Unfair dismissal; reinstatement and compensation

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