Remedies for unfair dismissal; compensation

The most common remedy for unfair dismissal ordered by the Fair Work Commission is financial compensation. However it cannot be ordered to the be paid by the employer unless the applicant employee found to have been unfairly dismissed has suffered financial loss, as is explained in the following decision of the Fair Work Commission on this issue.

“Application for an unfair dismissal remedy – dismissal found to be unfair – reinstatement not appropriate – compensation not awarded due to no loss of post termination earnings.

[1] On 31 July 2020, Mr Jim Canty (the Applicant) made an application to the Fair Work Commission (the Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Della Precast (Vic) Pty Ltd (the Respondent) on 14 July 2020. The matter was subsequently programmed and was heard on 16 November 2020.

[2] In a decision issued on 23 November 2020 1 (the Decision) I found that the Applicant was unfairly dismissed within the meaning of section 385 of the Act. However, there was insufficient material before me at that hearing to determine the question of remedy. Consequently, directions were issued to the parties and a further hearing to deal with the question of remedy was held on 21 January 2021.

[3] The Applicant filed submissions and a witness statement in advance of the 21 January 2021 hearing in accordance with the directions issued whereas the Respondent filed various documentary material on 20 January 2021 which was some 4 weeks late and not in accordance with the directions. The material filed by the Respondent did not bare upon the remedy question and was not admitted into evidence.

[4] At the hearing on 21 January 2021, the Applicant, was represented by Mr D Vroland of the Construction, Forestry, Mining, Maritime and Energy Union (CFMMEU). Mr B McMurray (General Manager of Della Precast) appeared on behalf of the Respondent.

[5] I turn now to deal with the question of remedy arising from the Applicant’s unfair dismissal.

Remedy

[6] Being satisfied that the Applicant:

(i) made an application for an order granting a remedy under section 394;

(ii) was a person protected from unfair dismissal; and

(iii) was unfairly dismissed within the meaning of section 385 of the FW Act,

I may, subject to the Act, order the Applicant’s reinstatement, or the payment of compensation to the Applicant.

[7] Under section 390(3) of the FW Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

(b) I consider an order for payment of compensation is appropriate in all the circumstances of the case.

Is reinstatement of the Applicant inappropriate?

[8] The Applicant does not seek reinstatement. In these circumstances and also having regard to the apparent cessation of the Respondent’s operation I consider that reinstatement is inappropriate. I will now consider whether a payment for compensation is appropriate in all the circumstances.

Is an order for payment of compensation appropriate in all the circumstances of the case?

[9] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”2

[10] The circumstances of this case are that the Applicant was dismissed on the grounds of redundancy although the process of dismissal was not conducted in a manner consistent with the Respondent’s consultation obligations under the relevant enterprise agreement, that being the Della Precast (Aust) Pty Ltd and the CFMEU (Victorian Construction and General Division) Precast Panel Enterprise Agreement 2016-20183 (the Agreement). The dismissal was also unfair having regard to the particular circumstances of the Applicant which were set out in the Decision at [73] & [76]. In all of these circumstances, I consider that an order for payment of compensation is appropriate.

Compensation – what must be taken into account in determining an amount?

[11] Section 392(2) of the FW 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.

[12] I consider all the circumstances of the case below.

Effect of the order on the viability of the Respondent’s enterprise

[13] There was no evidence adduced or material filed by the Respondent that established that an award of compensation would impact on the viability of the employer

Length of the Applicant’s service

[14] The Applicant commenced employment with the predecessor business to the Respondent on 3 April 2017 and was terminated by the Respondent on 14 July 2020. A period of 3 years’ service with the Respondent and its predecessor 4 weighs against any reduction in compensation that may be otherwise assessed as warranted.

Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed

[15] As stated by a majority of the Full Court of the Federal Court, “[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.”5

[16] In the Decision I determined that the Applicant’s dismissal was due to redundancy, albeit it was not a genuine redundancy 6 due to the consultation failures of the Respondent. It was the absence of a proper consultative process and the personal circumstances of the Applicant that rendered his dismissal unfair. Had a proper process been undertaken that was consistent with the consultation obligations under the Agreement, I assess that the Applicant’s employment would have continued for a period no longer than a further 2 weeks. I note however that the evidence of Mr DeBono in the earlier proceedings in this matter, which I accepted, indicated that the Respondent’s operations appeared to have “ground to a halt” on or by Saturday 25 July 2020.7

[17] The Applicant contends that it would be reasonable to conclude that he would have worked or remained on JobKeeper for a further two weeks beyond the apparent cessation of the Respondent’s operations on 25 July 2020. I don’t regard that as likely in the circumstances of a proper consultative process having been followed and having regard to the apparent cessation of the Respondent’s operations.

[18] In the above circumstances I find that it is unlikely that the Applicant’s employment would have continued beyond Saturday 25 July 2020. As his employment termination took effect on Tuesday 14 July 2020, the additional period I estimate he would have worked but for his dismissal was the period from Wednesday 15 July to Friday 24 July 2020 inclusive. This represents an additional 8 days of work.

[19] As set out in the Decision at [12] the Applicant was at the time of his dismissal classified at Level 2 under the Agreement which attracted an hourly rate of pay of $43.35. However, at the time of the Applicant’s dismissal, he had been stood down and placed on JobKeeper 8, which attracted payment of $1500.00 per fortnight. Had the Applicant remained in employment until 25 July 2020 he would have been entitled to receive JobKeeper payments for the 8 working days between 14 July 2020 and 25 July 2020, resulting in a pro-rata payment of $1200.00.

[20] Based on the above I am satisfied that it is likely that had the Applicant not been dismissed on 14 July 2020 he would have received $1,200.00 in remuneration.

Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal

[21] The Applicant must provide evidence that he has taken reasonable steps to minimise the impact of the dismissal.9 What is reasonable depends on the circumstances of the case.10

[22] The Applicant gave evidence that he secured alternative employment with Titan Precast and commenced employment with them on 20 July 2020. 11 I am satisfied in the circumstances that the Applicant has made reasonable efforts to secure alternate employment and that no deductions of compensation should be made.

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

[23] The Applicant commenced employment with Titan Concrete on 20 July 2020 and remains so employed. It is not immediately apparent on the material filed what earnings he has received from that employment in the period immediately following his dismissal by the Respondent on 14 July 2020.

[24] The only evidence as to his earnings with Titan Concrete is for the pay period 28 September – 4 October 2020 which revealed earnings of $2,530.00 for the week ending 4 October 2020. However, the payslip also reveals YTD gross earnings at that same date of $26,510.00. 12 Accepting the Applicant’s evidence that he commenced employment with Titan Concrete on 20 July 2020, this means his average weekly earnings over the 11 week period from 20 July 2020 to 4 October 2020 equates to $2,410.00 per week.

[25] Given the above calculated average weekly earnings figure closely approximates the Applicant’s earnings in the week ending 4 October 2020, I infer in the absence of other evidence that the Applicant’s weekly earnings from 20 July 2020 were $2,410.00 per week.

[26] I also note that on termination of his employment the Applicant also received one week’s pay in lieu of notice amounting to $1,560.00 13 which must be included in the calculation of post termination remuneration. This brings the total amount the Applicant received in remuneration in the period between 14 – 25 July 2020 to that of $2,410.00 + $1,650.00 = $4,060.00.

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

[27] The Applicant submits that he remains in employment with Titan Concrete and is likely to earn income between the making of the order for compensation and the payment of compensation. That evidence is not challenged by the Respondent.

[28] I am satisfied that the Applicant is likely to earn income between the making of the order for compensation and the payment of compensation, although the likely amount is unclear.

Other relevant matters

[29] Other matters were raised by the Applicant including the Respondent’s failure to appear in proceedings and alleged wages underpayment claims that at the time of the substantive hearing remained unresolved. The matter of alleged underpayment can be pursued in a court of competent jurisdiction and as such I do not believe such claims warrant the adjustment of the amount of compensation that is to be awarded in this matter. As regards the Respondent’s failure to engage in the proceedings before me I apply no weight to that in my consideration.

Compensation – how is the amount to be calculated?

[30] As noted by the Full Bench, “[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).14 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages15.”16

[31] The approach in Sprigg is as follows:

  • Step 1: Estimate the remuneration the Applicant 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 1

[32] I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated the employment to be $1,200.00 on the basis of my finding that it is likely the Applicant would have remained in employment for a further period of 8 working days. This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”.

Step 2

[33] I have also found that the Applicant has earned an amount of remuneration since the date of his dismissal, that he is likely to earn some remuneration between the making of the order for compensation and the payment of compensation, and that he has taken reasonable steps to mitigate his losses.

[34] Based on the findings I have made above in relation to the Applicant’s earnings from his employment with Titan Concrete plus his payment in lieu of notice, the Applicant received remuneration of $4,060.00 in the “anticipated period of employment”. Only monies earned since termination for the “anticipated period of employment” are to be deducted.17 Consequently, A deduction must be made for these earnings.

[35] Having regard to the deduction that is to be made for the earnings in the “anticipated period of employment” it is apparent that the amount earned in that period exceeds the remuneration the Applicant would have received, or would have been likely to have received had he not been dismissed by the Respondent on 14 July 2020. It follows that no loss of earnings has been suffered by the Applicant. Even if the payment in lieu of notice is excluded from the calculation, the amount of remuneration received by the Applicant from his employment with Titan Concrete exceeds the remuneration he would have received in the “anticipated period of employment” between 14 – 25 July 2020.

Step 3

[36] I now need to consider the impact of contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment.18 I do not consider it appropriate to adjust the amount for contingencies.

Step 4

[37] Having applied the formula in Sprigg, it is apparent that no loss of remuneration has been suffered by the Applicant and as such, no award of compensation ought be made. 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,”19

[38] I am satisfied that the amount of compensation that I have determined takes into account all the circumstances of the case as required by s.392(2) of the FW Act.

Conclusion

[39] Given the findings I have made regarding the Applicant’s earnings since termination and how long the Applicant would have remained employed but for his termination, the other criteria under s 392 are not relevant in these circumstances. Having further considered the particular circumstances of the case, I do not believe that any discretionary adjustment is necessary or appropriate. For this reason, I do not intend to make any order for compensation.

[40] I have found that the Applicant’s dismissal was unfair, and that reinstatement was inappropriate. I have further found that compensation is not appropriate in the circumstances where the Applicant has not suffered a loss of earnings in the period since the termination of his employment. The matter is determined accordingly.”

Canty v Della Precast (Vic) Pty Ltd (2021) FWC 220 delivered 22 January 2021 per Masson DP