Reinstatement for unfair dismissal; the issue of trust and confidence

The Fair Work Act requires the Fair Work Commission to consider reinstatement as its primary remedy where it determines that the termination of an employee is relevantly unfair.

That the Commission almost never orders reinstatement when it finds that a dismissal was unfair is a national disgrace, and I have posted many times on this web site to that effect.

Here is an explanation of the law; well at least in theory.

“In Perkins v Grace Worldwide (Aust) Pty Ltd  (1997) 72 IR 186 the Industrial Relations Court considered the loss of trust and confidence in an environment where employment had been terminated. The Court found that

[t]rust and confidence is a necessary ingredient in any employment relationship. That is why the law imports into employment contracts an implied promise by the employer not to damage the relationship or destroy the relationship of trust and confidence between the parties, without reasonable cause: see Burazin v Blacktown City Guardian Pty Ltd (unreported, Industrial Relations Court of Australia, Full Court, No. 606/96, 13 December 1996). The implication is not confined to employers, it extends to employees: see for example Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81-82 and North v Television Corporation Ltd (1976) 11 ALR 599 at 609. So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.

At the same time, it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee’s employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court’s finding on that question in the resolution of an application under Div 3 of Pt VIA of the Act.

If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between the employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of a loss of confidence in the employee. 3

[78] In McLauchlan v Australia Meat Holdings Pty Ltd    (1998) 84 IR 1.4 the Full Bench found that the observations in Perkins remained relevant even though the language of the statue had changed.

[79] In Nguyen v Vietnamese Community in Australi[2014] FWCFB 7198. the Full Bench observed at [27] that:

An allegation that there has been a loss of trust and confidence must be soundly and rationally based and it is important to carefully scrutinise a claim that reinstatement is inappropriate because of a loss of confidence in the employee. The onus of establishing a loss of trust and confidence rests on the party making the assertion.