Remedies; unfair dismissal; reinstatement, continuity of service

These passages from a recent decision of the Fair Work Commission express the legal principles which the Commission uses to determine the remedies for unfair dismissal when reinstatement is ordered, and issues such as continuity of service must be dealt with.

“Legislation

[37] Section 390 of the Act provides:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

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

Note: Division 5 deals with procedural matters such as applications for remedies.”

[38] As to any order for reinstatement, s.391 provides:

“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

(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.”

[39] The matters to be considered in determining any order for compensation are provided at s.392 as follows:

“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

(3) 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

(4) 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.

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

(b) 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.”

Consideration

[40] Given that I have found that the Applicant’s dismissal was unfair, it is necessary to consider the question of remedy. As required by s.390 of the Act, I am satisfied that the Applicant was protected from unfair dismissal and that she has been unfairly dismissed. The Applicant has made an application under s. 394 of the FW Act and in my view the Applicant should have a remedy for her unfair dismissal.

[41] Reinstatement is the primary remedy for unfair dismissal. In Ngyuen v Vietnamese Community in Australia 16 a Full Bench of the Commission said (citations omitted):

“[10] Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair dismissal as the discretion to order a remedy of compensation may only be exercised if the Commission is satisfied that reinstatement is ‘inappropriate’. Further, one of the objects of Part 3-2 of Chapter 3, in which the unfair dismissal provisions appear, is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement”.  We would observe that to describe reinstatement as the ‘primary remedy’, is to simply recognise that reinstatement is the first, perhaps even the foremost, remedy under the Act. The relevant question in determining whether to grant the remedy of reinstatement of an employee in relation to a dismissal that is found to have been ‘unfair’ is whether reinstatement is appropriate in the particular case.”

[42] In the present case I am satisfied that reinstatement is an appropriate remedy, for the following reasons. Firstly, the Applicant expressed regret and remorse for the loss suffered by the Respondent. Although the Applicant did not accept full responsibility, she conceded that she should have taken steps to avoid the mistake and did not do so. I do not accept that the manner in which the Applicant’s case was conducted before the Commission establishes a bar to reinstatement. It is difficult for a person to prosecute an unfair dismissal case while at the same time accepting total culpability for the error that led to the dismissal. In prosecuting her case for unfair dismissal, the Applicant was entitled to draw attention to what she perceived as failings on the part of the Respondent’s managers to support her and to deficiencies in the training she was provided with in the course of her employment. The Applicant did not press these points to the extent that the employment relationship could reasonably be viewed as damaged to the extent that this is a basis for finding that reinstatement is inappropriate. I also note the Applicant’s preparedness to undertake any training that the Respondent deems necessary to prevent the same error from reoccurring.

[43] Secondly, I do not accept that the assertion in the Applicant’s evidence that the Respondent dismissed the Applicant for misconduct in order to avoid paying her a redundancy payment because of a downturn associated with the COVID-19 Pandemic, is a barrier to reinstatement. While the allegation was not made out at hearing, there was evidence that the Applicant’s position had not been replaced and the Branch was being run by a Manager from another Branch who was splitting his time between two branches. It was open to the Applicant to assert that in putting this arrangement into place after dismissing her, the Respondent was not required to make the redundancy payments to her that it would have been required to make if her employment had been terminated to allow for this arrangement to be implemented.

[44] Thirdly, I do not accept that there is a reasonable basis for Mr Holland to assert a loss of trust and confidence in the Applicant. The Applicant’s conduct was careless and not wilful. The Applicant is remorseful for her part in the loss sustained by the Bank and maintained that if faced with the same circumstances in future she would have conducted herself differently by taking proper steps to verify the authenticity of the transfer request. The Applicant’s carelessness was in part, a result of a lack of training and this can be rectified upon reinstatement. It is also the case that some of the grounds upon which Mr Holland based his asserted lack of trust and confidence, were not matters that could reasonably support the assertion. For example, Mr Holland believed that characteristics and technical matters relating to the emails which caused the Applicant to make the transfer should have been apparent to her in circumstances where these matters could only have been apparent with the benefit of hindsight and following analysis which the Applicant was not qualified or trained to undertake.

[45] Fourthly, it is open to the Respondent to adjust the Applicant’s duties and responsibilities subsequent to reinstatement, as part of a process of addressing any shortfalls in her training or skills. Fifthly, an order for reinstatement places the Applicant in the same position she would have been in had she not been dismissed. In the present case, for reasons set out in the 4 January Decision, the Applicant’s conduct was careless, caused loss to the Respondent and was deserving of censure. The Respondent has foreshadowed that it will subject the Applicant to a warning if she is reinstated. That is a step that could have been taken instead of dismissing the Applicant and is no barrier to reinstatement.

[46] In finding that it is appropriate to reinstate the Applicant I accept as valid the Respondent’s submission that the Applicant’s assertion that she would have received a pay increase and/or a bonus had she remained in employment, is indicative of a lack of insight on her part. However, on balance, that lack of insight is not fatal to reinstatement in all the circumstances. I also note that the Respondent has withdrawn an earlier submission that the Applicant’s position is surplus to requirements because the Nambour Branch is being managed by the Coolum Branch. There is no other evidence of any practical impediment to reinstatement.

[47] Accordingly, I have concluded, pursuant to s. 391(1) that it is appropriate for the Applicant to be reinstated to her former position as Manager of the Respondent’s Nambour Branch and that an Order to that effect should issue requiring reinstatement from 27 April 2021. I am also satisfied, pursuant to s. 391(2) that it is appropriate for an Order in respect of continuity of the Applicant’s employment and her period of continuous service be made. Such an Order is appropriate on the basis that the Applicant has been unfairly dismissed after some eight years of service with the Respondent.

[48] I consider it appropriate, pursuant to s. 391(3) to make an order to cause the Respondent to pay the Applicant an amount for the remuneration lost on account of the dismissal. I reject the submission of the Applicant that it could be reasonably inferred that the Applicant would have received a wage increase or a bonus in September 2020 had she remained in employment. The Applicant’s carelessness was a significant contributor to a $30,000.00 loss to the Bank. Had the Applicant remained in employment it is improbable that she would have received either a bonus or a salary increase. To the contrary, the Respondent would have been entitled to issue the Applicant with a final warning in relation to her conduct.

[49] Adopting the Applicant’s calculation method, I accept that she would have earned an amount of $66,540.98 inclusive of superannuation, for the period from 8 May 2020 when the Applicant was dismissed until 27 January 2021 when her compensation submission was prepared. On the basis that superannuation is 9.5% of that amount, lost remuneration comprises salary of $60,219.58 and superannuation contributions in the amount of $6,321.40. On termination of her employment the Applicant was paid an amount of $8,870.00 which should be deducted from the salary component leaving an amount of $51,349.58. The Respondent also paid the Applicant an amount of $1,068.00 in annual leave. I deduct that amount on the basis that the Respondent’s position is that the period of leave the amount relates to will be restored as part of an order for continuous service. This leaves an amount of $50,281.58.

[50] In the period from 8 May 2020 to 27 January 2021, the Applicant earned an amount of $8,889.40 in wages and $844.49 in superannuation. The deduction of these amounts results in lost remuneration for the period from 8 May 2020 to 27 January 2021, of $41,392.18 in wages and $5,476.91 in superannuation contributions. The parties agree, and I accept that the total loss for each week from 27 January 2021 is $585.70 per week comprising $530.05 in lost wages and $55.65 in superannuation contributions (on the basis that super contributions are calculated at 9.5%). Multiplied over the 13 weeks between 27 January and 27 April 2021 (when the Order for reinstatement is required to be complied with) this equates to a loss of $6,890.65 in wages and $723.45 in superannuation.

[51] Therefore the total amount of lost remuneration in the period from the date of dismissal to the date of reinstatement is $54,482.28 comprising $48,282.83 in wages and $ 6,200.36 in superannuation. The Order will require the amount of lost wages to be paid to the Applicant less taxation deductions according to law and superannuation contributions to be paid into the Applicant’s nominated superannuation fund.

[52] I have also determined that I will not make a deduction from the amount awarded for lost remuneration, on the basis that the Applicant suffered loss from the termination of her employment which will not be completely recovered through an Order for lost remuneration. The Applicant has expended considerable effort to obtain alternative employment including undertaking retraining to obtain a position in aged care. I accept that the Applicant faced additional difficulty in circumstances where a number of positions she applied for required her to declare whether she had been dismissed from her previous employment for misconduct.”

 

Smith v Bank of Queensland Ltd  [2021] FWC 2060 delivered 19 April 2021per- Asbury DP