Reinstatement for unfair dismissal

This extract from an important appeal decision of the Fair Work Commission is a relatively rare analysis by the Commission of the legal principles which go to determining whether finding of unfair dismissal should result in an order for reinstatement of employment.

“Section 390(3) of the Act provides that the Commission must not order compensation

unless satisfied that reinstatement of the person is inappropriate and the Commission considers

that an order for payment of compensation is appropriate in all the circumstances of the case.

A finding as to whether reinstatement is inappropriate is foundational to determining remedy

and an award of compensation cannot be made without a finding that reinstatement is

inappropriate.

[61] While we accept that s. 390(3) confers a wide discretion,43 we are satisfied that the

exercise of that discretion by the Deputy President miscarried because of his failure to consider

evidence and submissions that were central to whether reinstatement was inappropriate. The

Deputy President’s consideration of whether reinstatement was inappropriate was confined to

a single paragraph of the Merits Decision which expressed a conclusion without identifying the

basis for that conclusion. Accordingly, we uphold appeal ground 1. We also observe that even

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if this error was not jurisdictional, we would have found that it was a significant error of fact,

for the purposes of s. 400(2) of the Act, as contended in appeal ground 2.

[62] Ground 3 is concerned with the Deputy President’s finding that there was clear

animosity between the Appellant and the Respondent’s management and asserts that the finding

was made in a way that denied the Appellant procedural fairness. The contention that underpins

ground 3 is that there was no evidence before the Deputy President to support the finding of

animosity and the Respondent made no submission that animosity between the parties militated

against reinstatement.

[63] The Commission is bound to act judicially and to afford parties procedural fairness.44

The fundamental principle as set out by the High Court in Kioa v West45 is that natural justice

requires that a person know the substance of the case against him or her and be given the

opportunity to respond to adverse material that is credible, relevant or significant.46 It has also

been held that while a decision maker is generally not required to expose his or her reasoning

process or provisional views for comment by the person affected, there may be circumstances

where fairness requires prior disclosure of such matters, such as where they relate to a critical

issue or factor, or where they do not follow from an obvious or natural evaluation of the

evidence.47

[64] The Decision of a Full Bench of the Commission in Steve Newton v Toll Transport Pty

Ltd48 (Newton) is illustrative of the requirement to afford procedural fairness in circumstances

where a member of the Commission forms a view about a matter that is critical to the case

advanced by a party or does not naturally follow from an evaluation of the evidence or has not

otherwise been raised in proceedings. Newton also involved an appeal from a decision of the

Deputy President which included a finding that the Applicant (Mr Newton) had engaged in

dishonest conduct in the investigation of the incident which led to his dismissal and in his

evidence to the Commission, and that he did so for a “sinister purpose”.

49 On the basis of his

finding of dishonesty on the part of Mr Newton, including in his evidence to the Commission,

the Deputy President found that Mr Newton had not been unfairly dismissed.

[65] In the appeal, Mr Newton contended inter alia that it is not appropriate for the

Commission to itself formulate or identify valid reasons for dismissal that are not expressly

relied on or advanced by the employer during the course of a hearing.50 The Full Bench rejected

this submission and held that the Commission is not confined to the reason advanced by the

employer (either at the time of the dismissal or during the course of the subsequent hearing)

and that a valid reason for dismissal can be any valid reason underpinned by the evidence to the

Commission.51 Significantly, the Full Bench stated:

“[66] We accept that if the Commission determines that there is a valid reason for dismissal which is

not expressly advanced by the employer then it must act judicially and accord the parties procedural

fairness…”

[66] After noting that the issue of dishonesty in giving evidence to the Commission was

irrelevant to whether there was a valid reason for dismissal in the context of s. 387(a), the Full

Bench turned to consider whether Mr Newton was afforded procedural fairness in relation to

the finding of dishonesty made by the Deputy President. The Full Bench referred to several

cases including the judgment of the High Court in Kuhl v Zurich Financial Services Australia

Ltd,

52 where the plurality held that a party-witness should not be criticised for deliberately

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withholding the truth unless reasons are given for concluding that this has occurred, and the

party-witness has been given an opportunity to deal with the criticism. The plurality in Kuhl

also said that in the absence of any challenge from the cross-examiner to the frankness and

completeness of the plaintiff’s evidence, it was incumbent on the trial judge to make the

challenge, if his conclusion that the plaintiff had not been frank was to play a role in a decision

adverse to the plaintiff. The plurality further observed that if the criticism did not occur to the

judge until after the plaintiff had left the box or the hearing had been concluded, and before the

reserved judgement was given, it remained necessary to either recall the plaintiff or to have no

regard to that aspect of the plaintiff’s evidence.53

[67] The Full Bench went on to find that Mr Newton was not afforded procedural fairness in

respect of the Deputy President’s findings of dishonesty and the imputed motive for the

dishonesty, and that a finding of the type made by the Deputy President carries with it an

obligation to accord the relevant party procedural fairness. The Full Bench concluded “absent

the matter being squarely put by the cross-examiner it was incumbent on the Deputy President

to make the challenge himself”.

[68] The principle to be derived from Newton and the cases cited by the Full Bench, is that

where a finding on a critical issue or factor adverse to a party is being considered by a Member

of the Commission hearing a matter, and the finding does not follow from the evidence or

relates to a contention that was not raised in the hearing of the matter, the Member conducting

the hearing should put the proposition to the parties and the basis for it, so that the affected

party has an opportunity to respond. This is particularly so when the finding is foundational to

a conclusion about a matter central to the case advanced by the party. A failure to do so will

generally amount to a denial of procedural fairness.

[69] In Newton, the question of whether there was a valid reason for dismissal, and the extent

of Mr Newton’s honesty were central to his case. In the present matter, as we have observed,

reinstatement was central to the Appellant’s case at first instance. The finding that the Appellant

had displayed animosity was a significant factor in the Deputy President’s conclusion that

reinstatement was inappropriate.

[70] In the present case, there is no indication that the Deputy President raised the matter

with the parties, either during or after the hearing. Further, it would not have been reasonably

apparent to the Appellant that this finding was in contemplation. To the contrary, the Appellant

gave evidence – albeit subjective – that he could maintain a productive and safe working

relationship, had good rapport with management and remained hopeful that he could return to

the Respondent’s employment, and that evidence was not contradicted, and nor was the

Appellant cross-examined in relation to it.

[71] Having considered all the material that was before the Deputy President at the hearing,

we are unable to discern the evidentiary basis for the Deputy President’s finding of “clear

animosity”. There was no submission to that effect advanced by the Respondent. Nor was there

any evidence elicited in the hearing below from Mr Buchberger which could be relied upon in

support of the finding of “clear animosity”.

[72] If the Deputy President formed a view during the hearing that the Appellant was

displaying animosity towards the Respondent, and that a finding of animosity could directly

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impact his claim for reinstatement (a significant issue in his case), the Deputy President should

have put the Appellant on notice that this finding was in his contemplation and the basis for it.

The requirement to do so was heightened by the fact that the Respondent was not represented

by a lawyer or paid agent, and the Respondent’s case was conducted by Mr Buchberger, a

Director and the person who decided to dismiss the Appellant. If the view of the Deputy

President was formed after the hearing, the parties should have been advised and the Appellant

given an opportunity to be heard in relation to whether such a finding should have been made.

[73] We accept the submission for the Appellant that had the Deputy President drawn this

matter to the parties’ attention, the Appellant could have pointed to Mr Buchberger’s evidence

and otherwise have submitted that there was no extant animosity. If the Deputy President had

taken this step the Respondent would also have been on notice about the state of its evidentiary

case in relation to reinstatement and would have had an opportunity to address any deficiencies.

Given that the Deputy President concluded that he had insufficient evidence from both parties

to calculate compensation, and that a further hearing should be held to resolve this matter, the

decision in relation to remedy could have been entirely deferred so that both parties were

afforded an opportunity to deal with these issues.

[74] Before us the Respondent contended that there has been a significant loss of trust in the

Appellant by not only management but also work colleagues. It was further contended before

us that reinstatement would have little merit. Both of those contentions may be correct.

However, none of this was put to the Deputy President.

[75] The Appellant was not afforded procedural fairness in relation to a significant aspect of

his case, and we therefore uphold appeal ground 3. Notwithstanding that it was advanced in the

alternative, we are also of the view that the manner in which the Deputy President dealt with

the issue of remedy involved a significant error of fact for the purposes of s. 400(2) of the Act

on the basis of the finding that the Appellant displayed animosity to the Respondent’s

management and that the evidence of the Appellant in relation to why reinstatement was not

inappropriate, was not considered. If necessary, we would have upheld appeal ground 4.

[76] Ground 6 is concerned with the Deputy President’s finding that there was a valid reason

for the Appellant’s dismissal on the basis that he had no reason to be resting up or escaping the

rain in the truck. In our view, this finding is unsound. While the Deputy President accepted Mr

Fuller’s evidence at [13] of the Merits Decision that the Appellant had been asleep in the truck

at 2:45pm, he failed to take in account Mr Fuller’s evidence in cross-examination that Mr Fuller

had in fact “knocked the boys off around 2:30”.

54 In our view, on the evidence before the Deputy

President, there was no proper basis for him to find that there was a valid reason for dismissal

because the Appellant was ‘sleeping on duty’ where this was after the Respondent had

determined to shut its site and cease work at 2:30pm. We consider this a significant error of fact

that casts doubt on whether a valid reason for dismissal existed, and as such, we uphold ground

6.

Conclusion and Order

[77] The Appellant initially sought that the Merits Decision be quashed and that the Full

Bench rehear the matter on the question of remedy and at the rehearing, determine to reinstate

the Appellant and make orders for continuity of employment and service. At the hearing of the

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appeal, the Appellant sought that the Merits Decision and the Compensation Decision be

quashed. The Appellant also accepted that if error is found and the Respondent sought to adduce

further evidence on the question of remedy, that is a course that the Full Bench may consider

itself or remit the matter to another Member of the Commission to deal with. The Respondent

confirmed that it would seek to adduce further evidence if the appeal was upheld, and

reinstatement was in contemplation.

[78] Having considered the submissions in relation to the disposition of the appeal, we:

  1. Grant permission to appeal.
  2. Uphold grounds 1, 3 and 6 of the appeal.
  3. Quash the Merits Decision and Compensation Decision.

[79] An Order55 to that effect will issue with this decision. The application for an unfair

dismissal remedy is remitted to Commissioner Johns for redetermination.”

 

Steed v Active Crane Hire Pty Ltd [2023] FWCFB 152 delivered 1 September 2023 per Asbury VP, Bissett C and Johns C