Remedies for unfair dismissal

Here is an excellent summary of the way in which the Fair Work Commission approaches the calculation of compensation for unfair dismissal from an extract from a decision in a recent case.

“Conclusion on harsh, unjust and unreasonable

“[37] After considering and taking into account each of the matters specified in s 387 of the Act, my value judgment is that the Coast Community’s dismissal of Ms Ramos was harsh, unjust and unreasonable. It was unjust because, on the material before the Commission, Ms Ramos did not engage in the conduct alleged against her in the termination letter. It was harsh because it was disproportionate to Ms Ramos’s conduct and performance. The dismissal was also harsh in the sense that it caused Ms Ramos to suffer financial loss. It was unreasonable because Coast Community did not afford Ms Ramos any procedural fairness and, on the material before the Commission, there was no basis on which a reasonable employer could have concluded that Ms Ramos acted inappropriately or performed her duties in a deficient manner. Further, I am satisfied on the material before the Commission that the decision to dismiss was unreasonable because it was motivated, at least in part, by the valid queries Ms Ramos was making in relation to her unpaid superannuation and the failure to provide her with a Pay As You Go payment summary.

Compensation

[38] Having found that Ms Ramos was protected from unfair dismissal, and that her dismissal was harsh unjust and unreasonable, it is necessary to consider what, if any, remedy should be granted to her. Ms Ramos did not seek the remedy of reinstatement and I accept that it would be inappropriate to reinstate Ms Ramos in all the circumstances. Instead, Ms Ramos seeks the remedy of compensation. As a result, I need to consider whether compensation is appropriate.

[39] Section 390(3)(b) of the Act provides the Commission may only issue an order for compensation if it is appropriate in all the circumstances. A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied. 18

[40] Having regard to all the circumstances of the case, including the fact that Ms Ramos has suffered financial loss as a result of her unfair dismissal, I consider that an order for payment of compensation to her is appropriate.

[41] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms Ramos. In assessing compensation, I am required by s 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection.

[42] I will use the established methodology for assessing compensation in unfair dismissal cases which was set out in Sprigg v Paul Licensed Festival Supermarket 19 and applied and elaborated upon in the context of the current Act by Full Benches of the Commission in a number of cases.20 The approach to calculating compensation in accordance with these authorities 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.

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 5: Apply the legislative cap on compensation.

Remuneration Ms Ramos would have received, or would have been likely to receive, if she had not been dismissed (s 392(2)(c))

[43] Like all calculations of damages or compensation, there is an element of speculation in determining an employee’s anticipated period of employment because the task involves an assessment of what would have been likely to happen in the future had the employee not been dismissed. 21

[44] On the one hand, Ms Ramos says that she enjoyed working with the clients to whom she provided care and support during her employment with Coast Community. Ms Ramos was also pleased that she had permanent work with Coast Community, with an entitlement to at least 15 hours a week and she usually worked significantly more hours each week. Further, although Ms Ramos considered leaving Coast Community when her team leader was absent from work in about mid-2020 and she had a lack of support at work, those difficulties ended in about August 2020 when Jo returned to work. These matters support Ms Ramos’s evidence that she believes she would have remained in employment with Coast Community for up to about six months if she had not been dismissed on 2 December 2020.

[45] On the other hand, Ms Ramos was only employed by Coast Community for just less than one year and there is no doubt that Ms Ramos was frustrated by the failure of Coast Community to make superannuation contributions on her behalf and provide her with a Pay As You Go payment summary. As Ms Ramos accepted in her evidence, if these things did not improve in 2021 she would have looked for alternative employment.

[46] In all the circumstances and weighing up the likelihood of the various possibilities, my finding is that Ms Ramos would have remained employed by Coast Community for a further four months had her employment not come to an end on 2 December 2020.

[47] Ms Ramos’s gross average weekly remuneration from Coast Community in the period from period from 20 April 2020 until 9 August 2020 was $942.57. 22 I find that she would have continued to receive this gross average weekly level of remuneration had she not been unfairly dismissed on 2 December 2020. I have not used Ms Ramos’s remuneration in the period from 10 August 2020 until her suspension on 16 October 2020 because during this time Coast Community reduced Ms Ramos’s hours of work as a consequence of her raising issues with the Australian Taxation Office about her unpaid superannuation.23 It would be both inappropriate and unfair to use the lower amount of remuneration paid to Ms Ramos during this period as a means of assessing the amount of remuneration Ms Ramos would have been paid had she not been unfairly dismissed and instead continued in her employment with Coast Community for a period of four months. Similarly, I have not used the remuneration paid to Ms Ramos in the period from her suspension until her dismissal as the means of assessing her likely future remuneration because Ms Ramos was only paid her minimum contracted hours (15 per week) during this period. The reality is that Ms Ramos consistently worked many more than 15 hours per week during her employment with Coast Community. Had she remained in that employment beyond 2 December 2020, I am confident that Ms Ramos would have continued to work many hours beyond her minimum contracted hours. In my view, the actual hours Ms Ramos would have worked if she had not been unfairly dismissed on 2 December 2020 is most likely to be reflected in the average weekly hours she worked from 20 April 2020 until 9 August 2020.

[48] It follows that in the period from 3 December 2020 to 2 April 2021 (a period of four months) Ms Ramos would have received $16,155.65 gross (17.14 weeks x $942.57 = $16,155.65). That is the remuneration that Ms Ramos would have received, or would have been likely to receive, if she had not been dismissed.

Remuneration earned (s 392(2)(e)) and income reasonably likely to be earned (s 392(2)(f))

[49] In respect of the period from 3 December 2020 until 7 March 2021, Ms Ramos tendered pay slips from her new employers 24 which show that she received $9,415.22 gross in this period. Ms Ramos had two employers in this period. Ms Ramos commenced her first new casual employment in mid-January 2021 and has since finished that employment. Ms Ramos commenced her second new casual employment in mid-February 2021 and remains in that employment relationship. Ms Ramos expects to continue to receive a similar number of hours work with her new employer as she has been getting in the fortnight from 22 February 2021 until 7 March 2021. She is also hopeful that her new employment may become permanent, rather than casual, if it continues to work out well.

[50] As to the period from 8 March 2021 until the making of the order for compensation on 18 March 2021, Ms Ramos did not have a payslip to tender at the hearing because she had not been provided with one and part of that period had not passed at the time of the hearing. I find that during this period it is likely that Ms Ramos continued to receive the same level of remuneration in her new employment as she did in the fortnightly pay period from 22 February 2021 until 7 March 2021. That amount was $1,803.70 gross for 43.25 hours work during the fortnight. It follows that in the period from 8 to 18 March 2021 Ms Ramos is likely to earn $1,415.90 (1.57 weeks x $901.85/week = $1,415.90)

[51] Accordingly, I find that the amount of any remuneration earned by Ms Ramos from employment or other work during the period between the dismissal and the making of the order for compensation is $10,831.12 ($9,415.22 + $1,415.90 = $10,831.12) (s 392(2)(e) of the Act).

[52] As to the amount of any income reasonably likely to be earned by Ms Ramos during the period between the making of the order for compensation (18 March 2021) and the end of the expected period of further employment (2 April 2021), I find that Ms Ramos is likely to remain in employment with her current employer and is likely to continue to receive average gross weekly remuneration of $901.85. I appreciate that Ms Ramos’s current employment is on a casual basis and her earnings may fluctuate from one week to the next, but on the basis of the earnings Ms Ramos received in the fortnight ending on 7 March 2021 and her expectation of ongoing hours, my assessment is that she is likely to continue to receive the same level of average earnings until 2 April 2021 as she did from 22 February 2021 until 7 March 2021. It follows that the amount of any income reasonably likely to be earned by Ms Ramos during the period between the making of the order for compensation (18 March 2021) and the end of the expected period of further employment (2 April 2021) is $2,065.23 (2.29 weeks x $901.85 = $2,065.23) (s 392(2)(f) of the Act).

[53] Thus, my view is that $3,259.30 is the gross amount of additional remuneration which Ms Ramos would likely have earned had she not been dismissed by Coast Community and instead continued to be employed by Coast Community until 2 April 2021 ($16,155.65 – ($10,831.12 + $2,065.23) = $3,259.30). This calculation is intended to put Ms Ramos in the position she would have been in but for the termination of her employment. 25

Viability (s 392(2)(a))

[54] No evidence was adduced on behalf of the Coast Community, and no submission was made, that any particular amount of compensation would affect the viability of Coast Community’s enterprise.

[55] My view is that no adjustment will be made on this account.

Length of service (s 392(2)(b))

[56] My view is that Ms Ramos’s period of service with Coast Community (about 11 months) does not justify any adjustment to the amount of compensation.

Mitigation efforts (s 392(2)(d))

[57] The evidence establishes that Ms Ramos made significant efforts to obtain alternative employment following her dismissal on 2 December 2020. In particular, Ms Ramos applied for dozens of jobs online and made direct approaches to employers. The extent of Ms Ramos’s efforts in this regard are supported by the fact that she obtained employment with two employers in the first few months of 2021.

[58] In all the circumstances, my view is that Ms Ramos acted reasonably to mitigate the loss suffered by her because of the dismissal and I do not consider it appropriate to reduce the compensation on this account.

Any other relevant matter (s 392(2)(g))

[59] It is necessary to consider whether to discount the remaining amount ($3,259.30) for “contingencies”. This step is a means of taking into account the possibility that the occurrence of contingencies to which Ms Ramos was subject might have brought about some change in earning capacity or earnings. 26 Positive considerations which might have resulted in advancement and increased earnings are also taken into account.

[60] The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision. 27

[61] The prospective period in this case is short – from 19 March 2021 until 2 April 2021. Because Ms Ramos is employed on a casual basis, her earnings in that period may well fluctuate up or down. In addition, there is the prospect that she may obtain permanent employment with her current employer or another employer in this period and her earnings may increase. Alternatively, Ms Ramos may lose capacity to work or lose her current casual employment and take some time to obtain other work. In all the circumstances and having regard to factors which weigh in each direction, my view is that it is not appropriate to discount or increase the figure of $3,259.30 for contingencies.

[62] Save for the matters referred to in this decision, my view is that there are no other matters which I consider relevant to the task of determining an amount for the purposes of an order under s 392(1) of the Act.

[63] I have considered the impact of taxation, but my view is that I prefer to determine compensation as a gross amount and leave taxation for determination.

Application of the Sprigg formula

[64] In my view, this is a case in which the application of the Sprigg formula yields an amount ($3,259.30) that is clearly inadequate. 28 The order for the payment of compensation must be appropriate having regard to all the circumstances of the case.29

[65] Ms Ramos was dismissed in circumstances where she was stood down for a period of almost seven weeks, during which time she suffered a significant loss because she was only paid for her minimum weekly hours ($455.25/week), compared to her gross average weekly earnings of $942.57 30 per week in the period from 20 April 2020 until 9 August 2020. Notwithstanding her attempts to find out the reasons for being stood down, no allegations were put to Ms Ramos and she was given no chance to respond to any allegations or concerns during the almost seven week suspension period. Ms Ramos was then summarily dismissed for conduct which I have found on the material before the Commission did not occur. Further, I have found that at least part of the reason for Ms Ramos’s dismissal was her legitimate action in seeking payment of her unpaid superannuation and provision of a Pay As You Go payment summary. Ms Ramos was not afforded any procedural fairness prior to her dismissal. There is no suggestion in the material before the Commission that Ms Ramos had been subjected to any disciplinary action during her almost 12 month period of employment with Coast Community. Following her dismissal, Ms Ramos made efforts to find alternative employment and has worked in two different jobs to mitigate her loss.

[66] Having regard to all the circumstances of the case, I consider that the application of the Sprigg formula yields an amount ($3,259.30) that is clearly inadequate. My view is that an appropriate amount of compensation having regard to all the circumstances of the case is $7,540.56, which is eight weeks’ pay at Ms Ramos’s gross average weekly earnings of $942.57 per week in the period from 20 April 2020 until 9 August 2020.

Misconduct (s 392(3))

[67] Section 392(3) of the Act provides that if the Commission is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the Commission must reduce the amount it would otherwise order under s 392(1) of the Act by an appropriate amount on account of the misconduct.

[68] I have found that Ms Ramos did not engage in any misconduct. There is no basis to reduce the amount of compensation to be ordered in Ms Ramos’s favour pursuant to s 392(3) of the Act.

Shock, distress or humiliation, or other analogous hurt (s 392(4))

[69] I note that in accordance with s 392(4) of the Act, the amount of compensation ($7,540.56) does not include a component for shock, humiliation or distress.

Compensation cap (s 392(5)-(6))

[70] The amount of $7,540.56 is less than half the amount of the high income threshold immediately before the dismissal. It is also less than the total amount of remuneration to which Ms Ramos was entitled in her employment with the Coast Community during the 26 weeks immediately before her dismissal. In those circumstances, my view is that there is no basis to reduce the amount of $7,540.56 by reason of s 392(5) of the Act.

Instalments (s 393)

[71] No application has been made by Coast Community for any amount of compensation awarded to be paid in the form of instalments.

Conclusion on compensation

[72] For the reasons I have given, my view is that a remedy of compensation in the sum of $7,540.56 (less taxation as required by law) in favour of Ms Ramos is appropriate in the circumstances of this case. I will issue an order [PR727894] to that effect.”

Ramos v Coast Community Pty Ltd (2021) FWC 1480 delivered 18 March 2021 per Saunders DP