship between Mr McCormick and Mr Fewster in February 2025, I have determined that the employment relationship would have ended within a period of no more than 13 weeks after McCormick was dismissed by Mr Fewster.
Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal
[26]
Mr McCormick must provide evidence that he has taken reasonable steps to minimise the impact of the dismissal.7 What is reasonable depends on the circumstances of the case.8
[27]
Mr McCormick submitted that, at 60 years of age, he had trouble finding new employment. Mr McCormick also notes that he no longer wished to work FIFO work and his preference is to continue working in the apiary industry. Mr McCormick confirmed that he had been unable to find employment in this industry following his termination as he had been honest with prospective employers about his dismissal.
[28]
Mr McCormick provided very limited submissions and evidence to support that he had taken reasonable steps to mitigate his loss. Mr McCormick is keen to continue working in the apiary industry; however, Mr McCormick does have other skills, such as being a plumber by trade, that he could have tapped into in some capacity to mitigate the financial loss.
[29]
Having considered the above factors, I am not satisfied that Mr McCormick has taken reasonable steps to mitigate loss.
Amount of remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation
[2026] FWC 2179
7
[30]
Mr McCormick provided two invoices for work completed in April 2025, following the termination of his employment. During this period Mr McCormick earned $560.
Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation
[31]
Mr McCormick confirms that he is not currently employed and therefore his earnings would be $0. Therefore, I have calculated Mr McCormick’s earnings during this period to be $0.
Other relevant matters
[32]
Neither party brought to my attention any other relevant matters to be considered by the Commission.
Compensation – Calculation
[33]
As noted by the Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries:
“[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).9 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages10.”11
[34]
The approach in Sprigg 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. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.
•
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 1
[35]
At the time of his dismissal, Mr McCormick was being paid an hourly rate of $40.00 per hour and worked approximately 38 hours per week.
[2026] FWC 2179
8
[36]
I have estimated the remuneration Mr McCormick would have received, or would have been likely to have received, if the Respondent had not terminated the employment, to be $19,760. This is on the basis of my finding that Mr McCormick would likely have remained in employment for a further period of no more than 13 weeks.
[37]
This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”.12
Step 2
[38]
I have found that the amount of remuneration earned by Mr McCormick from the date of dismissal was $560, and that the amount of income reasonably likely to be earned by the Applicant between the making of the order for compensation and the payment of compensation is $0.
[39]
Only monies earned since termination for the anticipated period of employment are to be deducted.13 From the information provided, Mr McCormick has only earned $560 during this period. I therefore deduct the sum of $560.
Step 3
[40]
I now need to consider the impact of contingencies on the amounts likely to be earned by Mr McCormick for the remainder of the anticipated period of employment.14
[41]
I do not find it appropriate to make any further deductions for contingencies.
Step 4
[42]
I have considered the impact of taxation but have elected to settle on the amount of $19,200 (gross) and leave taxation for determination.
[43]
Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case”,15 including my findings that:
•
Mr McCormick’s length of service being a neutral factor.
•
Mr McCormick not having engaged in any form of misconduct that contributed towards his dismissal.
[44]
Having determined that Mr McCormick did not take reasonable step to mitigate his loss, I have determined that a further deduction of 40% is appropriate in the circumstances.
[45]
I am satisfied that the amount of compensation I have determined above takes into account all the circumstances of the case as required by section 392(2) of the Act.
Compensation – Cap
[2026] FWC 2179
9
[46]
Section 392(5) of the Act provides that the amount of compensation ordered by the Commission must not exceed the lesser of:
(a)
the amount worked out under section 392(6) of the Act; and
(b)
half the amount of the high-income threshold immediately before the dismissal.
[47]
The amount worked out under section 392(6) of the Act is the total of the following amounts:
(a)
the total amount of the remuneration:
(a)
received by the Applicant; or
(ii) to which the Applicant was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b)
if the Applicant was on leave without pay or without full pay while so employed during any part of that period – the amount of remuneration taken to have been received by the Applicant for the period of leave in accordance with the regulations.
[48]
The high-income threshold immediately before the dismissal was $175,000. Half of the high-income threshold, as above, is $87,500. From the submissions and evidence of the Applicant, which I have previously accepted above, the Applicant’s annual remuneration was $79,040. I am satisfied the amount of compensation ordered by the Commission must not exceed $39,520. Accordingly, no reduction is required.
[49] I confirm that, consistent with section 394(2) of the Act, the amount to be ordered does not include payment for shock, distress, or humiliation caused by the Applicant’s dismissal.
Conclusion
[50]
In light of the above, I will make an order that the Respondent pay $11,520 (gross), plus superannuation, and less taxation, as required by law, to the Applicant, in lieu of reinstatement. The compensation is to be paid in four (4) instalments as stipulated in the Order. The Order is issued concurrently.16”
McCormick v Western Australian Honey Pty Ltd [2026] FWC 2179 delivered 11 June 2026 per Schneider C