Unfair dismissal compensation; the principles

When the Fair Work Commission determines that the termination of an employee constituted an unfair dismissal, it will then turn to determine whether reinstatement is the appropriate remedy and if not, to assess compensation for unfair dismissal.

The following is a brief extract from a recent decision of the Commission which deals in a summary way with the process the Commission follows at this stage of the case.

“In dealing with the amount of compensation to be awarded it is necessary to take into account all the circumstances of the matter, including the specific matters identified in s.392(2)(a) to (g), and to consider the other relevant requirements in s.392. The long established approach to the assessment of compensation under s.392 is to apply the formula derived from the Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (‘Sprigg’). 45 This approach was more recently confirmed in the context of the present legislative framework by the Full Bench in Bowden vOttrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge (‘Bowden’).46 The first, and perhaps most important step to be taken, is to determine what the employee would have received by way of remuneration, or would have been likely to receive, if they had not been dismissed. This was described in Bowden in the following terms:

“[33] The first step in this process – the assessment of remuneration lost – is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

‘… we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the ‘anticipated period of employment’ are deducted. An example may assist to illustrate the approach to be taken.” 47

Once this assessment has been made various adjustments are then required to be made, including the amount of income earned since the time of dismissal, any amount on account of contingencies, any reduction on account of the employee’s misconduct, and the application of the statutory salary cap. This approach is, however, subject to the overarching requirement to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.”

Kapoor v Teleperformance Australia (2018) FWC 4520 delivered 2 August 2018 per Gregory C