This passage from an unfair dismissal case determined by the Fair Work Commission deals with how to calculate compensation for unfair dismissal when the Commission orders reinstatement of employment as a part of the remedy.
“[1] On 5 October 2023 a decision (first decision)1 was made by the Fair Work
Commission to reinstate the Applicant, Ms. Tahmina Zobair, into her former position with
Sydney International Container Terminals Pty Ltd (Respondent). An order pursuant to
s.391(1) of the Fair Work Act 2009 (Cth) (FW Act) giving effect to that decision and a further
order pursuant to s.391(2) to maintain the continuity of employment and period of continuous
service of the Applicant were issued on the same day.
[2] The first decision also determined that it was appropriate in the circumstances to make
an order to restore lost pay to the Applicant. The parties were required to confer in an effort to
reach agreement as to the amount that should be included in any such order. No agreement
was reached. Brief written submissions were filed by both parties as to the appropriate order
for lost pay.
Relevant FW Act Provisions
[3] Section 391 of the FW act relevantly 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.
….
[2023] FWC 2797
DECISION
[2023] FWC 2797
2
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.
[4] The Applicant’s employment was terminated by the Respondent on 17 May 2023 and
an application for an unfair dismissal remedy was filed shortly thereafter. The matter was
heard on 10 August 2023. Following the orders that were made on 5 October 2023, the
Applicant was reinstated to her former position commencing on 16 October 2023. That
commencement date was agreed between the parties on the basis that no lost pay would be
sought by the Applicant in respect of any period on or after 11 October 2023.
[5] As is apparent from s.391(4) above, in determining an amount for the purpose of any
order for lost pay the Commission must consider the remuneration earned in the period
between dismissal and the making of an order for reinstatement (in this case from 17 May
until 5 October 2023) and the remuneration earned or reasonably likely to be earned during
the period between the making of the order for reinstatement and the actual reinstatement (5
October 2023 until 16 October 2023). Aside from these mandatory considerations, once it has
been determined that it is appropriate to make an order, the discretion conferred by s.391(3) is
general in nature. It is conditioned by the scheme and objects of the FW Act, including the
objects of Part 3-2, and the requirement that any order be 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. In determining the appropriateness of an order of that nature
it is necessary to have regard to the circumstances of the case.
[6] The Applicant submitted that she had received very little income in the period from
her dismissal until her reinstatement. She said she had lived on the termination payment she
received from the Respondent when her employment came to an end. The Applicant also
accepted that she had not applied for alternative employment since her dismissal. Rather, she
had sought to build her musical career in this period, albeit with limited financial reward for
her efforts. The Applicant submitted that she had travelled to India to perform with another
artist. She said the trip was unpaid, but her expenses were covered by a third party. It was also
submitted that the Applicant had undertaken a trip of unspecified duration to attend an event
and that the trip was paid for by the not-for-profit organisation that had organised the event.
[2023] FWC 2797
3
[7] The Applicant contended that she should receive the full amount of her lost earnings
since the date of her dismissal.
[8] The Respondent argued that the Applicant had failed entirely to mitigate any loss she
had suffered as a result of the termination. They pointed to the Applicant’s evidence in crossexamination that she had not applied for alternative work and in particular her evidence that in
the period 6 July 2023 to 6 August 2023, she had travelled overseas to visit a friend. The
Respondent said that the Applicant had chosen not to seek alternative employment for reasons
unrelated to her termination. In the circumstances it was submitted that the Commission
should exercise its discretion and make no order for lost pay.
[9] When the Applicant was dismissed with immediate effect on 17 May 2023, the
Respondent made a payment to the Applicant in lieu of the notice period prescribed by the
enterprise agreement that applied to the parties.2 That agreement provides for an amount of 4
weeks’ pay in lieu of notice for a person such as the Applicant with more than 5 years of
service. The payment was made notwithstanding the Respondent’s conclusion that the
Applicant had engaged in misconduct. Although it was concluded in the first decision that the
dismissal was unfair, I consider it appropriate to take this payment into account in
determining the amount of an order for lost pay. I therefore propose to reduce the amount of
the order by an amount of 4 weeks.
[10] I also propose to take into account the Applicant’s efforts to mitigate the loss caused
by the termination of her employment. It seems to me that it is open for someone in the
Applicant’s position to attempt to mitigate any loss by building on her second career as a
singer and earning an income by that means just as she might by seeking out paid
employment in the stevedoring industry or elsewhere, although it might be said that the risks
of securing a reliable income associated with that course would be greater. Here, the
Applicant’s efforts yielded little result and despite that, there were no other attempts by the
Applicant to obtain alternative employment. Further, for the period 6 July to 6 August 2023
the Applicant accepted that she was out of the country on holiday visiting family and friends.
In that case the Applicant would not have been actively seeking to mitigate any loss during
that period. Overall, I consider it appropriate to reduce the amount of the order by an amount
of 6 weeks to take these circumstances into account.
[11] I am also required to take into account any remuneration earned by the Applicant from
employment or other work from the time of dismissal until the making of the order for
reinstatement and 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.
3 The
evidence and submissions here are limited and are referred to above. It seems to me that at
least the payment of expenses for the Applicant to attend to perform with another musician
falls within the description “remuneration from other work”. There was no attempt to quantify
the amount. In the circumstances I propose to reduce the amount in the order by estimating an
amount so as to take account of this remuneration as required by the Fair Work Act 2009
(Cth).
[12] In the result, I determine that the Respondent should pay the Applicant an amount for
lost pay pursuant to s.391(3) as follows:
Period Rate Total
17 May 2023 to 20 August 13 weeks and 2 days at $30,410.63
[2023] FWC 2797
4
2023 $2,269.45 per week
21 August 2023 to 11
October 2023
7 weeks and 2 days at
$2,325.94 per week
$17,211.96
Running Total: $47,622.59
Deduction Rate Total
Less 4 weeks in lieu of notice $2,269.45 $9,077.80
Less 6 weeks at $2,297.70 being average
weekly amount
$13,786.17
Less estimated expenses $1500
Total: $23,258.62
Plus Superannuation
contributions
Rate Total
6 weeks 10.5% x $2,269.45 $1,429.75
14 weeks less 6-week
deduction above
11% x $2,325.94 $2,046.83
Superannuation Total: $3,476.58
[13] An order to this effect will accompany this decision.”
Zobair v Sydney International Container Terminals Pty Limited T/A Hutchison Ports – [2023] FWC 2797 – 25 October 2023 – Roberts DP